Dismal credit market not likely to affect plans to construct green buildings, say real estate execs
Despite the concerns about the availability of credit, 75% of the commercial real estate executives surveyed said they would not be any less likely to construct “green” buildings. Green buildings are designed to be more efficient in their use of energy, water, and other resources and to create better environments for occupants. In total, 754 commercial real estate executives were surveyed for Turner Construction Company’s 2008 Green Building Market Barometer.
Turner’s 2008 Green Building Market Barometer survey found that commercial real estate executives viewed green buildings as having lower energy, operating and lifecycle costs, higher building values, asking rents, and occupancy rates. Respondents also noted that green buildings can generate greater investment returns. Despite the current economic environment and some perceived obstacles to green building, the benefits remain significant. As such, Turner anticipates continued interest in green buildings, benefiting building owners and occupants.
“We are very encouraged to see that real estate professionals continue to recognize the value of building green,” commented Michael Deane, VP and chief sustainability officer at Turner. “While companies across all industries have launched green initiatives, construction is central to any discussion of sustainability.
Eighty-four percent of executives said that energy costs were lower in green buildings, and 68% said overall operating costs were lower. Green buildings create an attractive cost/benefit ratio, according to most executives, and are considered to be less expensive than non-green buildings for several key measures of cost.
In addition to a reduction of energy costs, improved health and well-being of occupants (76%), increased building value (72%), and higher asking-rents (65%) were most often cited as benefits of green buildings. Survey respondents noted several other benefits to green building, including overall higher return on investment (52%), higher occupancy rates (49%), increased worker productivity (46%), and improved learning in schools (41%).
Real estate executives surveyed were asked about the likelihood that they will seek LEED certification if they are involved in green building over the next three years. Although 54% of executives noted that the cost of LEED documentation is an “extremely” or “very significant” obstacle to green construction, 83% of executives said they would be “extremely” or “very likely” to seek LEED certification if they are planning to build within the next three years.
For those seeking LEED certification, 40% expect to pursue Silver, 26% will seek the Certified level, 25% will pursue Gold, and 10% Platinum. Among executives who think the first cost of green buildings to be higher, roughly three-quarters believed green buildings can pay back their higher initial costs, with this figure rising to 84% among those who would seek a Gold or Platinum certification. The median estimated payback period cited by executives for sustainable features was seven years.
Obstacles to green
When asked to rate a series of issues that could potentially discourage the construction of green buildings, executives rated the following as presenting an extremely or very significant obstacle to green construction: the costs of LEED documentation (61%), higher construction costs (61%), the length of the payback period (57%), and the difficulty quantifying the benefits of green building (43%).
About the survey
The Green Building Market Barometer findings are the result of the fourth independent online survey commissioned by Turner Construction Company since 2004. The 2008 Green Market Barometer focused on executives involved in commercial real estate.
The survey of 754 respondents was comprised of executives at companies representing a cross-section of the real estate industry, including developers (37%), rental building owners (31%), brokers and real estate services (27%), architectural/engineering/ construction (22%), other (23%). Note: The percentage figures above total more than 100 due to the respondents’ ability to offer responses in multiple industry segments.