Credit & Credibility

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Lansing, Mich.—Steven Roznowski hesitated for just a moment when asked to describe the benefits of his new headquarters here. “It’s a hard question—because there are just so many,” says the chairman and CEO of the 115-year-old The Christman Co., a construction and real estate development powerhouse with $400 million in annual revenue.

“But I guess we could start with one really tangible benefit: Our own project has led to a similar, but much larger job developing the headquarters for a local insurance company—and that’s a $180 million project. So we really cannot underestimate the value of our building—it has gone way beyond any expectation or hope.”

Credit to the Community—
& the Corp. Coffers

When growth prompted Christman to begin a search for new headquarters, the company did consider leaving downtown Lansing, its home since the 1920s. “It was not a given that we would stay, by any stretch,” says Roznowski. “We examined all the options, and we were heavily recruited by suburban areas.”

But a number of incentives made staying in the city center attractive. One significant, if hard to measure value, would come from the perception of being a good corporate citizen by not abandoning Lansing. “There was a strong sense of responsibility, of wanting to be a leader in the community,” says Roznowski. “And staying has enhanced our stature.”

Another edge in remaining downtown, however, was very easy to quantify in bottom-line terms: Nearly $13 million in federal and state tax credits were available if the company restored and occupied the vacant, five-story Mutual Building, built in 1928 and listed on the National Register of Historic Places.

While this eight-figure tax break would warm the heart of any CFO, Christman saw additional benefits beyond the credits alone. Executing the historic restoration, and transforming a dilapidated structure into a design showcase, would serve as a 60,000-square-foot calling card for the company—both showcasing skills for which it was already well-known; and establishing its expertise in a new business arena critically important to its future growth.

Christman has long been recognized as a top partner in helping other companies execute tax-credit-producing historic-preservation projects. And it also has enjoyed for decades a reputation as the go-to firm for high-end, intricately detailed construction—the company to use when craftsmanship, not cost, is the paramount concern. So when it came to move, Roznowski recognized the opportunity presented by the Mutual Building to further burnish Christman’s leadership in these areas.

But the company also seized the chance to use the building, which it occupied in February 2008, to dramatically rebrand itself, to redefine its very strategic vision: The renovation project would highlight the company’s emerging dexterity in delivering deeply sustainable buildings.

And on this front, Christman literally set a world record, as its headquarters, whose design work was done by the SmithGroup, achieved the globe’s first “Dual Platinum” LEED certification from the U.S. Green Building Council: LEED CI (commercial interiors) and LEED CS (Core & Shell)—and it is on track for an unprecedented triple crown, with a third Platinum certification pending in LEED EB (Existing Buildings).

Incredible Credibility

These efforts to create a building that trumpets Christman’s multifaceted talents have resulted in a headquarters whose value as a business-generating tool is immense. “It’s close to $300 million worth of projects we’ve won where the building has had an influence and impact on the client,” says Roznowski—or nearly 20 percent of the $1.5 billion in construction the company current has underway.

The strongest evidence of the building’s direct effect on revenue is that $180 million project for an insurance company, where Christman is doing the historic preservation and retrofit of an abandoned power plant on Lansing’s Grand River.

Christman’s experience renovating its own new headquarters “was not the only factor in our getting that business,” says Roznowski, “but it gave us a ton of credibility. Certainly, the insurance company’s leaders have told us that seeing what we did with our own headquarters gave them a great deal of confidence that we really could turn an old power plant into a modern office building. They saw in what disrepair—what a wreck—our building was before we started on it, and they saw what it became—the premier office building in Lansing.”

(Evidence of the building’s position as the best in town: Christman rents out part of its space at what Roznowski characterizes as a “10 percent rental premium” over Lansing’s other Class A office buildings.)

“It’s such a nice tool to have trying to sell ourselves in historic preservation, sustainability, and the development of high-performance buildings,” says Roznowski. “Talk is cheap, but this says we walk the walk in addition to talking the talk—and are willing to spend our own money on [concepts] we encourage others to invest in.

“For a competitive industry like ours, we typically have spent a lot of time chasing business. But now our phone is ringing off the hook from people who want to learn more about what we did. The publicity surrounding the building has just been great.”

And the building is not only having a quantitative impact—steering more clients its way—but a qualitative one as well: The building is helping Christman upsell its services.

“It’s beginning to change when we are getting hired in the building process,” says Roznowski. “As a contractor, we’re always trying to move up the value chain—not be a commodity that gets competitively bid.

“We are using the building to show people what we can accomplish if we’re brought in before construction even starts. And our getting hired in that initial planning phase, where we’re able to offer more integrated, turnkey services, can mean 50 percent better margins for us,” Roznowski says.

The Future Is Green

Of course, being able to attribute $300 million worth of new construction business to the building means it is already a hero—and could rest comfortably on its laurels. But Roznowski thinks this is just the beginning, as he envisions essentially endless demand for the services of a company whose headquarters is proof of its ability to combine historic preservation (and the accompanying tax credits) with award-winning energy efficiency.

“Sustainability is becoming a more and more critical factor in people’s building decisions. There’s zero question about that. And we have found that when you marry together the use of a historic building with the latest green technology, it creates so much synergy that the impact on the use of energy and resources is huge—a white-hot explosion [of savings].”

So having a headquarters that demonstrates world-class green leadership “really has put us leaps and bounds ahead of competitors; it has really created a real sweet spot for us.”

In addition to the competitive edge in acquiring clients that having such a green building provides, it also enhances Christman’s recruitment efforts. “Both the best young talent and most seasoned pros are really looking to hookup with a leader in green,” Roznowski says.

The building has had a positive impact on productivity as well: “People still come up to me all the time to say how much they appreciate working in this building flooded with natural light and with fresh air. Our employees are always talking about how they don’t hit that wall after lunch and start yawning at their desks. The environment energizes them.”

Roznowski’s Recommendations

What advice does Roznowski have for his CEO peers who might be about to embark on a major building project?

“I’ve thought a lot about this, and I can boil it down to the CEO needs to think of his HQ as a strategic business asset and not just real estate. Many CEOs see their company’s facilities as something that doesn’t rise to their level of attention—except maybe when it comes to picking out their office or weighing in on decorations.

“But I really believe the facility has say a lot about what the company stands for, and the physical space definitely impacts employee productivity. So for a CEO to spend time thinking about his HQ, and making sure the project is designed keeping in mind its organizational value, is time well spent. So don’t delegate too much. And plan, plan, plan—spend as much time planning as building.

“Our own project started out as something we had to take care of to address that we were quickly outgrowing our old building. But then we asked what else could we accomplish with it and what it could mean for the company. And it just blossomed into something very special.”