Page 230 - The Green Building Bottom Line The Real Cost of Sustainable Building

208 CHAPTER 7

increase when factored on a professional’s time alone yields significant production. If,
for example, we assume the average salary at Birmingham Federal Reserve & Tower
to be $50,000 and gross production to be 2.5 times salary, total gross revenues from
all tenants would amount to $106 million. A 16 percent increase in productivity would
add over $17 million to tenants’ gross revenue.
In environments where building occupants are regularly tested (e.g., schools), simply
adding daylighting has resulted in significant increases in productivity. In Colorado and
Washington, for example, end-of-year test scores from students in classrooms with the
most daylighting were found to be 7 to 18 percent higher than those with the least. In
California, students in classrooms with the greatest amount of daylighting were found to
be 20 percent more advanced in math skills and 25 percent faster on reading tests in one
year when compared to those students in classrooms with the least daylighting. 6
The tricky part, of course, is assuming analogous productivity gains when moving
from the school environment, where quantitative notions of success are codified and
measured, to an office environment, where the data is challenging to acquire and the
metrics are highly subjective. Despite this, we do feel that some increase in produc-
tivity is found in green buildings. How much? Bob Willard, citing studies from Joseph
Romm’s Cool Companies and Hawken, Lovins, and Lovins’ Natural Capitalism,
notes that increased productivity in green buildings has been documented to range
from 6 to 16 percent. Based on these studies, Willard feels comfortable calculating
productivity gains as a 7 percent increase for 50 percent of a company’s workforce.
Our own analysis is more conservative. It assumes that employee productivity is 2.5
times employee cost ($50,000 per staff member) and that tenants will see a 6 percent
increase in productivity for 20 percent of its workforce. The result is increased pro-
ductivity of approximately $1.275 million annually. This increase amounts to slightly
more than a 1 percent hike in gross revenues but covers over 30 percent of the com-
pany’s rent, or $7.50 per square foot in savings. (The calculation is $50,000 × 2.5 × 850
total employees × 20% of this workforce × 6% productivity increase.)
How realistic is this? If we consider the analysis of Green, Inc. in previous chap-
ters, we’ll recall that this small (20 employees) fictionalized company is recording
additional net income of approximately $1 million through additional development
work and consulting, boosting its annual profits from $3,720,000 to $4,720,000.
How much of that increased profitability is owing to the increased productivity that
comes from locating in a green office? Again, it’s difficult to say precisely. But even
if a tiny percentage (say 3 percent) of Green, Inc.’s $1 million increased net revenue
is linked to the company’s environment, the numbers it is posting will bear out the
assumptions regarding location in a green building. The analysis is obviously more art
than science, particularly since we are using a fictionalized company’s performance to
underscore projected benefits for a generic tenant elsewhere. For many readers, this
will seem just too farfetched. Perhaps. But consider the alternative: A company could
occupy conventional space for the same rent as office space in a green building, but
productivity could simply be expected to be the same it historically has been. The ob-
ject of our discussion is the degree of upside value creation in a green building versus
a conventional alternative, where no additional value creation can be expected.