Green building should not add to first costs

August 11, 2010

Recently, an A/E firm asked me to come in and talk to their project managers about how to overcome client fears of additional cost associated with green or LEED-rated buildings. This concern did not surprise me, based on the findings of our recent “Green Building Research White Paper.”

From our exclusive surveys of 11 building owner and user groups, it is clear that “added first cost” is still a huge stumbling block for those who pay the bills. In 10 of 11 cases, a majority of owners/users said sustainable design added to first costs. The lone exception: corporate real estate managers, only 41% of whom said they thought going green added to first costs.

Even the readers of this magazine were cautionary. Of 631 respondents, 78% said they thought their clients viewed sustainability as adding “significantly” to first costs. By an even greater margin (86%), respondents themselves said they thought green buildings had added costs.

This is particularly disturbing in light of reports from the field that LEED buildings up to the Silver level are coming in at only 1-2% above “conventional” costs, or at no added cost.

Anecdotal evidence is one thing, but hard data is another. A recent report by Lisa Fay Matthiessen and Peter Morris of real estate consulting firm Davis Langdon, a follow-up to their 2004 study, should put this issue to rest. Because Davis Langdon has databases of the actual construction costs of hundreds of projects, both green and non-green, the researchers were able to compare hard numbers from real projects.

In “Cost of Green Revisited,” the authors found that “many projects are achieving LEED within their budgets, and in the same cost range as non-LEED projects.” Added first costs resulted primarily from the building's program, not because it was green or non-green.

“The 2006 study shows essentially the same results as 2004: there is no significant difference in average costs for green buildings as compared to non-green buildings,” they conclude. “Many project teams are building green buildings with little or no added cost, and with budgets well within the cost range of non-green buildings with similar programs.”

Other findings:

Building Teams are using common sense in their choice of green strategies. They are achieving LEED certification using lower-cost technologies, while forgoing more elaborate and expensive strategies.Building Teams are taking a conservative approach to energy conservation. The authors report that “few projects attempt to reach higher levels of energy reduction beyond what is required by local ordinances, or beyond what can be achieved with a minimum of cost impact.”Some Building Teams, especially less experienced teams shooting for LEED Gold or Platinum, continue to see sustainability as an add-on that justifies added cost.While average construction costs have risen 25-30% in the past three years, many projects continue to achieve LEED standards within budget.

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