Investing in Sustainable Design
New technologies help developers and tenants save the environment - and money.
Many commercial building
owners and investors favor green, and now they are discovering that
buildings designed with sustainable features are another reason to
prize the color of money. Attracted by lower operating and maintenance
costs, corporate tenants are recognizing green office buildings' value,
an important factor in today's competitive real estate marketplace.
design capitalizes on technological advances to provide less toxic
building materials, highly efficient heating, ventilating, and
air-conditioning systems, low-consuming electrical and water systems,
and designs employing natural light, landscaping, and building
orientation to improve energy and occupant efficiency.
buildings first were promoted primarily for environmental reasons.
Designs involved high initial capital costs, specialized teams, and
uncommon equipment and building practices. Government agencies,
universities, and nonprofit organizations were early adopters of
sustainable design, using subsidies and grants to offset more-expensive
building costs and recouping the return through long-term occupancies.
sustainable design is moving into the mainstream as more corporate
tenants and owners, as well as speculative building developers,
discover the value created when minor upfront capital costs and short
payback times increase lease rates along with tenant attraction and
retention. In short, sustainable design makes sense.
Today's sustainable-design buildings offer a host of advantages to
building owners and developers: reduced life-cycle and operating
costs, increased energy and water efficiency, decreased environmental
impacts, and occupants' increased comfort and quality of life. Each of
these benefits addresses building owners' and users' bottom lines.
Reduced Liability. Sustainable
design creates a healthy indoor environment for building occupants,
offsetting a trend toward increased insurance claims related to poor
indoor air quality and sick building syndrome. Increasing fresh-air
intake, improving air filtration and ventilation effectiveness, and
carefully selecting materials and finishes that minimize volatile
organic compound off-gassing create a healthier environment for
building occupants. Eventually, insurance companies may offer premium
reductions for certified green buildings.
Increased Comfort. Green
building occupants are more attentive and learn faster than
counterparts in typical office buildings. Increased natural light,
employee-controlled temperatures, and advances in glazing and lighting
systems, combined with thoughtful regard to building orientation and
footprint, provide a working environment that promotes creativity,
employee collaboration, and improved productivity.
and productive employees also are less likely to be absent. The
economic potential is compelling: For example, if the average cost for
employee salaries is $150 per square foot per year, a 1 percent
improvement in employee performance achieved through sustainable design
represents a $1.50 psf per year savings - roughly equal to the
building's average psf annual energy cost. Because employee annual
salary and benefit costs far outweigh a building's annualized energy,
operations, and maintenance expenses, productivity gains can positively
affect a business's bottom line.
Indoor environmental quality affects many aspects of business success,
such as customer satisfaction, innovation capacity, work quality,
employee morale, job satisfaction, employee retention, and operational
efficiency. Numerous studies support the idea that a more comfortable
and pleasant working environment creates an uplifting atmosphere for
Economics certainly prevail in weighing the options of adding
sustainable features to a building. Commercial real estate tenants,
brokers, developers, and appraisers need to educate themselves on
sustainable design's true costs in today's marketplace. Innovative
construction materials and techniques and mechanical system advances,
while possibly more expensive upfront, can reduce a building's lifetime
operating costs significantly.
analyzing green economics, commercial real estate professionals should
consider long-term operating and maintenance costs. These factors are
beginning to affect leases, insurance rates, loans, and other real
estate practices as tenants, owners, banks, and communities recognize
energy efficiency's value.
Sustainable design can provide the following economic benefits.
Increased Market Demand. Growing
industry evidence asserts that sustainable-design buildings can obtain
higher lease premiums or be more competitive in an otherwise tough
market, as more corporate tenants, particularly class A triple-net
tenants, become aware of sustainable design's cost savings. This
competitive advantage already is creating a new market for green office
space. Savvy brokers and leasing agents aware of green buildings'
potential should look for opportunities in their markets to capitalize
on this advantage.
Lower Operating Costs.
