Not a penny more. The evidence that green buildings don’t have to cost a penny more than their conventional counterparts continues to pile up, as do the studies that validate significant ongoing operational cost savings for both new and existing green buildings. And these studies are extending beyond time and material into very real and financially important factors associated with building valuation, along with the health and productivity of building occupants, be they employees, students or shoppers.

First Costs

The most commonly cited deterrent for building owners and operators to go green is perceived higher first costs. A 2007 study by Davis Langdon, updating an earlier study, notes, “It is clear from the substantial weight of evidence in the marketplace that reasonable levels of sustainable design can be incorporated into most building types at little or no additional cost. In addition, sustainable materials and systems are becoming more affordable, sustainable design elements are becoming widely accepted in the mainstream of project design, and building owners and tenants are beginning to demand and value those features.”

In fact, key players in real estate and construction regularly misjudge the costs and benefits of “green” buildings, a new study by the World Business Council for Sustainable Development (WBCSD) reports.

Respondents to a 1,400-person global survey estimated the additional cost of building green at 17 percent greater than conventional construction, more than triple the true cost difference of about 1 to 2 percent. At the same time, survey respondents put greenhouse gas emissions by buildings at 19 percent of world total, while the actual number is double this at 40 percent

While experienced users of LEED are finding it possible to build at Silver and Gold LEED levels for the same cost as conventional buildings, most studies are finding that certification adds only 1 to 2 percent of the overall budget to the cost of construction. LEED registration and certification fees are negligible, averaging around $2,000, depending on the size of the project. Registration is essential for projects pursuing LEED certification, and provides access to a variety of resources including LEED Online, an online project management tool that teams use to prepare their documentation.

Costs associated with building commissioning, energy modeling and additional professional services typically turn out to be a risk mitigation strategy for owners. While these aspects might add on to the project budget, they will end up saving projects money in the long run, and are also best practices for building design and construction. For example, when Adobe Systems, Inc. earned LEED Platinum certification for its existing building in San Jose, Calif., one which they thought was already high-performing, they were surprised to learn that some of the building systems were not running efficiently. By going through certification they were able to uncover inefficiencies, subsequently saving thousands of dollars annually.

Ongoing Operations

Once the project is operational, buildings recoup the added costs within the first one to two years of the life cycle of the building. LEED-certified buildings use significantly less energy and water then a conventional building. They’re able to use 30 to 50 percent less energy and water usage runs 40 percent less than its non-certified counterpart, yielding large savings in operational costs. Research in a newly released study by the New Buildings Institute (NBI) indicates that new buildings certified under the U.S. Green Building Council’s (USGBC) LEED certification system are, on average, performing 25 to 30 percent better than non LEED-certified buildings in terms of energy use. Gold and Platinum LEED buildings have average energy savings approaching 50 percent. With energy costs showing no signs of abating, this number is expected to go higher.

In fact, the American Council for an Energy Efficient Economy (ACEEE) notes that energy efficiency may be the farthest-reaching, least-polluting, and fastest-growing energy success story of the last 50 years. Investments in energy efficiency technologies are estimated to have generated approximately 1.7 quads of energy savings in 2004 alone — roughly the equivalent of the energy required to operate 40 mid-sized coal-fired or nuclear power plants.

And much of that has been generated in buildings.

Other Metrics

But beyond the obvious implications of reduced energy use and reduced carbon emissions, the results from both studies strengthen the “business case” for green buildings as financially sound investments. According to the CoStar study, LEED buildings command rent premiums of $11.24 per square foot versus their non-LEED peers and have 3.8 percent greater occupancy. Rental rates in ENERGY STAR buildings represent a $2.38 per square foot premium versus comparable non-ENERGY STAR buildings and have 3.6 percent greater occupancy. And, in a trend that could signal greater attention from institutional investors, ENERGY STAR buildings are selling for an average of $61 per square foot more than their peers, and LEED buildings command a remarkable $171 more per square foot. The group analyzed more than 1,300 LEED and ENERGY STAR buildings representing about 351 million square feet in CoStar’s commercial property database of roughly 44 billion square feet, and assessed those buildings against non-green properties with similar size, location, class, tenancy and year-built characteristics to generate the results.

How’s that for the bottom line?

The Other Side of the Equation

One of the most costly aspects of a building is the people inside. A 2000 study conducted by the Harvard School of Public Health and the Polaroid Corporation found that employee absences cost companies billions of dollars annually. In a study by William Fisk, green buildings were found to add $20 to $160 billion in increased worker productivity every year[1]. LEED-certified buildings yield significant productivity and health benefits, such as heightened employee productivity and satisfaction, fewer sick days, and less turnover according to many facility managers overseeing LEED-certified buildings. Case studies further demonstrate that employees who work inside the building are also more productive and report greater satisfaction with their workplaces — specifically identifying sunlight, views of nature, and the heightened thermal and acoustic comfort.

Other Strategies

The most effective way to reduce any higher cost is to get an experienced project team in place and practice the principles of integrated design. Integrated design engages users and operators during the design process so that projects are able to integrate better design and understanding of the buildings features and functions.

Then to stay on track, according to Davis Langdon:

• Begin documentation early and maintain it as you go;
• Update and monitor the LEED checklist regularly so you have a clear picture of your progress;
• Use energy and cost modeling tools to drive decisions at the design phase, not to validate decisions at the construction phase.