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GREEN VALUE

Green buildings, growing assets

REPORT

A major collaboration into the study of building value by building green


CONTENTS PAGE
FOREWORD 1

INTRODUCTION 2

EXECUTIVE SUMMARY 3

CONCLUSION 6

RECOMMENDATIONS 6

BARRIERS 6

RECOMMENDATIONS

General 8

Financial 9

Social and environmental 10

Building industry 11

WHAT IS A GREEN BUILDING? 12

REVIEW OF LITERATURE 15

THEORETICAL LINKAGES TO VALUE 15

THE ROLE OF VALUATION 17

CASE STUDIES AND INTERVIEWS 25

GLOSSARY 50

BIBLIOGRAPHY 52

LEED is a Registered Trademark of US Green Buildings Council.


Other trademarks are the property of their respective owners. Edited by Dr. Ross Davies
FORWORD

Buildings have a profound impact on the It’s my hope that this report spurs
quality of our lives and the world around discussion on what our future sustainable
us. They can enrich our communities, communities should look like, and how
health and well being, as well as support we can get there.
and enable business. They are a visible
Hon. Barry Penner
stamp of our culture on the environment.
Minister of Environment
Environmental sustainability matters to Province of British Columbia, Canada
British Columbia. As an example, in 2010,
we are hosting the world's first sustainable
Winter Olympics and we plan to encourage
sustainable green building practices, all
based on strong business principles.

Green Value is part of the journey towards


sustainability. It looks at the financial value
of green buildings and how they contribute
to a sustainable community, balancing
economics with the environment.

1
INTRODUCTION

Worldwide, it was the public sector that I want to thank RICS’ partners in agreeing
largely led the move towards green buildings. to the need for, sponsoring and supporting
But as sustainable practices gradually move this study. Stakeholders and input covered
to the general marketplace, they increasingly the government and private sectors in
have to meet the challenge of viability. three countries and two continents. It
The green movement must thus address would also have been impossible without
the targets of the real estate and financial the those with completed green buildings
sectors who buy, sell, finance, audit and who answered our research team’s
create saleable real estate value. persistent questions. I especially thank
the team, and the Boards that backed
This means that green buildings must
this. More work will sensibly follow.
satisfy independent scrutiny, or the
business sector may not accept them. Green Value shows that sustainability is
Green Value was thus crafted to assess not simply an ethic, it’s good business.
whether sustainable practices make
Chris Corps BSc MRICS
money or not.
Victoria, Canada
In total it has taken two years for this
study, from concept to completion. It
concludes that while evidence is as yet
thin, sufficient exists to say that green
buildings do indeed make money.

Change is not easy. But to all the


developers, investors, owners, lenders,
appraisers, valuers, agents and especially,
occupiers, the conclusion is that you
ignore green buildings at your cost. Green
buildings can provide financial benefit.

2
EXECUTIVE SUMMARY

A link is beginning to emerge between Green is good for asset value. • Improve business productivity for Nonetheless, the number of green
the market value of a building and its This, contrary to a view frequently held occupants, affecting churn, renewals, buildings is increasing exponentially,
green features and related performance. by many builders, developers, lenders and inducements and fitting out costs which is good for the environment, and
This is the picture presented by new some valuers/appraisers, is the picture amongst others good for the encouragement of further
research in Canada, the United States and that emerges from new research. • Resulting from business productivity green building by adding to the industry’s
the United Kingdom based on case-study benefits, benefit occupants more than knowledge-pool and helping to bring down
These conclusions came through
interviews, supported by a review of best the underlying asset cost or value. any incremental cost.
interviews with developers, owners and
practice and existing publications. Our
occupiers at green office, industrial, retail, Because comparatively few green buildings In Canada, the number of members of
findings are contrary to a widely held view
residential and educational buildings across have been completed, however, the extent the Canada Green Buildings Council
that green buildings provide a questionable
Canada, the United Kingdom and the of value benefit is still hard to quantify. (CaGBC) has gone from zero in January
advantage to builders, developers, investors
United States. The findings are also borne So, too, is the effect on market value of 2003 to 800 in April 2005. Projects
and landlords. Yet a link between market
out by an extensive review of academic green building rating systems, as well as registered for CaGBC’s Leadership in
value and green practices is now evident,
and industry literature. the degree to which the benefits of green Energy and Environmental Design (LEED®)
the nature of which will become clearer
buildings go to the occupier rather than green building rating system double or
as the industry works to quantify the That green buildings are healthier places in
the owner or developer. triple each year.
financial and non-financial benefits of which to live and work is widely accepted.
green buildings. So, too, are the environmental benefits, Several studies show that the extra cost In 2000 there were none, but by 2004, 74.
because green buildings consume fewer of building green is fairly small. These go
Member organizations registered with
non-renewable resources, produce less a long way to allay concern that green
the United States Green Building Council
waste and air emissions, and cause less means higher cost, but generally do not
(USGBC) rose from 264 in 1999 to 5,516
TOWARDS TRUER VALUE: disturbance to site ecology. show whether the increased cost is offset
in 2005. The number of buildings
by improvements in value. This will no
THE MARKET VALUE OF A With this new research, however, green
doubt stimulate a further and more
registering for USGBC LEED® certification
buildings are also shown to improve asset rose from 624 in 2002 to 2,080 in 2005,
REAL ESTATE ASSET, ITS value. Green buildings can:
holistic review of the overall business
while the number achieving certification in
case for green buildings.
GREEN FEATURES AND • Be quicker to secure tenants
that time has gone up six fold, from 38 to
While there is evidence to show that 237. Total construction in progress exceeds
RELATED PERFORMANCE • Command higher rents or prices value exists, the business case can be these numbers considerably: the impetus
• Enjoy lower tenant turnover improved. Many green developments is undeniable.
• Cost less to operate and maintain have been completed too recently to
in most cases provide conclusive evidence, or to have
had detailed post-occupancy analysis.
• Attract grants, subsidies and other
A lack of comparative data is compounded
inducements to do with stewardship
by the secrecy surrounding financial data.
of the environment, increasing energy
efficiency and lessening greenhouse
gas emissions

