Page 119 - Green Building Through Integrated Design

96 THE BUSINESS CASE FOR GREEN BUILDINGS

ENERGY STAR buildings commanded rent premiums of $2.40 per square foot and
showed occupancy rates of 3.6 percent over peers.
LEED-certified buildings that were resold received $171 more per square foot,
while ENERGY STAR buildings sold for an average of $61 per square foot more than
comparable non-ENERGY STAR buildings.
LEED-certified buildings exhibited rent premiums of $11.33 per square foot over
similar non-LEED-certified buildings and had 4.1 percent higher occupancy. Rental
rates in ENERGY STAR buildings represented a $2.40 per square foot premium over
comparable non-ENERGY STAR buildings and had 3.6 percent higher occupancy.
The data are now in, and they are compelling. This study demonstrated that green
buildings achieve higher rents and higher occupancy rates, they have lower operating
costs, and they get higher resale prices. What more information does one need, to
make the business case for green buildings in the commercial sector?*
For institutional building owners, such as large corporations, universities, schools,
nonprofits, and government agencies, typically those with long-term owner/occupant
perspectives, the business case is even more compelling, since they can secure all of
the benefits of building ownership, whereas commercial developers must typically
split those benefits with tenants. Public and institutional owners increasingly see green
buildings as expressions of policy choices favoring sustainability, a tangible expres-
sion of an often intangible commitment.
By 2010, most observers expect the business case for green buildings to be com-
pletely accepted and become part of a new definition of “business as usual.” Richard
Cook, AIA, a prominent architect in New York City (see discussion of the Bank of
America Tower at One Bryant Park in Chap. 2), says, “In five years, it will be clear
that buildings not reaching the highest standard of sustainability will become obso-
†
lete.” Many real estate professionals see the day soon when an office building will not
be considered as “Class A” without a LEED certification. Without certification, build-
ings will be at a considerable disadvantage in most large cities, unable to command
the same rents or the same quality of tenants as their certified competitors.
Here’s the business case as expressed by Denver-based developer Aardex LLC’s
Ben Weeks. ‡

Typically, businesses will pay anywhere from $300 to $600 per square foot for
their people (assuming a salary and benefits cost of $60,000 per year and 100 to
200 square-feet of space per employee). And they’ll pay $15 to $20 per square foot
for rent. If a building can increase the productivity of the people by even 5 percent,
well, at $600 a foot per employee that’s $30, roughly twice or significantly more than
the total cost of the building.
I think the sky is the limit for realization and maximization of with this relationship.
We’re sharing as much of this in the industry as we can, to anybody that will listen. For

*http://www.costar.com/News/Article.aspx?id=D968F1E0DCF73712B03A099E0E99C679, accessed May 11, 2008.
† Interview with Richard Cook, Cook + Fox Architects, New York City, March 2007.
‡ Interview with Ben Weeks, Aardex, LLC, March 2008.