Why Green Buildings Make Financial Sense

Sure, it’s not easy being green. But the payoff can be big.

At a recent meeting of the U.S. Green Building Council's Minnesota Chapter, presenters quantified the financial benefits for owners and tenants of “LEED”-certified or Energy Star-labeled building. (LEED – or “Leader in Energy and Environmental Design” – is a certification by the U.S. Green Building Council awarded to buildings that meet a suite of environmental sustainability benchmarks. Energy Star-labeled buildings and plants are certified by the U.S. Environmental Protection Agency as meeting high benchmarks for energy efficiency.)

These esteemed certifications –- though they require money and time to achieve -- offer big competitive advantages. Beyond wasting fewer natural resources, eco-friendly buildings have lower vacancy rates, better indoor air quality, fewer sick days among employees working in them, lower liability insurance premiums and can fetch higher rents from tenants. They also attract higher-caliber workers and have higher occupancy rates because people desire to work in environmentally friendlier conditions.

Adam Fransen, sustainability project manager for multinational commercial real-estate firm CB Richard Ellis, shared findings from a University of San Diego study called “Do Green Buildings Make Dollars and Sense?” The researchers compared 154 Energy Star-labeled buildings in 10 large U.S. markets with non-Energy Star general office buildings in those same markets. All buildings in the study were owned by CB Richard Ellis.

The study found that overall operating costs of the Energy Star-labeled buildings didn’t decrease despite their environmental practices – likely because they were more intensely managed than other buildings, Mr. Fransen said. But the Energy Star-labeld buildings had a 3.5% lower vacancy rate and charged 13.5% more for rent than the other buildings. Energy costs were also much lower in the Energy Star-labled properties: Every one-point increase in a building’s Energy Star rating, for instance, saved .83% electricity costs.

Mr. Fransen said that while the competitive advantages of being a “green” building are substantial today, they likely won’t last forever as green practices become mainstream and expected. “There’s a unique window” over the next five to 10 years,” he added.

Have questions about how to get Energy Star-labeled or LEED certification? Call Energy Smart at (651)292-4653.