Sunday, May 11, 2008

Green Buildings Pay

I was recently introduced to a CoStar report that got me very excited. http://www.costar.com/partners/costar-green-study.pdf It compares LEED certified and Energy Star buildings against those that are not across the US real estate market. The results of the study are astounding... they show that green buildings achieve higher rents, higher occupancy, have lower operating costs and achieve higer prices per square foot. Now what developer or building owner in their right might would choose anything but a green building!

That said, it turns out that one of my esteemed colleagues used this study in a recent presentation to pension real estate leaders and they were not so happy with the methodology used. They felt the analysis was not consistent in grouping unlike buildings together and the conclusions should not be drawn across all regions.

They did provide her with a bunch of additional articles that had similar findings. Here's a excerpt from a UBS study, How Will Green Construction Affect REITs?, they liked.

According to a survey done by McGraw-Hill, there is a 2% higher initial cost to go green, but over the long run, the benefits will outweigh the initial higher construction costs. These benefits include:

Operating costs: Average expected decrease of operating costs between 8% and 9% across the industry.

Building values: Average increase in values expected around 7.5%.

Return on investment (ROI): Average ROI expected to improve 6.6%.

Occupancy ratio: Occupancy rate expected to increase by 3.5%.

Rent ratio: On average, rents expected to increase by 3%.

Please comment and share other good studies you've found.

1 comment:

jmccoy said...

I am recently out of college and am very interested in sustainable building materials and practices. I work for a lumber company that is LEED certified and very knowledgeable in FSC lumber. I am trying to find framers and contractors that are looking to build with FSC type sustainable materials and supply them with those materials. If anyone is interested or has questions please e-mail me at jmccoy@idapac.com

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