3
Dramatic though these figures may be, The spread of green buildings, already Some governments now require that new As a result, the financial side remains
this report shows that they serve only as exponential, would be even greater were buildings constructed for them must be sceptical and largely unengaged. However,
an indicator of an even greater growth more builders and developers to offer green, and that suppliers adhere to green some on the financial side are beginning
in the number of green buildings. Some and to promote green alternatives to principles. In many cases, however, outdated to recognize the superior performance of
developers and owners do not seek conventional homes, offices and other local and national building codes are a big green buildings within their product
certification with official green rating places of work. In England, this study found obstacle to sustainable development. offerings including: Examples include
schemes, and many developments were evidence that some buyers will pay a Fannie Mae and Freddie Mac in the US,
At the heart of the debate over the linkage
built before the ratings scheme was premium for a green residence. Adoption VanCity in Canada, and Norwich and
between green buildings and asset value
established. Others ‘shadow’ LEED® of green buildings in the residential sector, Peterborough Building Society in the UK.
itself are the different notions of what
by using it as an aid to design and however, appears slower than in the
constitutes ‘value’. There is a substantial Until the green and the financial industries
development, thereby avoiding the commercial sector. That both real estate
but, we suggest, surmountable hurdle to be work together and start seeing each
certification cost, perhaps not recognizing brokers and developers are missing a
overcome. This is the gap in understanding other’s point of view, the benefits of green
the value certification offers. considerable commercial opportunity
and knowledge that exists between the buildings, financial and non-financial, will
now seems clear. Equally clear is that the
The cost of green buildings is one of the green industry and the financial industry, be neither fully understood nor quantified.
home-buying public is not always informed
challenges to the wider adoption of green in particular the valuers/appraisers who
about the benefits of green buildings. Each industry needs to meet the other
rating systems that has to be surmounted. advise companies, pension funds, banks,
halfway. The green industry needs a better
Certain rating systems are more efficient The extent of that commercial opportunity insurers and others on the investment side
grasp of the financial methodology used
than others, but despite recent papers is much greater than the demand for new of real estate.
by valuers/appraisers to analyse property
assessing the low incremental costs of green buildings suggests. There is even
Both the green and the financial industries, investments. Accounting and valuation
LEED®, discussion continues as to whether more potential in the renovation and
have their own definitions of value, and bodies need to catch up on green building
some rating systems are burdened less by retrofit of existing, conventional buildings
neither may be entirely appropriate in benefits as well as costs. Green and
physical cost than by process. Yet while to benefit from green design, building and
quantifying the impact on asset value. financial interests need to reach a
cost remains a matter of debate, the more operational systems. This market is
Many on the green side refer to the value common understanding in the pursuit
the enhanced value exceeds the increased thought to be as much as eight times
of green buildings but are actually referring of consistent valuation measures that
cost, the higher the incentive to go green. greater than the size of the new
to cost savings. These are not necessarily will require a wider base of financial and
That is the focus of Green Value. construction market.
the same as value, nor can savings be other comparative information than is
Many barriers hinder the further spread certain to add directly to building value as currently available.
of green building, and of the 12 North some have claimed.
American projects investigated for this
report, five did not seek designation.
Yet all five have won several green
awards, generating publicity that brought
commercial benefits. This suggests further
scope for simplified green rating systems.

