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Study explains the financial value of green commercial buildings

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Study explains the financial value of green commercial buildings

Report will help bridge the communication gap between green building and financial communities

August 11, 2010

Green building may be booming, especially in the Northwest, but the claims made for high-performance buildings have been slow to gain traction in the financial community.  Appraisers, lenders, investors and brokers have found it difficult to confirm the value of high-performance green features and related savings.  A new study of office buildings in Seattle, Portland and Vancouver, BC by the Cascadia Region Green Building Council, the Vancouver Valuation Accord and Cushman & Wakefield identifies how high-performance green features and systems can increase the value of commercial buildings.  The report outlines how value was achieved and how sustainable attributes impact costs, savings, investment income, and capital value.  It is a tool to help bridge the gap in understanding between the green building and financial communities.

The value proposition for each of the three buildings is as follows:
* 200 Market Place in Portland, OR (LEED-EB) – This property leads by example with its green retrofit.  It has competitive rents and higher levels of occupancy than its non-green competitors.  The building also has declining operating expenditures after certification.
* Alley24 East in Seattle, WA (LEED-CS) – This building had a comparatively quick absorption period, attracted and retained high quality tenants, achieved competitive rents, and now has higher-than-average levels of occupancy.
* Vancouver Centre in Vancouver, BC – This project achieved a 19% Return on Investment from undertaking an energy-efficient retrofit, as well as the potential for higher rates of return through the use of a different lease structure.

“This research makes much-needed progress in explaining how sustainable building attributes affect value,” says Brandon Smith, Chief Operating Officer of the Cascadia Region Green Building Council. “The design and construction communities will benefit from a better understanding of how value is determined and achieved by green strategies, so they can communicate more effectively with owners and developers.  The financial sector will benefit from understanding how to increase asset value through more sustainable approaches.” 

Download the report at: http://living-future.org/cascadia/news/cascadia-releases-study-on-the-value-of-green-building

This investigative study is part of a larger northwest regional effort conducted by a coalition of nonprofit, private sector and local government organizations.  There is an associated report on the residential sector that documents the superior market performance of third-party certified homes over non-green homes.  That report is available on the Earth Advantage website.

About Cascadia
The Cascadia Region Green Building Council is a non-profit organization in both the US and Canada.  Cascadia promotes the design, construction and operation of buildings in Alaska, British Columbia, Washington and Oregon that are environmentally-responsible, profitable and healthy places to live, work and learn.  Cascadia is one of the first chapters of the US and Canada Green Building Councils, and is the only international chapter in North America.  It is also the originator of the Living Building Challenge.  For more information, please visit www.cascadiagbc.org.

About the Vancouver Valuation Accord
The Vancouver Valuation Accord is a response to the evolving importance of sustainability and the need for its implications to be understood in valuations and appraisals. It is a commitment to review sustainability and valuation, including education, standards and practices, with the aim of improving understanding of their relationship. www.vancouveraccord.org

About Cushman & Wakefield
Cushman & Wakefield is the world's largest privately-held commercial real estate services firm. Founded in 1917, it has 230 offices in 58 countries and 15,000 employees.  The firm represents a diverse customer base ranging from small businesses to Fortune 500 companies.  It offers a complete range of services within four primary disciplines: Transaction Services, Capital Markets, Client Solutions and Consulting Services.  A recognized leader in global real estate research, the firm publishes a broad array of proprietary reports available on its online Knowledge Center at www.cushmanwakefield.com.

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