The Green Building Advantage Won't Last Long

Sustainability is fast becoming accepted as a mainstream ideal in our society. 2007 was marked by a series of bellwether events: corporate America challenging our nation's political leadership to take swift action to reduce greenhouse gases; Al Gore and the Internal Panel on Climate Change sharing a Nobel Peace Prize for their work on global climate change; and oil surging to $100 per barrel. There is no doubt that economic, social, scientific, and cultural forces are coming together to go green.

The commercial and residential building sector accounts for 38 percent of carbon dioxide (CO2) emissions in the United States per year, more than any other sector. U.S. buildings alone are responsible for more annual CO2 emissions than those of any other country, with the exception of China. Most of these emissions come from the combustion of fossil fuels to provide energy for heating, cooling, lighting, and power to satisfy our technology habits and demands for convenience appliances and other electrical equipment.

Building and operating sustainably is one of the best strategies for meeting the challenge of climate change because the technology to make substantial reductions in energy and CO2 emissions already exists.

LEED® Green Building Rating System™

In 2000, the U.S. Green Building Council developed the Leadership in Energy and Environmental Design Green Building Rating System™ as a way to encourage and accelerate global adoption of sustainable green building and development practices with universally understood and accepted tools and performance criteria. The average LEED certified building uses 32 percent less electricity, consumes 30 to 50 percent less energy, draws 40 percent less potable water, has a 70 percent savings on waste output, and saves 350 metric tons of CO2 emissions per year. In total, those savings reduce CO2 emissions by 38 percent per building. Modest investments in energy saving and other climate-friendly technologies can yield buildings and communities that are environmentally responsible, profitable, and healthy.

LEED certification is available for all building types: new construction, existing buildings, commercial interiors, core and shell developments, single and multi-family homes, and neighborhood developments. The existing building market is especially important because there are nearly one hundred times as many existing buildings as there are new buildings under construction. To boot, many of today's existing buildings have outdated equipment and the majority of those containing more efficient equipment are not operating at peak performance, causing unnecessary waste of energy and valuable resources. And in almost all cases, the building owner is unaware of this waste.

Attracting and Retaining Employees

Becoming sustainable strengthens reputations and sets smart organizations apart from less innovative competitors. Building sustainably boosts a company's profile as a good corporate citizen and having projects LEED certified provides third-party verification to the company, its employees, and the surrounding community that the company is achieving its sustainability goals. At the same time, studies have shown that green building features such as abundant natural light, superior indoor air quality, views of the outdoors, and landscaped surroundings increase employee satisfaction and productivity. Amenities that make a building a healthy and comfortable work environment also reduce employee absenteeism and turnover and have a big impact on a company's bottom line.

Maximizing Building Occupancy

People are increasingly seeking out healthier, more environmentally friendly spaces in which to live and work. A healthier, more productive working or living environment that costs less to operate and maintain is more likely to attract and retain tenants. Lease-up rates for green buildings typically range from average to 20 percent above average. Hines, a leading real estate development, investment, and management company, has shown that sustainable design can increase the occupancy rate by at least 8 percent in its green buildings relative to the nongreen buildings of its competitors.

Reducing Operating Costs and Increasing Cash Flow

Efficient green features may, on average, add a 2 percent up-front cost, but the resulting green buildings are quick to make that up in savings. Trimming a building's operating and maintenance costs, which can account for up to 85 percent of a building's lifetime cost, recuperates any upfront construction expenses in the first one to two years of a building's life cycle. And savings on operations and maintenance further increase cash flow and profit margins generated by the property.

The Solaire, a green residential tower in New York City's Battery Park City neighborhood, was fully leased-up within six months of its completion in August 2003. Offering amenities such as superior indoor air quality and a roof garden, the Solaire has a waiting list of prospective tenants willing to pay a 5 percent rental premium.

Reducing Risk and Liability

Building and operating sustainably lowers risk and liability throughout a building's construction and occupancy. Integrated design and a critical green building strategy encourage the entire design team to collaborate, which reduces the risks of delays and cost overruns. Green construction also allows companies to stay ahead of environmental regulations and insurance requirements.

Increasing Property Value

By offering a stronger occupancy record, lower risk and liability, and substantial operating savings, green buildings are more attractive to buyers even in a down market. On average, a property's value increases by $12.50 per square foot (based on an 8 percent market capitalization rate) for every $1 per square foot saved in operating expenses as a result of green building design. LEED certification takes this a step further by giving credibility to green performance claims.

Companies that have already started to incorporate sustainability practices see the enormous potential and reap the benefits. Those who haven't are running out of time, as what has historically been a competitive advantage is fast becoming a competitive imperative. Regulatory code, rising energy costs, and resolution of carbon tax issues are fast-moving trains on a very short track. Companies and organizations that do not authenticate, validate, and precipitate wide-scale system changes that root out the underlying causes of nonsustainability will find themselves left behind. For organizations that have yet to embrace these practices, greening buildings'new buildings, existing buildings, and interior office spaces is a great place to start.

*Footnotes