4
There are already a number of alternative Cost approaches can skew how sustainable The distinction between good design and As businesses become aware of the
approaches to valuation, among them the practices are treated. Such approaches green buildings is blurred, but it can be said productivity benefits of green buildings,
Triple Bottom Line, Full-Cost Accounting account for the often-higher capital that if good design is helpful to business, demand for them will rise. This may be the
and Multiple Accounts Evaluation. All seek investment of green buildings, but in effect green buildings are often found to be at most valuable aspect that will drive green
to model value more holistically by ignore the resulting benefits to occupiers the leading edge of excellence in benefits buildings to success, yet it may only be
integrating environmental, societal, and and on market value. This can slant to occupiers. The literature review found found in reduced demand for non-green
community as well as strictly ‘financial’ accounts against green buildings, deter impartially-evaluated evidence of savings buildings: as they fail to compete for
concepts, and all have yet to achieve green investment, and prove unhelpful to from good design, in one instance tenants, vacancy will increase and
universal acceptance. Each, however, points companies for whom sustainability is documenting a 21% improvement in the inducements to keep tenants will rise.
towards a possible path valuation can take central to their corporate ethic. operating efficiency of health-care delivery: The asset value impact of green buildings
in quantifying the effect on the market far more than the average 10% or less may thus be experienced first by those
Perhaps the largest single area of value
value of real-estate and its green features spent by business on all real estate buildings that are not green rather than
from green buildings lies in the ‘soft’ gains
and related performance. The valuation expenditures. those that are.
that can be difficult to value with
industry would do well to embrace the
conventional accounting methods. A What business can ignore the potential The green building industry has been led
developing green momentum, and start
company may win kudos from a green for improving its efficiency by 21%? Where by architects, engineers and others, with
adapting valuation standards to better
building that translates into sales or image is the executive who would not move in a the result, it can be argued, that much of
evaluate green building value. The same
gains. Better lighting and air quality may heartbeat if he or she could out-compete the financial/valuation industry has yet to
can be said of the accounting professions.
make for healthier employees, fewer by 21%? Which economy or government catch up. That is why the argument that
Valuers and appraisers are client-led, and absences, better retail sales and greater would ignore the possibility of a 21% there is no relation between the market
will be open to broader interpretations of productivity. Such a building may provide reduction in health-care costs or similar value of a real estate asset and its green
the impact on the value of green building a company with a competitive or cost reduction in waiting lists. features and related performance is so
features as more clients understand and advantage, help it meet its corporate often heard.
If there is one major area in which green
demand green developments. responsibility targets and improve its
buildings can add value, it is in this benefit That there is such a link, this report makes
standing with investors and customers.
Whatever country they may work in, to business: if this can be realised, the clear. The nature and extent of that link
valuers/appraisers are often asked to value It is not that the financial and real benefit could even exceed the value of the will become clearer as the green building
in accordance with accounting standards, estate businesses are hostile or resistant to real estate. industry matures, as mature it must.
yet some green building benefits are green building, although some may know Demand for green building is too high and
This study has found examples of where
difficult to fit within standard accounting little about it, and many remain to be the business opportunity too great for it to
such operating efficiencies do indeed
methods. One example of such a benefit is convinced. Accounting standards are not be otherwise.
draw demand and add value not just
that a green building may last longer than necessarily set in stone and can be varied.
to businesses and the economy, but to
a conventional one. This may lead to lower
investment and development.
operating costs, reduced replacement,
better lifespan, higher capital value and so The benefit to business is thus the largest
on. But these are examples of benefits that single value of going green. It is a benefit
may be difficult to express (and may even that perhaps goes beyond the core aim of
be totally ignored) where accounting this study, which is to assess the impact of
methods use only depreciation of the green practices and related features and
original cost. performance on asset value. A 21% benefit to
a business becomes more than a saving that
affects property and one that is of wider,
more direct and substantial benefit.
5
CONCLUSION BARRIERS TO A BETTER UNDERSTANDING
OF GREEN BUILDINGS
This study sets out to test the sceptical • The assumption that it costs more
‘null hypothesis’, that ‘There is no to build green
relationship between the market value • Lack of awareness of the market
of a real estate asset and its green
• Knowledge, research and resources
features and related performance’.
• Green strategies are not widely
The evidence gathered through literature understood
review and case studies, leads us to
• Steep learning curve for developers
conclude that the sustainable features
and consultants
of green buildings can add value to
real estate. • Construction companies lack experience
• Shortage of engineers with experience
of operating green building systems
• Lack of incentives for owner-investors
as opposed to owner-occupants
• Insufficient correlation between lower
energy costs and benefit to the landlord
• Leases don’t take account of green issues
• Outdated planning and building codes.

6
METHODOLOGY

This study sought to test a widespread


perception that there is no relationship
between the market value of a real estate
asset and its green features and related
performance, and comes at a time when
changes to accounting standards will affect
both valuation and the market value of
real estate assets1.

The research team began by reviewing


existing research on the links between
green features/ performance and asset
value, and then moved on to examine a
number of green buildings to assess the
impact of their green features/performance
on market value. Direct measures
considered included rental rates,
investment yields, and net operating
income. So, too, were indirect measures
such as leasing/absorption rates, tenant
inducements, tenant turnover rates,
and tenant workplace productivity
and marketing.

Following the pattern of questions put


to developers, owners, users and tenants
in interviews, the report’s conclusions
and recommendations are divided into
the following categories: general, financial,
social/environmental, and those aimed
at the building industry.

1
Valuation for Financial Reporting, now largely implemented
in Europe and pending in North America
7
RECOMMENDATIONS: GENERAL

