Following the construction industry and related legal topics in the United States.

Friday, April 13, 2007

Why don't more people build green?

Several weeks ago one of our readers commented that some in the public and private sector remain skeptical about building green, and asked about their concerns. There are a variety of concerns about building green (more than I can address in a single blog entry), but here are a few of the more common ones:

1. Building green is expense. This includes everything from materials and education to regulatory compliance. While these problems do exist to varying degrees, evidence suggests that these capital costs should be offset by significant operating cost savings over the life of the building. Some in the green building community claim that with proper planning a green building can be built for the same price (or less) than a traditional building.

2. Green buildings take longer to build. This concern may have more to due with the permitting process than actual construction. At the ACI conference, several builders noted that the process of getting green technologies approved was time consuming because building inspection departments were unfamiliar with them. This is due in part to a lack of information about products and systems in the marketplace.

3. There is no financial incentive for developers to build green. The cost benefits of a green building (operating costs, productivity, health) accrue over time to the final owner and tenants of the building, not to the developer. Additional up front costs are born by the developer and cannot be easily passed on to the owner.

4. There is no market for a green building. This goes along with "the public doesn't care" argument. As I noted in my previous entry, builders in the southeast are not seeing a rent premium on green building because of a lack of education (among tenants) about the value of occupying a green space, but this should change in the future. In more progressive, urban areas, a market is starting to form, and owners (and tenants) are seeking green buildings.

5. There is an absence of research on the advantages of green building. This is a big concern. At the conference, an appraiser noted the absence of institutional market research for real estate lenders and investors to evaluate green buildings. There is also an absence of case studies on building performance, long-term studies on the environmental benefit of building green, studies of productivity and health benefits, and an examination of the capital and operating costs of green features.

6. There is confusion in the marketplace. Multiple standards do exist in the market and many are not comparable. This creates market confusion. I suspect this confusion will subside because it appears LEED is becoming the most popular standard.

For additional discussion on benefits and barriers to green building, see Evaluating the Diffusion of Green Building Practices, written by Benjamin Cryer, Jeffrey Felder Rebecca Matthews, Michael Pettigrew and Brian Okrent, MBA candidates at the UCLA Anderson School of Management; see also the Massachusetts Technology Collaborative website on Green Building.


Anonymous Mary Schanuel said...

Good information on trends in LEED 'green' design and development. I linked to your post from my blog Glad to discover your blog!

11:01 AM  

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