Green Building is Bright Spot in Otherwise Tough Economy: Multifamily Projected to Spend $41B in Green Dollars in 2009
- Nov 20, 2008
By Anuradha Kher, Online News EditorNew York–The U.S. green building market is accelerating at a dramatic rate, McGraw-Hill Construction’s Green Outlook 2009: Trends Driving Change report says. The value of green building construction starts was up five-fold from 2005 to 2008 (from $10 billion to $36-$49 billion), and could triple by 2013, reaching $96-$140 billion, according to the report. While the report does not break down values for each property type, McGraw Hill predicts that $44 billion will be spent on green multifamily housing by the end of this year. For 2009, the company forecasts this number will be $41 billion.“The six percent drop is due to a reduction in the overall multifamily starts and the overall residential downturn,” Harvey M. Bernstein, F.ASCE, LEED AP, vice president of industry analytics, alliances and strategic initiatives at McGraw-Hill Construction, tells MHN. In 2006, the apartment industry spent $62.9 billion on green construction, a number that drastically fell the following year due to a downturn in the residential sector. This figure however, indicates that multifamily developers are increasingly going green.Other metrics also show that the apartment industry does well when it comes to green building. For example, LEED (Leadership in Energy and Environmental Design) is specified on 11 percent of projects (below average), but those projects account for 36 percent of the sector by value, which is higher than average, the report says. Also, owners of apartments are drawn to Energy Star products in order to use them as a selling point to an energy-conscious consumer. McGraw-Hill Construction attributes green building’s rapid expansion to growing public awareness, an increase in government regulations, and recognition of bottom-line advantages. Since 2005, the perceived benefits of green building have increased as people become more knowledgeable about green building. The decrease in operating costs is the most often cited benefit (13.6 percent, up from 8-9 percent in 2005), followed by the increase in building values (10.9 percent, up from 7.5% in 2005). “Buying a green home has always been about energy efficiency, but now with all the attention climate change is getting, people want to do the right thing for the planet as well as their health. The millennial generation is driving this trend in a big way,” says Bernstein. Ninety-six percent of all companies surveyed in the report say that 16 percent of all their projects will be green by 2013.Green building is the bright spot in an otherwise tough economy, the report says. U.S. Green Building Council members report green building to be less affected by the down market compared to non-green building, and homebuyers are willing to pay more for a green home. Perceived economic benefits are driving green building, including higher revenues, lower lifecycle costs, and lower operating costs, but builders and buyers are also motivated by health benefits, new government regulation, and pressure from global competition.“Green building creates green jobs that save energy and money,” says Rick Fedrizzi, president, CEO and founding chairman of the U.S. Green Building Council (USGBC). “Our community can help solve climate change and the economic crisis while building a new energy economy by putting the greening of existing buildings at the top of our agenda.”Moreover, green growth is phenomenal across the globe, with Europe leading the way, according to McGraw Hill’s other recent study “Global Green Building Trends.” Western Europe alone contributed to $1.4 trillion of the $4.7 trillion spent on green construction worldwide in 2007.