1. Strengthen the link Incentives for developers, owners and 6. Communicate to the beneficiary • Contributors to this study appear to
Buildings with green (or ‘sustainable’) occupiers to prepare detailed post- Beneficiaries commonly do not suggest that customers have a lot of
features, whether residential or occupancy performance analysis are understand that green buildings add ‘guilt money’ that they would spend
commercial, do bring developers faster needed if the green building industry value to building occupiers. Much on better, green choices if the choices
absorption (the rate at which vacant is to bring home to the financial sector communication is instead directed were offered.
space is leased or sold), higher rent/yield the benefits of green buildings. This data internally towards the green industry. • Contributors indicate that ignorance
and lower tenant turnover. could be captured as part of the of green value distorts market pricing,
If the industry can convince occupiers of
certification of green building rating especially among developers and real
Green building being in its relative infancy, the benefits of green buildings, it will
systems. Governments should consider estate brokers/agents. Customers can
the industry should collect information to make green buildings more desirable and
incentivising projects so good audit is buy only what is on offer. In the
enable better evaluation of how buildings so boost market demand. Developers,
undertaken. absence of knowledge and choice,
operate and perform and the impact on owners, investors and lenders will have
value. Building rating systems should 4. Valuers should become more involved to respond to this increased demand if people will continue to make do with
consider the integration of financial If green buildings are to be valued more they are to retain investment value. conventional buildings, a choice based
reporting. Valuation and accounting effectively and their benefits distinguished Valuers, appraisers and real estate upon the current and inaccurate
standards need to be reviewed so that from non-green buildings, valuers must brokers/agents are important to securing system of pricing.
they encompass green buildings. learn to differentiate between green and this success, and the green building Just because the market does not offer
more traditional buildings. sector would do well to communicate green options or if offered, they are not
2. Speak the language
through these professionals to the taken up does not means that green
Better communication and information As the green building industry matures, so
public. Communicate the benefits of options are not in demand. Where
distribution between the green building progressive valuers/appraisers will develop
green building in terms the consumer possible, stress the financial benefits
industry and the financial sector will a more rigorous analysis of the value
can understand. as well as the health and other benefits
benefit both. impact of green building features. Valuers
and appraisers’ present reliance upon 7. Make the case, make the money to occupiers.
Green builders need to learn more about
capital and operating costs is no longer Some developers and their advisors, 8. Improve the process
valuation, underwriting and other tools
enough. Valuers/appraisers must better including green building professionals, Interviews suggested there would be
the financial sector uses to analyse
understand and distinguish green features, understand the benefits of green wider use of rating systems if the process
property investments. The financial
adjusting comparables accordingly. building but do not communicate them and resultant impacts on development
and accounting sectors need a better
clearly to the occupant. Others think continue to be improved. Greater
understanding of green buildings. 5. Learn more about existing buildings
there is little market interest in green understanding of the value and financial
Both green and financial sectors need Promising though the new-build green
buildings when what has happened is impacts of the certification process are
more and better information about market is for investors, developers and
that green options have often been areas where benefits can be obtained,
each other in their own ‘language’. tenants, there is huge scope for adopting
badly ‘sold’. The way to ensure value
and applying green building practices to Green certification processes will benefit
3. Bank knowledge to everyone’s benefit is secured is not only to communicate
existing buildings, a sector whose size is from the ongoing improvements and
The level of interest in their projects effectively with occupants; it is also
considerably greater than that of new evolution that are continuing. Evidence
overwhelms developers, builders and essential to align communications to
construction. suggests that rating systems will benefit
occupants of green buildings. Yet few the occupants’ benefit:
tenants or landlords budget for the time The potential for applying green building and be best accepted where they
• Developers develop what they think the minimize cost and time impact.
and staff needed to collect the post- practices to existing buildings, like the
market wants, and don’t offer green
occupancy data to satisfy this interest. impact on asset values, will repay further
buildings because customers don’t know
Rating systems already are felt to detailed research.
enough about them. This includes
burden green development; adding
customers who could and would pay
further occupancy evaluation while
for green if offered the chance.
8 desirable, is thus a significant challenge.
RECOMMENDATIONS: FINANCIAL

9. Share green secrets 11. Accountancy could go greener 12. Find out who gets what 13. Convince the sceptics
The quality of financial data collected By concentrating on cost, traditional It may not be popular to say so, but Throughout the English-speaking world,
for case studies of green building accounting practices may not always some commentators do not seem to valuers/appraisers have only just begun
projects was limited by the reluctance capture many benefits of green understand how costs and benefits are to understand green buildings and how
of building owners or developers to building. Accounting standards and split between the developer, owner, to value them appropriately. The
share financial information because financial regulations could be better user and tenant. Many financial and valuation industry was not the leader
they perceive a need for confidentiality. linked to market value concepts. other benefits of a green building, for in establishing the green building
None of the green building-certifiers Governments were the first to turn example, flow to the tenant or occupier movement. Only now are they and
(the Canada Green Building Council, to green buildings, and the application rather than the developer or owner and other financial professionals beginning
the US Green Building Council, or the of cost-valuation methods by may not add asset value, so limiting the to understand the opportunity that
British Research Environmental governments remains an impediment growth of green building. In the USA green buildings present.
Assessment Method Consultancy, to properly accounting for the value especially, many leases are gross,
If the green building industry is to
for example) appears to collect such of green buildings. resulting in well-documented instances
attract capital from investors who are
data. This is a very significant omission, of tenants being discouraged from
Accounting standards and financial sceptical of the financial benefits, it is
given that financiers' approval is conserving energy. By contrast, much of
regulations can be better linked to vital that the industry does more to
necessary for development to proceed. the rest of the world uses net leases
market value since cost approaches educate valuers/appraisers as to the
Failing to appeal to those whose that often deter green investment
will usually fail to reflect properly relative impacts of green building
imperative is value, will continue to because it is not the beneficiaries who
the benefits of green features and features on asset values. Occupiers and
hold back green building. are burdened with the initial investment
sustainable practices. Cost approaches the public have to be drawn into the
cost. Many disincentives are thus
The gathering and sharing of financial remain optional for government and green buildings issue, one way being
embedded in lease structures,
information on green building corporate reporting, creating the to demonstrate the value of green
encouraging wasteful construction,
performance is crucial to the potential for inconsistency and/or buildings to tenants. Agents and
ownership and occupation.
development of the business case. RICS, uncertainty. Accounting and valuation valuers/appraisers will be key to
the valuation/appraisal industry and standards could address this by moving Much greater rigour is essential in the progress on this issue; the green
rating system certifiers would do well more strongly towards market value if analysis of the relative impact on asset industry would be well-advised to
to work together to bring this about. there is to be proper accounting for values of green building features. This shift communications to those who,
green buildings. analysis should progress beyond capital like real estate brokers/agents and
10. Make valuation measures consistent
and construction costs. The creation of valuers/appraisers, are able to
Markets need good, consistent
‘Green Lease’ terms that cover and demonstrate the financial benefits of
information to evaluate the performance
reward green practices is overdue, and green buildings.
and value of green buildings.
is fundamental to, for example, energy
Consistent definitions, measures and conservation by occupiers.
methods should be developed to gauge
the costs and benefits of green buildings.
This consistency should be applied by
reference to valuation and accounting
standards. The green building industry
will benefit from improved integration of
valuation/appraisal audit in its processes
since this will more clearly demonstrate
the value of green buildings.
9
RECOMMENDATIONS: SOCIAL AND ENVIRONMENTAL

