Page 134 - The Green Building Bottom Line The Real Cost of Sustainable Building

GREEN IS THE COLOR OF MONEY 113

discover they were learning with us and knew little more than we did. We incurred pre-
mium pricing for materials and technologies either out of our own ignorance or because
prices had yet to become competitive. We faced up-charges in architectural fees as a result
of re-designing projects in the midst of construction because we were changing our envi-
ronmental performance objectives as we were building. And, not surprisingly, we suf-
fered from delayed receipt of rent because our projects were taking longer to complete.
We estimate that our first LEED project, the Whitaker Building, probably saw a 15
percent cost overrun as a result of our learning curve (approximately $150,000). It did
not help that our first project involved renovation of a 19th century building on the
National Historic Register, challenging us to meld historic constraints to stringent con-
temporary energy standards. Our learning curve on that development in terms of time
and process was a significant part of the cost premium.
We estimate that our second project, Abercorn Common, also entailed a premium as
a result of our learning the LEED program. Much of this premium is factored into our
discussion of this project in Chapter 5. However, it’s worth pointing out there that a
significant portion of our premium came in the form of longer time delivery to market
and with that delay, deferral of rental income (approximately $417,000). It’s almost
impossible to calculate how much of that delay was owing to making this building
green and how much to other factors that many development projects face (threatened
litigation from a neighboring retailer, changes in design, uncertainty in the retail market
post-9/11, etc.). Since those first two projects (Whitaker and Abercorn), the premium
we calculate paying for green development has declined to the point where we feel it
is largely negligible. An overview of the cost of our learning curve on our first four
LEED projects, amounting to roughly $1.5 million, can be seen in Table 4.2.

TABLE 4.2 COST OF LEARNING CURVE ON EARLY LEED PROJECTS

LEED
PROJECT PROJECT LEED PREMIUM PROJECT PREMIUM LOST
NAME TYPE CATEGORY (%) COST ($) INCOME TOTALS
Whitaker Office/ New 15.00% $ 1,211,479 $ 150,000
Retail Construction
Abercorn: Retail Core & Shell 4.60% $18,293,000 $ 840,000 $416,667
In-line
McDonald’s Retail Core & Shell 4.60% $ 1,410,000 $ 50,000
Building 600 Retail Core & Shell 4.60% $ 1,788,000 $ 57,000

Learning $1,097,000 $416,667 $1,513,667
Curve Totals
Cost of LEED $ 48,850
Education
Total Cost $1,562,517