Page 128 - Green Building Through Integrated Design

ECONOMIC BENEFITS 105

operating costs by $0.90 to $1.50 per square foot per year. Often these savings are
achieved for an investment of just $1.00 to $3.00 per square foot. With building costs
reaching $150 to $300 per square foot, many developers, institutions, and building
owners consider it a wise business decision to invest 1 to 2 percent of capital cost to
secure long-term savings, particularly with a payback of less than 3 years. In an
80,000-square-foot building, this level of owner’s savings translates into $72,000 to
$120,000 per year, year after year.

REDUCED MAINTENANCE COSTS
More than 120 studies have documented that a properly commissioned building shows
additional energy cost savings of 10 percent to 15 percent. These buildings also tend
to be much easier to operate and maintain.* By conducting comprehensive functional
testing of all energy-using systems before occupancy, it’s often possible to have a
smoother-running building for years because potential problems are fixed in advance.
A recent review of these studies by Lawrence Berkeley National Laboratory showed
that the payback from building commissioning in terms of energy savings alone was
about 4 years, while the payback fell to about 1 year when other benefits were con-
sidered, such as fewer callbacks to address thermal comfort complaints.

INCREASED BUILDING VALUE

Increased annual energy savings also create higher building values. Imagine a build-
ing that saves $72,000 per year in energy costs versus a comparable building built to
code (this savings might result from saving only $0.90 per year per square foot for an
80,000-square-foot building). At capitalization rates of 6 percent, typical today in
commercial real estate, green building upgrades would add $1,200,000 ($15 per
square foot) to the value of the building. For a small upfront investment, an owner can
reap benefits that typically offer a payback of three years or less and an internal rate
of return exceeding 20 percent. The CoStar study cited earlier and others show that
ENERGY STAR-rated and LEED-certified buildings exhibit resale premiums of up to
30 percent.

TAX BENEFITS AND INCENTIVES

More than 600 incentive programs for renewable energy and energy efficiency are
†
offered by all levels of government. Some states offer tax benefits for green buildings.
Oregon and New York offer state tax credits. New York’s tax credit allows builders
who meet energy goals and use environmentally preferable materials to claim credits

*Lawrence Berkeley National Laboratory, The Cost-Effectiveness of Commercial-Buildings Commissioning,
2004 [online], http://eetd.lbl.gov/emills/PUBS/Cx-Costs-Benefits.html, accessed April 2008. This research
reviewed 224 studies of the benefits of building commissioning and concluded that based on energy savings
alone, such investments have a payback within 5 years.
† The best source is the database of State Incentives, www.dsireusa.org, accessed June 30, 2008.