14. Chart the unknown A building pre- and post-occupancy 17. Modernize building codes, reduce
Many social and environmental evaluation should be required after bureaucracy
benefits spring from green building every green building completion. These The green building market is growing
design but, as things stand, these evaluations should be focussed firmly exponentially. This growth, however,
benefits are hard to quantify and are on the holistic business case. Equally, is despite rather than because of
therefore unknown to or ignored by tracking pre- and post-occupancy gains regulatory systems. The biggest hurdle
the financial professionals whose job over time will benefit occupiers. To help faced by the green building industry
it is to value or appraise real estate. the financial evaluation of occupancy is often outdated local and national
benefits, evaluation should quantify, building codes, as well as other
It would be to the mutual benefit of the
ideally in monetary terms, every regulatory barriers.
green building and the financial sectors
available indicator such as reduced
to quantify social and environmental Building codes, local and national,
absenteeism or improved productivity.
benefits in such a way that financial need to be updated to support green
Wherever possible, evaluations should
professionals can integrate these building while continuing to meet their
benchmark the impact on such factors
benefits with their financial reporting objectives of protecting life, health, and
as staff productivity, sickness, and
and project analysis. Translation of property. Governments can and should
absenteeism – not just the physical
social and environmental factors to a explore how they might encourage
attributes of the building.
financial context will encourage the green development by reducing
growth of green building. 16. Make more of the marketing regulation and accelerating approvals.
advantage
15. Tell it like it is 18. Certification: better demonstrate
In nearly every case study covered by
The more post-occupancy feedback the value
this report, landlords and developers
on building design, performance and Some building projects that otherwise
cited shorter lease-up periods as a
quality there is, the better the green could be rated ‘green’ do not seek or
substantial benefit of green building.
building industry as well as other complete independent certification
Similarly, owners/occupiers and
industrial, commercial and financial because of the perceived cost in time
tenants said green building brought
interests can communicate, understand and money, relative to the benefits of
them positive media/marketing gains.
and measure the potential of green independent review.
buildings. Groups such as The Usable Marketing advantage emerges from
If the rate of certification is to be
Buildings Trust in Great Britain and, the present study as one of the most
increased, certification bodies need to
in the USA, the Centre for the Built significant and easily-understood
present industry with the business case
Environment at Berkeley, California, benefits of green building, and should
for certification, part of which entails
are now studying the impact on be better quantified and publicized.
demonstrating green value. That case
human health of building design,
will be the more easily made if
tracing the relationship between
certification efficiency continues to
operational performance and
improve, at the same time as the
occupants’ comfort. Studies like
benefits of independent certification
these, often carried out between one
are clearly demonstrated.
and five years from the completion
of a building, are illuminating the life-
cycle benefits of green design features
and strategies.

10
RECOMMENDATIONS: THE BUILDING INDUSTRY

19. Training: encourage small 20. Don’t go it alone


green shoots Green projects work better and
The pool of green design leaders that deliver more where operations and
industry can draw upon is still small. maintenance staff are brought in early
Operations and maintenance staffs in the design stage, for the design
have little experience with team benefits from operations and
sophisticated green building maintenance experience.
technologies. Contractors and building
Since the integrated design process is
trades require training to build green
central to the ability to capitalize on
buildings without compromising
the synergies and tradeoffs between
certification. Lenders, developers and
architectural design strategies and
valuers/appraisers have much to learn
mechanical system choices, all
about how green buildings affect value.
consultants and stakeholders should
Financial professionals commonly do be involved in a project from the
not understand the holistic nature of beginning. Track and compare all
green buildings and the potential for options financially, and this will ease
benefits such as better operating risk management and financial
performance combined with higher acceptance, as well as contributing to
employee morale and productivity. the best-achievable financial success.
Even the case studies for this research
21. Recognize economic gains
project were often the first green
Green building developments are good
buildings on which many project
for their surrounding communities
team members had worked.
because they encourage wider
The green building industry needs to initiatives such as green policy or
be a better trainer of everyone regulatory developments, other green
connected with the industry, actually case studies, and a wider ecognition of
or potentially. In particular, developers, the community regionally, nationally or
valuers, appraisers and other financial internationally.
professionals need more financial
Green buildings should be considered as
information and training in how
part of an economic and community
green buildings affect asset value.
renewal strategy because of the
Information should be shared, so
benefits they bring locally, through
smoothing out the steep learning
using local employment and materials.
curve that many green building
projects entail. Incentives may be
required to encourage developers and
others to share this information.

11
WHAT IS A GREEN BUILDING?

For the purposes of this study, a ‘green As ever, opinions vary, but it seems economic systems converge. In
USGBC MEMBER NUMBERS*
building’ (sometimes called a ‘sustainable generally accepted (Roodman and Lenssen, valuing green buildings, therefore, it is
building’) is one that has been rated ‘green’ World Watch Institute Paper 124, 1995) helpful to acknowledge that in addition to Year Number of
by a green building rating system, or, in the that, globally, buildings and construction economic impacts in business operations USGBC Members
absence of such a rating, a building that is activity consume: there are also inherent social and
2005 5516
recognized as ‘green’ in the media or in the environmental impacts.
• Three billion tons of raw materials,
surrounding community. In a broader 2004 5438
or 40% of total global use In general, a green building reduces the
context, sustainable development is
• Buildings use 40% of the world’s impact on the environmental and social 2003 3773
sometimes discussed in relation to the
materials and energy systems that surround it. Green buildings
‘Brundtland Definition’, that ‘...development 2002 2397
enlarge our economic, social and
that meets the needs of the present • 55% of the wood cut for uses other
environmental capital. Compared to 2001 1137
without compromising the ability of future then fuel is for construction
conventional buildings, green structures use
generations to meet their own needs’. • 30% of newly-built or renovated 2000 573
less water and energy, as well as fewer raw
The problem of definition is one that dogs buildings suffer from ‘sick building materials and other resources. They are also 1999 264
the property and construction industries. syndrome’, their occupants exposed to better places in which to live and work, for
Many argue that ‘green’ is nothing new, stale, or mould- or chemical-laden air green buildings improve human wellbeing as *As of July 5th 2005

