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found that new green buildings were 7% more valuable than their non-green counterparts, with a 15% decrease in operating costs over five years. A Notre Dame study of PNC Bank retail branches also showed that those using LEED for green building certification spent $675 less in annual utilities cost per employee than the bank’s non-green buildings.
And increased asset value leads to…
4. Energy Efficient Buildings Driving Higher Revenue
As millennials continue to account for more and more potential tenants, it’s more important for businesses to align with their environmentally friendly ideals and values. This means capitalizing on a high-potential market for green real estate.
Los Angeles is a prime example of such a market. According to CoStar data regarding green buildings in the Los Angeles region, the average asking price for “non-green” CRE in the city is somewhere around $2.16 per square foot. But this number increases greatly when factoring in
LEED and ENERGY STAR certification. ENERGY STAR-certified buildings command $2.69 per square foot, while LEED certification brings in a whopping $2.91 per square foot. What’s more, the increased rent is not affecting vacancy rates, proving that tenants are not turned off by the higher costs of green buildings.
Finally, with satisfied tenants, increased revenue and asset value, regulatory compliance, and an energy management program in place, a CRE organization will learn that…
5. Energy Efficiency is Becoming a Competitive Differentiator
The 2015 US Green
Building Council (USGBC) study from Booz Allen Hamilton showed that the green building sector is vastly outpacing conventional construction growth in the US, and by 2018, green construction will encompass more than a third of the entire US construction market. Respondents to a 2016 Dodge Data Analytics survey of global construction professionals replied that 60 percent of their projects would be green construction.
The message is clear—CRE businesses that develop a comprehensive energy strategy to embrace this shift in the industry will set themselves apart from those that fail to adapt.
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