Copyright Natural Habitats 2016

Green Buildings, Do They Add Up?

Green Buildings, Do They Add Up?

greenmoneyRead an article or two about green building technology, and you’ll quickly notice the dominance of words like enhance, improve, and increase…

While these terms are accurate, they’re inherently subjective, and that means they’re probably not going to get you far when it comes time to make an appointment with the bank manager. People who prefer their paper with rows and columns like to see some numbers, and now, courtesy of a report published this month by Jones Lang LaSalle, we have some.

To start with, the construction of Leadership in Energy and Environmental Design (LEED) certified buildings was examined. A study by construction company Davis Langdon concluded that LEED Buildings cost just below 2% more than the average non-LEED building – in monetary terms, slightly over $20,000 per $1 million of construction cost. However The Design-Build Institute of America proved that any additional costs can be offset by employing integrated project delivery methods, rather than the traditional design-bid-build model.

One of the most compelling advantages of green buildings is their reduced utility expense. In a study conducted by the U.S department of Energy, researchers found that the 150 buildings studied saved a combined 18% in utilities. The economic savings meant incremental green building costs were paid back in just over eight months. After that, annual savings ranging from $45,000 to $1.8 million would appear on directly on the bottom line.

For owners and investors, green buildings can generate higher ROI through rent premiums and vacancy reductions. The 2011 Green Building Market and Impact report cites 5 studies where LEED buildings were found to command between 5% and 17% higher average rents than non-LEED buildings. In addition, the Jones Lang LaSalle’s Green Gauge found an average vacancy drop of over 3%, as well as a much faster absorption into the market. The five reported studies also suggested that LEED certified buildings achieved a price premium of 8.5% – 25% over non-LEED buildings.

These studies show us that green buildings – like most things that are good for us – require an initial investment, but for those who are willing, the benefits over the long term are overwhelmingly positive. As the green building market matures, there is an emergence of first hand data to categorically prove what has long been suspected. The studies cited here, and many more being done are critical to the advancement of the field. They provide the kind of tangible evidence that can move green buildings from a new age fringe, to mainstream building practice. Not a moment to soon.