and that green buildings have been built • Buildings and construction materials measured by health and productivity.
and green materials used and reused for production account for at least 30%
Reducing a building’s negative social and
centuries. That is true, but as populations of greenhouse gas emissions.
environmental impacts can also bring
explode, there are no longer enough such
Since green buildings have a smaller financial benefits. Because the three
buildings or materials to re-use.
‘environmental footprint’ than more aspects are connected, a change in one
Put simply, there is increasing agreement traditional developments, it makes sense will ultimately have an impact upon the
that the earth cannot sustain the current to have more of them. This is especially other two.
consumption of its non-renewable so, since according to Dr David Orr,
Time is not on the side of those who
resources and the damage being done to Chair of the Environmental Studies
seek to further an understanding of the
its atmosphere. Unless changes are made, Program at Oberlin College, as many
relationship between asset value and
it is further agreed, life upon earth will buildings will be constructed worldwide in
green features. Green buildings have
become even more difficult, if not the next 50 years as over the last 5,000.
achieved prominence in the market
impossible, for many more human beings.
Although economic benefits flow from relatively recently. The US Green Building
green buildings and green building Council (USGBC) has seen an exponential
practices, the environmental and social rise in its membership as well as in the
benefits tend to be discussed in the light number of green buildings registered
of how they reduce costs. There is room under its LEED® programme since 1998
for a wider consideration when assessing when USGBC unveiled its Leadership in
value, one example being the ‘Triple Energy and Environmental Green Building
Bottom Line’ approach to social, Rating System (LEED®). This rise, especially
environmental and financial accounts. marked over the last three years, is one
indicator of a rapidly-growing interest in
Construction and operation of buildings are
green building.
interdisciplinary. Buildings are places where
a number of environmental, social and
12
In Canada, the momentum benefits from Green buildings, however, are widely
USGBC LEED® METRICS
the progress made by the USGBC. The perceived as more expensive than
LEED® METRICS* 2002 2003 2004 2005 number of member-organisations of the conventional buildings. Whatever the
Canada Green Buildings Council (CaGBC) perception, however, if green building was
NC Registrations 624 1,095 1,792 2,080
has gone from zero in January 2003 to 800 once a side issue, this is no longer the case.
NC Certified Projects 38 82 167 237 in April 2005. LEED®-registered projects in Since the main focus of green buildings is
Canada double or triple each year: in 2000 to improve building efficiency and
NC Total SF >80m >144m >217m >243m
there were none, in 2001 five, 19 in 2002, economics, it is entirely practical for green
EB Registrations 6 45 88 96 36 in 2003, and in 2004, 74. buildings to become more accepted and
eventually the standard for the building
EB Certified Projects 1 13 20 Many studies now seek to establish
industry. Indeed, the most likely scenario is
‘the business case’ for green buildings,
EB Total SF >10m >14.5m >29m >31.5m for the gradual absorption into everyday
in an attempt to promote them and
construction practices of the component
CI Registrations 4 52 106 137 encourage developers and designers to
aspects of green building.
build them. In practice, however, much of
CI Certified Projects 21 26
this research is to do with providing For green buildings to further increase their
CI Total SF 8k 3.7m >9m >11m information on design strategies and market share, more building professionals
environmental benefits, or on establishing will need to familiarize themselves with
Total Workshop Attendees 7,905 14,606 22,495 25,615
a base-line for capital costs. green building practices and how they can
NC Accredited Professionals 2,443 5,978 19,200 20,250 be integrated into design, construction,
Construction costs being what concerns
and development viability.
the building industry most, studies focus
* Cumulative; includes previous years’ data, e.g. 2002 totals include data from 2000 through 2002.
Registration data includes pilot projects.
on such costs for building green. Research The building market is generally risk-averse,
NC, New Construction
involving LEED® (Matthiessen and Morris, which hinders acceptance of green
SC, Square Feet Costing Green, 2004; Kats, The Costs and buildings because of an understandable
EB, Existing Buildings
CI, Commercial Interiors.
Financial Benefits of Green Building, 2003) reluctance to accept new methods without
The LEED® Rating System now covers existing buildings and commercial interiors as well as new construction. has found that there need be negligible proof that they work. Documenting the
Registrations: projects in the pipeline for certification but not yet built or finished additional construction costs: the cost- financial benefits of green buildings will
Source: USGBC premium ranges from 0-8%, depending reassure the building market and
upon the level of rating, with an average of encourage acceptance.
around 2% (pp.32, 48, LePage).
Examples of green building are either few
in number or inadequately-documented to
present a persuasive case to developers,
lenders and others, helping to understand
green viability. However, the increasing
number of owners and developers who are
developing green buildings suggests that
they foresee value in building green.

