While I think most people can agree that sustainable building practices are a good thing, the decision on whether or not to take a project down a green path ultimately becomes a business decision, and rightfully so. I have had this discussion many times with many different people, and the big question on everyones mind is “What is the payback period” or “How do you quantify the benefits”. The additional costs of a sustainable building project are well known – including higher construction costs, interest from a longer payback period, and the costly third party certification and commissioning (LEED, Energy Star). What seems to be less well known are the benefits beyond long term energy savings that building green can provide to a commercial project. Below are in my mind some of the most important selling points of a Green commercial building project.
1. Reduced Operating Costs in the Long Run
This is the obvious one, but just because it is obvious doesn’t make it any less important. With the prices of gas, electricity, and water all on the rise an energy efficient building makes economic sense. While the initial capital cost may seem significant, green buildings will save on energy operating costs for the life of the building, well beyond the initial 2- 5 year payback period. Even in a triple net lease(tenant pays utilities), the decreased operating costs become a selling point reducing the tenants net costs.
2. A Unique Sales Proposition
By having something special and different, you put your building in another class all together. This allows you to position yourself as a superior product in the market, generating a unique demand for your building. When it comes to leasing, you can expect higher rent and increased occupancy. In fact, a 2008 survey by Costar shows that LEED and Energy Star certified buildings attain a 4.1% greater occupancy and earn a 30% higher rent than other similar properties located within a quarter mile radius. Not to shabby. This unique position also works when it is time to sell, boosting resale values. Sure, the unique positioning may not last forever, but as more and more buildings continue to be certified green, those who do not meet these standards get pushed into the inferior product category, and the inverse of these benefits becomes true.
3. Marketing and PR
Environmental stewardship is good business, and it makes a good news story. A study from the Associated press showed that news stories about green building have increased 4X over the last three years. Green buildings can also serve as a boost to a brand’s image, especially a business who has an image of sustainability and corporate responsibility to begin with. While renting a green office building won’t make you beloved by your community on it’s own, it is a good start.
4. A Healthy Worker is a Happy Worker
Year in and year out new studies of the workplace show that things like indoor air quality, lighting quality, and increased ventilation have an effect on the health and productivity of employees. LEED buildings focus on these same things, drastically improving the work environment. With low toxicity building materials, high-tech ventilation systems, and a focus on maximizing natural light, green buildings provide a much better environment for employees. And guess what, they won’t keep it to themselves. Studies show that happy employees shout it from the rooftops, passing the word along to friends, family, business contacts about just how much they like their new work environment. And better yet, they won’t want to leave. All of the sudden the workplace becomes a selling point for employees that share your green values, and can deter employees from shopping around for new jobs. It can also work the other way, attracting new, like minded employees that share your organization’s values.
Tags: Green Building, LEED, Payback period
