Usgbc_the Sustainable Enteprise Vol2

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Your Bottom Line

You can afford to build green: The true cost is much lower than you think Doug Gatlin / U.S. Green Building Council

E

vidence that green buildings do not have to

buildings, a new study by the World Business Council

cost a penny more than their conventional

for Sustainable Development (WBCSD) reports.

counterparts continue to pile up, as do the studies that validate significant ongoing operational cost

Respondents to a 1,400-person global survey

savings for both new and existing green buildings.

estimated the additional cost of building green at

And these studies are extending beyond time and

17 percent above conventional construction, much

material into such factors as building valuation, and

higher than the true cost difference of about 1 to

health and productivity of building occupants.

2 percent. At the same time, survey respondents estimated buildings’ greenhouse gas emissions at

The most commonly cited reason for building own-

19 percent of world total – half the actual number

ers and operators not going green is the perceived

of 40 percent.

higher first costs. A 2007 study by Davis Langdon notes, “It is clear from the substantial weight of

While experienced users of the Green Building Council

evidence in the marketplace that reasonable levels

(Leadership in Energy and Environmental Design)

of sustainable design can be incorporated into most

LEED Green Building Certification System are finding

building types at little or no additional cost. In addi-

it possible to build at Silver and Gold LEED levels

tion, sustainable materials and systems are becom-

for the same cost as conventional buildings, most

ing more affordable, sustainable design elements

studies are finding that certification adds only 1 or

are becoming widely accepted in the mainstream of

2 percent of the overall budget to the construction

project design, and building owners and tenants are

cost. LEED registration and certification fees are

beginning to demand and value those features.”

negligible, averaging around $3,000 to $5,000 per project, depending on size and whether it is a new or existing building. (New construction requires more information to be reviewed by USGBC, so the fee is slightly higher than for existing buildings.) Registration is essential for projects pursuing LEED certification and provides access to a variety of resources, including LEED Online, a project management tool that teams use to prepare documentation. Investments in building commissioning, energy model-

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ing and additional professional services pay dividends

In fact, key players in real estate and construction

commissioning (a quality control process ensuring that

regularly misjudge the costs and benefits of green

all HVAC, plumbing, electrical and security systems are

as risk mitigation strategy for owners. In fact, building

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operating as intended) provides one of the most cost-

alone reduced energy consumption enough to save

effective ways to ensure lower energy use and cost

$98,818 yearly without sacrificing air quality!

once the building is operational. According to Texas A&M University, the commissioning process typically reduces energy costs in existing buildings by about 20 percent, compared to buildings that do not go through routine commissioning. While these might add to the project budget, they end up saving money in the long run and are also best practices for building design, construction and operations. When Adobe Systems Inc. earned platinum LEED certification for its existing headquarters complex in

“

Managers of LEED-certified buildings regularly report energy and water savings between 30 and 50 percent over their noncertified counterparts.

Savings From Ongoing Operations

San Jose, California, which company leaders thought

Once the project is operational, buildings recoup

was already high performing, they were surprised

added costs within the first one to two years, a blip

to learn that some of the building systems were not

compared with the typical lifespan of a building, which

running as efficiently as they could. By pursuing LEED

can often exceed 100 years. LEED-certified buildings

certification, they uncovered energy waste, subse-

use significantly less energy and water than a conven-

quently saving over a million dollars annually. In fact,

tional building. Managers of LEED-certified buildings

modifications to the programming of a garage fan

regularly report energy and water savings between 30 and 50 percent over their noncertified counterparts, yielding large savings in operational costs. But beyond the obvious implications of reduced utility costs, the business case for green buildings as financially sound investments is strengthened when you consider LEED-certified buildings’ increased worth. Several building projects recently submitted to USGBC show an average savings of more than $1.50 per square foot in operational expenses as a result of management improvements and equipment upgrades conducted to earn LEED certification. In investment properties, this translates into an attractive increase in net operating income (NOI) that delivers increased profitability year after year. The role of green building practices and features is

Adobe Systems, Inc. Tower San Jose, California

boosting the value of real estate and has appraisal experts taking notice. According to Theddi Wright

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Chappell, the managing director and national

the Harvard School of Public Health and the Polaroid

practice leader of National Green  Building &  Sus-

Corporation found that employee absences cost com-

tainability Practice Valuation Services for the Capital

panies billions of dollars annually. In a study by Wil-

Markets Group of Cushman & Wakefield of Washing-

liam Fisk, green buildings were found to add between

ton, Inc.: “There is no doubt the market is looking

$20 billion and $160 billion in increased worker

more closely at issues such as energy efficiency and

productivity every year. According to many facility

a building’s carbon footprint in making investment

managers overseeing LEED-certified buildings, these

decisions. Buildings that do not measure up in these

buildings yield significant productivity and health

two areas alone are losing favor among investors

benefits, including heightened employee productivity

and in many instances are being considered less

and satisfaction, fewer sick days and less turnover.

