The Business Case for Green Building

The U.S. Green Building Council has launched a new Web page featuring statistics, quotes, and testimonials from LEED users that demonstrate the business case for green building. The page outlines business benefits for commercial-building owners and tenants.

The page lists five reasons commercial-building owners should consider green building:

  • Competitive differentiator. Green buildings with lower operating costs and better indoor-environmental quality are more attractive to a growing group of corporate, public, and individual buyers. Green features increasingly enter into tenants' decisions about leasing space and into buyers' decisions about purchasing properties and homes.
  • Mitigate risk. Green-building certification can provide some measure of protection against future lawsuits through third-party verification of measures installed to protect indoor-air quality beyond simply meeting code-required minimums. Faster permitting or special-permit assistance also can be considered a type of risk mitigation. Another risk management benefit of green buildings in the private sector is the faster sales and leasing of such buildings, compared with similar projects in the same town. Green buildings can be easier to rent and sell because tenants increasingly understand their benefits.
  • Attract tenants. Tenants understand and are looking for the benefits that green-building spaces have to offer. The new Class A office space is green, and lease-up rates for green buildings typically range from average to 20 percent above average.
  • Cost effective. The cost per square foot for buildings seeking LEED certification falls into the existing range of costs for buildings not seeking LEED certification. An upfront investment of 2 percent in green-building design, on average, results in life-cycle savings of 20 percent of the total construction costs—more than 10 times the initial investment. Additionally, building sale prices for energy-efficient buildings are as much as 10-percent higher per square foot than conventional buildings.
  • Increase rental rates. A 2008 CoStar Group study found that green buildings outperform their non-green peer assets in key areas, such as occupancy, sale price, and rental rates, sometimes by wide margins. According to the study, LEED buildings command rent premiums of $11.33 per square foot over their non-LEED peers and have 4.1 percent higher occupancy. Rental rates in Energy Star buildings represent a $2.40 per square foot premium over comparable non-Energy Star buildings and have 3.6 percent higher occupancy.
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