Building green

A new survey offers some interesting insights into the current state of sustainable building. The good news: Seventy-five percent of the executives surveyed said that, given the benefits of green building, the downturn in the credit markets would not make their companies less likely to construct green buildings. The bad news: A perception of higher construction costs continues to pose a critical obstacle to additional green construction.

The survey, called “Green Building Market Barometer,” is from Turner Construction and is the company’s fourth study since 2004 of perceptions regarding sustainable building by retail and other commercial real estate executives.

Survey respondents said that green buildings enjoy lower costs than non-green buildings in three important areas:

• energy;
• overall operating expenses; and
• total life cycle over a 10-year span.

The executives also reported that green buildings have better financial performance than non-green ones in terms of:

• higher building values;
• higher asking rents; and
• greater return on investment and higher occupancy rates.

Those perceptions are confirmed by other studies. A review by Rosenberg Real Estate Equity Funds of several cost studies found that green buildings had average energy costs that were 30% less than those of conventional buildings. A 2008 study by the New Buildings Institute of 121 LEED new construction buildings concluded that their median energy use was 24% below that of the national building stock.

Although 87% of the surveyed executives believed that green buildings cost more to construct, some 73% said these higher costs would be paid back through lower operating costs, with a median estimated payback period of seven years.

The results indicate that many executives still believe that green construction is significantly more expensive than traditional building methods, when in fact, according to Turner, it can often be achieved with little or no premium.

For example, a review by Davis Langdon, of a wide range of studies, found that the average construction cost premium required to achieve a moderate level of green features (equivalent to LEED Silver certification) was only 1% to 2%.

The Turner survey is part of a growing body of evidence that building green and undertaking sustainable measures provides both short-term relief and long-term fiscal savings. Add to this the goodwill that such initiatives can engender in consumers, and sustainability ranks as one of a retailer’s best assets, even in a downturn.

?Editor’s Note: It’s not too late to sign up for Chain Store Age’s second annual Green4Retail (G4R) Conference, April 29 to 30 at the Hyatt Regency O’Hare in Chicago. The program will explore real-life strategies for sustainability in retail design, construction and facilities management. Go to  www.greenforretail.com for more information.