attractive investments long term. Even though data

Case studies further demonstrate that employees

may not currently exist to prove up a value premium

who work inside the buildings are more productive

for sustainable properties, there is a growing belief

and report greater satisfaction with their workplaces,

in the valuation community that if a building is not

specifically identifying sunlight, views of nature and

energy efficient and high performing, there is a

heightened thermal and acoustic comfort.

much greater likelihood its value will be discounted

Other Strategies

in the coming years.”

The most effective way to reduce higher costs is by getting an experienced project team in place and practicing the principles of integrated design. Integrated design engages users and operators during the design process so projects are able to integrate better design and understanding of building features and functions. To stay on track, according to Davis Langdon’s study: • Begin documentation early and maintain it as you go. • Update and monitor the LEED checklist regularly so you Oxford - Metro Centre Photo by Shai Gil, courtesy of HOK

have a clear picture of your progress. • Use energy- and cost-modeling tools to drive decisions

Overall, building a new building or upgrading an

at the design phase, not to validate decisions at the

existing building to LEED standards offers a remarkable

construction phase.

return on investment (ROI). Cost-benefit analysis on 10 buildings recently awarded LEED certification shows

The best response to the question, “How can you afford

an average ROI of 29 percent for green investments.

LEED certification?” may well be, “You can’t afford not to!”

How’s that for the bottom line?

Existing Buildings The Other Side of the Equation LEED has been a successful tool not only for greening One of the costliest aspects of a building is the health

new buildings but for improving the efficiency and

of the people inside. A study conducted in 2000 by

healthiness of existing buildings. The commercial

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buildings market in the United States is vast and aging.

sustainable site management, water conservation

Spanning more than five million individual facilities

and indoor environmental quality.

and comprising 70 billion square feet, U.S. commercial buildings–including offices, retail facilities, schools

LEED for Existing Buildings: O&M is the result of major

and public buildings–are on average more than 30

revisions to the LEED for Existing Buildings certifica-

years old. Many could benefit from the use of green

tion system, which was first launched in 2004. The

operations and maintenance strategies addressed in

new version has a clearer focus on green operations

the new LEED for Existing Buildings: Operations and

as opposed to construction, making it a more useful

Maintenance (O&M) certification system.

tool for implementing sustainability across the board in an organization’s facilities. The other goals of the

Launched in January 2008, LEED for Existing Build-

new system are streamlined reporting requirements

ings: O&M is a tool for maximizing efficient operations

for earning LEED certification, and increased focus on

in existing buildings. It identifies and rewards best

measured environmental outcomes.

practices across the spectrum of building management issues, including energy and water efficiency,

The journey toward sustainability begins with creat-

resource conservation, recycling, environmentally

ing a plan for improving existing facility performance

preferable purchasing and green cleaning. LEED for

and operations practices. The collection of measures,

Existing Buildings: O&M also serves as an outline for

known as credits in the LEED for Existing Buildings:

implementing improvements and provides a reference

O&M certification system, can be used as the basis for

to the technologies and strategies that help you on

this plan. This can be done at the level of a single

your journey toward sustainable facilities operations.

building or can be applied to dozens or even hundreds of buildings across a portfolio. LEED for Existing

USGBC

also

provides

independent

third-party

Buildings: O&M includes credits that address green

verification of green performance levels in buildings

cleaning, materials and resources, energy and water

that pursue LEED certification. Prevalent in the new

efficiency, and indoor environmental quality. Many of

construction arena, LEED certification is now gain-

the items can be implemented quickly at no cost and

ing popularity among existing buildings, as owners

will garner immediate environmental benefits. Others

seek to quantify the performance of their buildings

can be implemented over time as part of a compre-

in a range of key areas such as carbon emissions,

hensive upgrade plan. To learn more about LEED for Existing Buildings: O&M, visit www.usgbc.org.

Doug Gatlin is vice president for market development at the U.S. Green Building Council, overseeing the family of LEED rating systems in all major commercial market segments, and managing overall customer relations for LEED and the council’s new pilot initiative, the Portfolio Program. He has 16 years’ experience in energy and environmental policy and Winrock International Photo by Craig Dugan, courtesy of HOK

has worked on climate change response strategies and voluntary pollution prevention programs.

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