Technological advances during the last 10 years in areas such as
glazing, lighting, and HVAC help improve performance and lower
buildings' operating costs. Along with attracting tenants, this benefit
also raises a building's value to potential investors.
operating costs increase a property's net operating income, creating a
higher valuation and possibly sales price. As appraisers begin to
incorporate green office buildings' value into appraisals, better
capitalization rates may result, thus providing significantly higher
What Constitutes Sustainable Design?
Thorough sustainable design addresses a gamut of topics from site
design through water and energy efficiency, material and resource
conservation, indoor environmental quality, and construction
techniques. The goal is to properly balance sustainable features and
their costs to give building owners the best overall performance.
Listed below are sustainable-design buildings' common features that
commercial real estate professionals should be aware of to help market
green buildings and determine their sale and lease values.
Advanced Lighting Systems.
Advances in lamp, ballast, and fixture technology produce more light
with less energy. Good lighting design uses as little as 0.5 to 0.75
watts psf of floor space, compared to lighting loads of 2.5 to 3 watts
psf in older buildings. Furthermore, sensors that measure indoor light
levels can raise and lower artificial lighting in response to changing
outdoor conditions, and occupancy sensors turn lights off when not
Lower lighting levels also
translate into cooling cost savings as air conditioners do not have to
remove the heat created by excess lighting. Indirect lighting systems
save energy and improve light quality by dispersing available light and
High-Performance Glazing Systems.
Daylighting - allowing abundant natural light indoors - enhances
interior light quality and reduces energy demands. Glass in
sustainable-design buildings is selected with consideration given to
visible light transmittance, heat loss and gain, ultraviolet ray
transmittance, and color. High-performance glazing systems admit more
light while simultaneously rejecting a higher percentage of solar heat
gain, resulting in better daylighting and reduced cooling loads.
geometry, location, orientation, glazing, and private office placement
can optimize daylight while minimizing heat gain or loss. Other factors
to consider include window orientation and proximity of glass to
ceilings and work surfaces.
Ventilation Systems. Advanced
ventilating and mechanical systems increase air-flow effectiveness,
provide plentiful fresh air, and reduce exposure to biocontaminants
such as microbial diseases, fungi, and molds using high-efficiency
filtration systems. Improved ventilation also removes indoor pollutants
generated by the off-gassing of materials such as carpet, adhesives,
sealants, furniture coverings, and paints and varnishes, as well as
reduces carbon dioxide levels.
Reduced Water Consumption.
Many cost-effective options can reduce water use by up to 30 percent.
Toilets now use 1.6 gallons per flush versus 3 to 5 gallons per flush
on older models. Sensor-operated faucets and urinals help save water
and improve sanitary conditions. Waterless urinals now are used in many
Western markets where water is scarce. Also, selecting drought-tolerant
outdoor landscaping can eliminate site irrigation needs.
Storm Water Control. Containing
storm water on site and allowing it to filter into the ground reduce
lake and stream runoff pollution and help recharge local aquifers.
Sustainable-design developers use features such as rain gardens, green
roofs, pervious pavement, and low-profile curbing to help control storm
Building and finish materials are selected with regard to renewability,
recycled content, manufacturing processes, packaging, and shipping
(i.e., using materials that are locally manufactured or harvested).
Sustainable-design practices also incorporate less-toxic building
materials and furnishings. Carpets and floors, paints and varnishes,
furniture, and other materials carefully are researched prior to
specification. Life-cycle cost analyses of materials also are conducted
to compare not only a system or material's first cost but also to
consider its cost over the building's entire life span. An increase in
the manufacturing of such products has reduced their costs while
increasing selection and quality.
Bottom Line: Black Ink
design doesn't come from employing piecemeal changes that create minor
reductions in resource use and total life-cycle costs. Building
investors, owners, and developers can benefit the most from sustainable
design if they work with designers and builders that take a holistic
approach to programming, planning, designing, and construction.
Simultaneously considering design, construction, and interlinked
issues, such as site and climate, building orientation and form,
lighting, and thermal comfort, optimizes all aspects of a project. In
the end, an integrated approach often creates multiple benefits,
allowing many sustainable buildings to cost minimally more than