Despite Credit Conditions, Commercial Real Estate Executives are Likely to Build Green

By Erika Schnitzer, Associate EditorNew York—Seventy-five percent of commercial real estate executives say that the current credit crisis has not made them less likely to build green, according to Turner Construction Company’s 2008 Green Building Market Barometer.“What the [survey] told us was that even in spite of the uncertainty in the credit market, for those people planning to build, three-quarters are still planning to build green,” says Michael Deane, vice president and chief sustainability officer at Turner, whose green multifamily buildings include New York’s Solaire, a LEED (Leadership in Energy and Environmental Design) Gold project, the Verdesian, the first LEED Platinum residential high-rise in the U.S., and the Visionaire (pictured), also expected to receive LEED Platinum.The market survey asked 754 commercial real estate executives nationwide a series of questions concerning their motivations, advantages and challenges behind building green, as well as the importance of LEED certification to their businesses.The survey, which has been commissioned since 2004 in various market sectors, was comprised of executives representing a cross-section of the industry, including developers, rental building owners, architects, engineers, builders and brokers. Fifty-four percent of the respondents said they were involved with either multi-unit residential or hospitality.Key reasons for building green in the current market are lower energy and operating costs, say 84 percent and 68 percent of respondents, respectively. Those surveyed also cited improved health and well-being of occupants, increased building value, higher asking rents, overall return on investments and higher occupancy rates as reasons they already do, or would, build green. Despite the common argument that green buildings cost more than traditional developments, most of those surveyed see building green less expensive than non-green buildings.Despite the growing popularity of green buildings, however, the executives surveyed noted the costs of LEED documentation, higher construction costs, the length of the payback period and the difficultly of quantifying green building benefits as issues that often prove most discouraging.“Now that the real and perceived costs have come down and the value of green building [has increased], the real bottom line value of operating costs and improved health of the occupants has gone up. It’s a really good play in a declining market because for a little extra money, you get a huge return on investment,” says Deane, noting that the average payback period for many green features is five to seven years.While the majority of respondents—54 percent—noted the cost as a possible deterrent to LEED certification, it remains a growing trend in green building. In fact, 83 percent of respondents said they would be “extremely” or “very likely” to seek LEED certification if they are planning to build within the next three years. Of those who said they would be seeking LEED certification, 26 percent will seek the Certified level, 40 percent expect to pursue Silver, 25 percent expect to pursue Gold and 10 percent Platinum. “If you’re not LEED, you can’t be considered a Class A building,” Deane notes. Despite this, however, some industry executives still perceive the process of LEED certification as a barrier in and of itself.“If you can put money into something with a two- to three-year payback, it’s a no-brainer,” Deane says. “Smart, savvy developers will continue to see the value in it, even more so in this market. It was the smart developers who latched onto green in the first place because it is a good business move as well as a smart environmental move.”