Page 118 - Green Building Through Integrated Design

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THE BUSINESS CASE FOR

GREEN BUILDINGS

I often state the business case for commercial green buildings in 2008 in this way: if
your next project is not a green building, one that’s certified by an accepted national
third-party rating system, it will be functionally outdated the day it opens for business
and very likely to underperform in the market as time passes.* One expert claims that
trillions of dollars of commercial property around the world will drop in value because
green buildings are becoming mainstream and will soon render those properties
†
obsolete. This is a remarkable change in the environment for commercial green build-
ings in just a short period of time, beginning about 2006. The question for commercial
developers is no longer whether they’re going to build a certified green building, but
when and where will they do their next projects, what level of certification will they
seek, and how much they’re prepared to invest in their green building program.
A recent study of commercial projects from the largest commercial property data-
base proves this contention. Completed in March 2008 by the CoStar Group, which
analyzed more than 1300 LEED-certified and ENERGY STAR buildings (of which
355 were LEED-certified) representing roughly 351 million square feet in its database,
the study showed that not only are rents and occupancy rates higher in green build-
ings, but sales prices are substantially higher.
In the analysis, LEED buildings achieved rent premiums of $11.33 per square foot
over traditional office buildings and exhibited 4.1 percent higher occupancy rates.

*There are buildings that may have green elements, but do not pursue formal certification. My estimate is that
these represent less than half the green building market at present and will decline rapidly over the next three
years as a share of all green buildings. As is often said, “The road to hell is paved with good intentions.” The case
for certification of buildings is made elsewhere. When people tell me they have a green building, but didn’t bother
to formally certify it, I say “prove it.” The fact is that most people who claim to be doing green design but don’t
bother to certify the project through an independent third-party are likely practicing self-deception, since with-
out certification as a goal, many of the green elements end up being cut from most projects for budget reasons.
† Charles Lockwood, “As Green as the Grass Outside,” Barron’s, December 25, 2006, http://online.barrons.com/
article/SB116683352907658186.html?mod=9_0031_b_this_weeks_magazine_main, accessed March 6, 2007.
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