Commercial buildings going green
Since the discussion about appraisal last week turned into a discussion of the value of “green,” here are a few tidbits about green commercial buildings to chew on:
The Fireman’s Fund made a statement this week saying that for commercial buildings, being not green will be a liability in the future. They offer a 5 percent reduction in insurance for green buildings.
Green buildings can boost real estate owners’ bottom line by protecting and building net operating income, attracting and retaining quality tenants and improving the environment. Simply put, green buildings create a triple net effect, benefitting [sic] the owners’ bottom line, its tenants and the environment,” said David Cohen, senior director of real estate, Commercial Insurance at Fireman’s Fund.
The Fireman’s Fund states these risks for non-green buildings:
- Risk of obsolescence. Green buildings are the future and are not a passing trend.
- Reputational and transactional risk. If a building isn’t known as green it will experience lower occupancy rates and rents.
- Regulatory risk. Green may be required in the future, locally or federally.
- Pollution. Existing buildings are one of the biggest contributors to environmental pollution in the U.S., accounting for 40 percent of total energy use, 72 percent electricity consumption, 39 percent of the carbon dioxide emissions, and 13 percent of total water consumption, according to the EPA.
According to the McGraw Hill construction, green commercial buildings enjoy a 7.5 percent increase in value over conventional buildings, 6.6 percent increase in ROI, and reduced operating expense.
The Fireman’s Fund statement purports that green buildings will get the best tenants and keep them, due lower operating costs and to a healthier environment, which leads to less absenteeism. I wonder if worker health has been studied. Do you think that you’d prefer to work in a green building? Would you be out sick less? Have you ever worked in a building that made you sick?
Do you think that commercial property will go green? How quickly?
While I’m on a kick of sharing videos that amuse me, there’s an award-winning film about the first green building in Boston called The Greening of Southie. Take a look at the trailer. The film shows the reaction of builders as they make the changes needed to build a green building (as opposed to a “normal” building.)
Today, I remember the World Trade Center in New York City, a very not-green building.
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We made a decision to put down a layer of thick insulation when we put a roof on a small commercial property. I think the tenant will be happy and stay longer. Also, the AC and heating units are ours, so why not reduce running time?
Energy is temporarily inexpensive. Wait 5 years and see how much insulation is being put down.
It seems to me that the biggest challenge in green building is getting institutions and companies to think long term. It is often harder to justify the long term health and productivity benefits that may be seen by going green, because they cost so much up front. As we increase in awareness about the connections between our buildings, our environment, our own health and wellness and the profit we gain from those things, hopefully some sense of the worth of these things will become more appreciated and fully accounted for, even on paper.
This blogger might want to review your comment before posting it.