13
While interest in green buildings is on Current green building rating
the increase, the literature on the systems include:
relationship between asset value and green
1. British Research Establishment
building is largely anecdotal or theoretical.
Environmental Assessment Method
One reason is that many green buildings
(BREEAM,
are government – or owner-occupied,
products.bre.co.uk/breeam/index.html)
and are thus not treated as an investment
and are rarely assessed on a value basis. 2. Green Globes™ Online Auditing Tool
Those that have more traditional (www.2.energyefficiency.org/default.asp)
investment characteristics may either be 3. Australia’s Green Star
insufficiently-tracked to allow analysis, or (www.gbcaus.org/greenstar/)
the value is kept confidential. Others have 4. Hong Kong Building Environmental
yet to be occupied or market-tested long Assessment Method (HK-BEAM;
enough to have demonstrated value, or www.hk-beam.org/general/home.php)
otherwise have yet to be the subject of
5. US Green Building Council’s Leadership
a full appraisal.
in Energy and Environmental Design
Whatever the reason, the fact remains Green Building Rating System (LEED®;
that the relationship between green www.usgbc.org/leed/)
building and asset value has yet to be 6. Japan Sustainable Building Consortium’s
fully explored. This report attempts to Comprehensive Assessment System for
throw fresh light on that link. Building Environmental Efficiency
(CASBEE), (www.ibec.or.jp/CASBEE).

14
REVIEW OF LITERATURE

Key findings Valuing Green • Valuation can support green building, Theoretical linkages to value
Marketing Green • Lifecycle cost analysis is needed to as the literature indicates direct benefit Although valuation has been an
• Developers develop what they think make the link between green building to asset value from green design and indispensable tool of commerce for
the market wants, and too often don’t and asset value because much of a building practices. many centuries, valuation texts have
offer green buildings because customers green building’s asset value may lie in • The literature concentrates more yet to cover extensively green building
don’t know enough about their benefits its long-term lifecycle benefits. Better upon the benefits, financial and non- features/performance and their impact
to demand them. These include and more formalised life-cycle valuation beneficial, to occupiers than on the upon value. Valuation practitioners are
customers who could and would pay for will help to demonstrate the benefits, primarily financial, to owners, therefore left largely left to their own
green if they were offered the choice. advantages of green buildings. investors and financiers. Documentation devices when it comes to incorporating
• Market pricing is distorted by ignorance • There’s a need for assessment of how largely focuses upon cost-savings and green considerations into valuation theory
of green values, especially among green buildings perform in the market, frequently makes the link to value and principles.
developers. Customers can buy only and the degree to which their capital haphazardly or incorrectly. A stronger
The table on the following page
what is offered. In the absence of value rises. The sample size for green case for the benefits of green building
summarizes the theoretical links to value.
knowledge and choice, people will buildings is still small, and operational needs to be made to the investment
continue to make do with data on them smaller still, making and financial community.
conventional buildings. professional documentation and • Governments and other advocates of
tracking a must. green building such as developers,
• The more people know about green
buildings, the more they want them. • Valuation is increasingly used to lenders, owners and others who wish
assess green assets by developers, to see more green building will benefit
Managing Green renovators, investors and owners. from encouraging valuation to play a
• Financially speaking, use of the greater part.
• Valuation lags in accounting for
Integrated Design Process to achieve
green features within accepted • Valuation professions will profit from
the higher performance of green
standards, although knowledgeable a greater understanding of how to deal
buildings keeps down construction
practitioners can apply valuation with the impacts of green features on
costs. Moreover, green-building
methods to green assets. asset values, and by developing
professionals should be brought in early
• Financial indicators of value are appropriate methodologies.
in the design stage before key decisions
are made, maximizing the benefits of increasingly incomplete unless they • There are many misconceptions
green design while minimizing costs. take account of other green indicators about the impact of green design and
in order to satisfy Corporate Social building systems on asset value. As an
• Having an informed professional valuer
Responsibility. understanding of green issues is both a
on the Integrated Design Team will help
• Clients and governments have to be business imperative as well as a social
understand how green aspects will be
drivers of valuers/appraisers’ adaptation trend, the valuation profession should
valued and decide what choices will
to green values. Valuation is largely a try to counter these misconceptions.
improve value. These choices support
marketing the green aspects' value to service business, and therefore client-,
consumers and help improve valuation regulation- and profession-led.
of the building for financing. Valuation professions must advise their
members on absorbing green buildings’
value into valuations.

15
GREEN OBJECTIVES GREEN STRATEGIES/FEATURES GREEN IMPACT THEORETICAL LINKAGE TO VALUE

Sustainable site development • Reduce site disturbance and soil erosion • Improved site aesthetics • Reduced development costs, improved KEY
during construction • Greater public support for the development marketability, reduced ongoing maintenance
• Use of natural drainage systems (e.g., swales) and accelerated local approval process, hence costs, improved natural appearance, higher * NOI: net
lower carrying costs. sales/rents, absorption and re-tenanting,
• Preserve or restore natural site features. operating income
NOI*/ROI** benefits.

• Landscape and orient building to capitalize on • Lower energy costs. • For gross leases, higher NOI. May have ** ROI: return
passive heating and cooling. impact for net leases*** if benefit can be on investment
demonstrated to tenants.
*** Net lease: a lease that
Water efficiency • Use captured rainwater for landscaping, • Lower water consumption/costs. • Lower tenant CAM**** charges. Direct NOI requires a leasee to pay all
toilet flushing, etc benefit for gross leases, potential for net leases
requires communicating benefit to tenants.
their operating costs resulting
• Treat and re-use greywater, excess
groundwater, and steam condensate from their occupation of
• Use low-flow fixtures and fittings (pressure- the premises.
assisted or composting toilets, waterless
urinals, etc.) and ozonation for laundry **** CAM: common area
• Use closed-loop systems and other water maintenance
reduction technologies for processes

Energy efficiency • Use passive solar heating/cooling and • Lower capital costs • Reduced operating costs, longer
natural ventilation • Occupant benefits life cycle, lower development costs Note:
• Enhance penetration of daylight to interior • Lower energy costs. • Improved occupant productivity, lower churn, To view a larger version of
spaces to reduce need for artificial lighting turnover, tenant inducements, etc
this table, please go to
• Use thermally efficient envelope to reduce • Higher net income for gross leased buildings,
perimeter heating and size of HVAC. improved yield.
www.rics.org/greenvalue

• Use energy management systems, monitoring, • Operational savings (can offset higher • Lower operating costs. On gross leases,
and controls to continuously calibrate, adjust, capital costs) higher ROI/NOI. On net leases, potential
and maintain energy-related systems. • Reduced capital cost of mechanical for improved ROI/NOI.
systems because control systems reduce the
need for oversizing.

