Build Green and Pocket Green

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Got your electric bill lately?   While you try harder to save energy each month, the cost of fuel continues to rise exponentially.  No matter how much you cut back, you never seem to get ahead.  Keeping those costs in check with efficiencies is the only way you will be able to economically survive…for at least the short term.

Energy loss in the commercial market is far more important to the tenant than how much carbon is being dumped into the atmosphere.  Yes, the two go hand in hand, but when energy costs represent a third of the operating expenses of a business, there are more discussions around budgets than in carbon emissions.

It has been well documented that a “Green” building brings a greater return to the investor than a building of conventional construction.  In an article in Environmental Building News last November, it was stated that

“Dutch economist Nils Kok has published the most comprehensive statistical analysis to date on the relative value of green and conventional buildings. The results show that U.S. buildings labeled under the LEED or Energy Star programs charge 3% higher rent, have greater occupancy rates, and sell for 13% more than comparable properties. “Labeled buildings have effective rents [rent multiplied by occupancy rate] that are almost 8% higher than those of otherwise identical nearby non-rated buildings,” the study reports

Noting that “Energy represents about 30% of operating expenses in the typical office building in the U.S.” and is “the single largest and most manageable expense in the provision of office space,” the researchers also looked at the interaction between LEED and Energy Star ratings. They found that the benefits of energy efficiency alone and LEED’s broader sustainability metrics are both “fully capitalized into rents and asset values.”

The cost to build a Green building has many variables.   To what extent you invest in the Green building techniques will help reap a tenfold return on your investment over the life of the building.  How that saving is calculated is based on the immediate utility savings. Then there is the perceived tenant retention generating a lower vacancy rate along with higher than normal lease rates.

It is a lot more glamorous to have marble floors in the bathrooms than to have a cistern on the roof.  It’s more appealing to have decorative crown molding than two inch foam insulation on the ceiling.  It’s more in vogue to have lush landscaping than to have drought hardy cactus surrounding your building, but what is most appealing and glamorous and in vogue…..is the “Green” in your pocket……and that “Green” makes everyone smile.

Brad Lindberg

CID – President Elect

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