Valuing Green--CBRE Makes The Financial Case For Building Green

Posted on September 22, 2009 by Shari Shapiro

CB Richard Ellis, the worldwide behemoth of real estate services, issued a report which addresses "the economics of sustainable buildings." Their conclusion? Basic level of certification adds between 2-3% to the cost, higher levels of accredidation add 5-7% of construction costs.  This is fairly in line with other cost estimates which have been issued.  However, there were some other interesting conclusions from the report:

  • Although developers will reap some rewards in terms of higher rents and enjoy higher rates of rental growth,the rates of rent additionality is about the same as the excess development costs (2-6%), so the additional rental value is essentially a wash.
  • Improvements in energy savings can be between 10-50%, a major number. 
  • Residential customers will pay some premium for green, but not necessarily the actual cost of the green improvements
  • Extra value will need to accrue from the investment markets for the lower risks and higher valuations of green buildings.

How should this study effect decisions making at the policy and business level?

  • The potential market benefits from greening buildings have not solidified--this means that incentives can still be powerful tools to motivate green projects.  The incentive may be the tipping point.
  • Energy savings, and measurement of the realization of energy savings, is an important factor in "pencilling out" green improvements.  From a policy perspective, this puts even more value on reporting and disclosure of building performance measures.
  • Policy measures need to be different for commercial and residential sectors to motivate green.  There may need to be different levels of incentives applied to motivate different segments.
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My New Pet Project--Web 2.0 For Green Building

Posted on April 2, 2009 by Shari Shapiro

I love social media.  I update my Facebook status regularly (Shari is working on a blog post) and I tweet often (I'm @sharishapiro for anyone who wants to read my tweets). 

But recently I have noticed the use of Web 2.0 for effective policy making tools.  For example, the San Francisco Chronicle reported that Google is using its Google Earth tool in conjunction with information from the Natural Resources Defense Council and other environmental groups to map where renewable energy projects should be sited to avoid environmental externalities, like invading endangered species habitats.   Everyone I know uses the DSIRE database for energy efficiency and renewable energy resources.  The Department of Energy has a number of interactive tools on energy efficiency and energy codes.  The NRDC recently created a neat tool which uses 3-D modelling to reenvision dead spaces as vibrant, multi-use places. 

We need a great set of Web 2.0 enabled tools to bring together the activities which are happening in the green building space, and to promote collaboration among the the great green practitioners nation and even worldwide.  My vision is to establish a web portal with green building regulations, green building case studies, best practices, wikis, and many other features.  I have a new mission, to create this policy resources powered by Web 2.0 and bring together the many people doing great work in this area. 

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