Business Case for Green Commercial Buildings

by Harry Richardson on May 6, 2011

I often wonder why there aren’t more green buildings in the California Bay Area. I guess that the case for creating them has not been articulated to owners. Here are some benefits for both building owners and for tenants to strive for better green buildings.

Benefits for Owners:

Financially More Attractive. Green buildings are more attractive than non-LEED buildings to buyers because they have lower operating costs and better indoor environmental quality. The result of earning LEED credits is a reduction in such costs and improvement in the building’s interior space.

Prevent Civil Lawsuits. LEED Certification of indoor air quality measures can reduce the probability of future lawsuits. This is a risk management issue that states a record of good indoor air quality will defend against claims of employees for building illnesses.

Higher Lease Rates. Lease-up rates are higher for green buildings. The supply of green buildings is less than the demand for them, so the vacancy rates are low.

Lower Long Term Expenses. Slightly higher green design costs will result in great life cycle savings and higher sale prices. If the design initially considers green elements, the design costs shouldn’t be much higher than designing without green items. Again, these elements must be considered from the beginning of the design process.

Higher Sale Prices. Occupancy, sale price, and rental square foot rates are higher in green buildings than in non-LEED buildings. The supply and demand curves show this to be true.

Benefits for Tenants:

Better Employee Productivity. Healthier indoor environment in green buildings leads to happier and more productive tenants. Natural lighting, bright work areas, fresh air, good ventilation, and thermal comfort are all benefits of green buildings.

Positive Public Relations. It is great community public relations to be a green tenant. Green buildings and the tenants who lease there are considered great neighbors.

Lower Operating Costs. Green buildings cost less to operate and maintain, including tax benefits and incentives. These issues should make the tenant CEO very happy.

Lower Energy & Resources Usage. New and renovated green buildings show immediate and measurable reduction in use of energy, water, and other resources. The tenant’s altruistic motives can be realized by knowing that he is conserving resources.

Reduces Carbon Footprint. Green building reduce a company’s carbon footprint (greenhouse gas emissions). Everybody benefits from such a reduction.

Still photographs and virtual tours of buildings’ exterior and interior can help showcase these and other owner and tenant benefits.

Do you have any other benefits that will entice owners to make their buildings more green?

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