The Economics of Sustainable Buildings

If enough planning goes into a building, some of the associated green costs can be minimized. (Photo: Mike [CC BY-SA 2.0]/Flickr)

One of the main impediments to green building, in my opinion, is the cost factor. Project managers, building owners, investors and others may feel that sustainable building costs too much, especially in the middle of an economic recession. However, a new report from CB Richard Ellis, a multi-national real estate services firm, looks at the financial aspect of building green. The report, Who Pays for Green? The Economics of Sustainable Buildings (PDF), is available at no charge from the CB Richard Ellis (CBRE) website.

The CBRE white paper states that preliminary studies show that building a property to receive basic LEED certification can be achieved with zero additional cost. “However, building a greener building – designed to achieve one of the higher standards of accreditation – is likely to add somewhere between 5 percent and 7.5 percent to construction costs.” Source: CBRE

The report shows that adequate planning can help mitigate some of the additional costs. If a building or renovation is designed from the ground up with sustainability in mind, the overall cost of the green upgrades may be lower and the final energy efficiency results are likely to be better.

CBRE also addresses the big question – does LEED certification (or other green building recognition) add value to a property? The short answer is yes, green upgrades can add value to a building. The report shows that energy-efficient commercial property owners can demand a higher initial rental rate, realize higher rental rate growth, and can even demand a higher sales price.