Another Study Dispels Myths About Green Building Cost Premiums

In December 2008 I wrote about a study that had been released which basically dispelled the myth that building green costs significantly more than building using standard building practices and materials.

Well, another article was just published in the Nashville Business Journal which not only backs up that earlier study, but takes it even further. In this newest study, sponsored by the US Green Building Council along with other real estate and architectural groups, concluded that building green costs an average of 2.5 percent more up front (which is a very similar conclusion to the December study from Good Energies which found the cost premium to be just 2 percent.) The new study also concluded, however, that the financial savings over the life of the building would easily exceed any initial higher costs by ten times or more.

Further, the latest USGBC study shows that even where a green building cost premium does exist, builders and developers can more than recover those initial costs in a variety of ways, including through:

• Significantly reduced operating expenses, particularly for energy (as much as 30% less)
• Insurance discounts due to lower risk of indoor air quality problems, reduced energy use costs, smoother operations and greater tenant satisfaction
• Higher building value, occupancy and rents - up to 3.8% higher occupancy and up to a 30% (!!) premium in dollars per square foot.
• Easier access to investment capital - not that this is so important in these booming economic times of free-flowing credit, but easier financing might appeal to some.
  
• Water conservation - Lower costs from both water consumption as well as downstream water treatment perspectives.
  
• Better employee health and productivity - from the perspective of the tenant, healthier, happier and more productive employees translate to less absentee-related costs, higher profits and less employee turnover.

The articles concludes thusly "In cases where ownership of the building is retained post-construction, it is shown that green buildings ultimately are not more expensive, but are actually less expensive in operational costs and overall worth." Amen, sister.

Given the conclusions of these studies, it's truly amazing that anybody would move forward on any construction project, whether commercial or residential, that is not built green. Read the whole article by clicking here.