• Use third-party commissioning agent to ensure • Lower operating costs • Marginally higher initial soft costs should be
that the installed systems work as designed • Lower maintenance costs. offset by long term operating cost benefits,
• Develop O&M manuals and train staff. higher ROI.

Indoor environmental quality • Control pollutant sources • Superior indoor air quality, quality lighting • Risk reduction
• Use low-emission materials and thermal quality • Greater marketability
• Ventilate before occupancy • Fewer occupant complaints • Faster sales and lets
• Enhance penetration of daylight and • Higher occupant productivity. • Improved churn/turnover
reduce glare • Higher ROI/NOI.
• Provide outdoor views
• Provide individual occupant controls
when possible.

Reduced consumption of • Select products for durability • Longer building lifecycle • Lower depreciation typically after higher
building materials • Eliminate unnecessary finishes and • Lower maintenance costs. investment costs.
other products • Lower construction costs, probable
• Reuse building shell from existing buildings lower operating/maintenance costs, higher
and fixtures from demolished buildings ROI/NOI.
• Use salvaged/refurbished materials
• Design for adaptability.
THE ROLE OF VALUATION

The link between green building and asset Investment and developments can Perhaps least understood is the difference Whether they want to or not, valuers
value has remained in large part untested involve the use of large capital sums from between cost and value. Cost is something and appraisers are required to estimate
because, although the number of green both shareholders and lenders. that many try to minimise. But a focus how green features/performance affect
buildings has increased in recent years, Management and shareholders need to on value helps understanding of whether development, investment and lending
many are owner-occupied by government, know whether a decision is wise, and a cost is justified. An accounting, cost or risk which materially impact value or if
few have yet to change hands and their valuation makes such knowledge possible. cost-saving focus can overlook where comparables need adjustment. Valuers
value has not been well-documented. Valuation helps all those involved to plan increased cost will be more than offset must evaluate their impact on absorption,
Yet valuation is indispensable. and make decisions that maximise value. by extra value. Hence a focus on value, tenant inducements, and, in the longer
not cost savings, is essential to business term, on tenant churn. For many aspects
Valuations have been undertaken for Valuations are also a useful audit tool.
and thus, green buildings. of green building, the challenge is whether
centuries, and are deeply embedded in They help to prevent or detect fraud, and
and how the longer lifecycle will affect
everyday business within and beyond real to protect companies and their investors But the question remains: how does
capitalization rate, yield and years’
estate. A valuation helps a company to against the financial risks of ignorance. valuation benefit green buildings?
purchase.
understand whether it is making a wise A green example of the latter would be in Valuers themselves have no choice but
decision. A company may agree to buy or evaluating the choices in managing risk to assess a building’s green features and Until green building features and related
build a property, and if that company while optimizing utility and value in a case related performance from the point of performance are integrated into valuations,
knows little or nothing about real estate, it where a property is contaminated. view of asset value. In other words, it is it is hard to see how green building
may pay a grossly-inflated price. Investors the valuer’s job to establish whether the features/performance can be integrated
Applied valuations are undertaken every
and shareholders want to know that the green features' performance of a building into the construction, financial and
day as a guide to the best course of action
company is handling their investment well: cause it to have a value that is higher or development industries. Unless the
in business. For developers, valuation helps
the impartial appraisal a valuation offers is lower than a conventional building, and financial sector understands the benefits
to identify the most-promising
indispensable in determining whether or whether the estimated operating costs of green to the net value of an asset,
development or investment, and thus
not funds are being properly applied. should be adjusted to reflect any financial professionals will not be
whether green features make financial
differential performance. motivated to account for green in their
It is rare for a company to invest in real sense. Since lenders require a valuation
financing decisions. Awareness of the value
estate without borrowing, and banks have audit, valuation helps the developer by Furthermore, since the life of a green
of green buildings on the part of the real
a fiduciary responsibility to show their simply applying the same basic techniques building may be longer than that of a
estate and financial sectors is therefore
customers and shareholders that their that will later help to secure finding. conventional structure, valuers have to
pivotal. However, some within this industry
deposits are secure. An independent consider what adjustments need to be
Valuations help to make a comparison are beginning to recognize the superior
valuation, completed by a professionally- made to investment capitalization, and
between possible investments, and pave performance of green buildings within
qualified valuer, helps to assure whether rents should be higher or lower
the way for making a sound choice that their product offerings including: Fannie
shareholders, investors and creditors that than the norm. Tenant fit-out costs and
balances risk against return. Although this Mae and Freddie Mac in the US, VanCity
investment in the company’s business is incentives (such as rent-free periods) and
is not always understood, valuations are in Canada, and Norwich and Peterborough
wise. Such a valuation acts as a safeguard absorption periods are among the other
made to standards of practice, which are Building Society in the UK.
to executives, justifying a decision or issues that may be affected, and may
both internationally-accepted and allow
indicating how to improve one. require adjustment on the basis of
for adjustments to take into account local
comparable evidence or through
circumstances.
investment cash-flow adjustment.

17
Texts offering direct and indirect links The economics of valuation Whatever their level of commitment to
between green features/performance and There is a gap between green and free trade, governments arguably therefore
valuation include: economic practice that helps neither. have a built-in economic justification for
Green rating systems go some way to encouraging their citizens to ‘go green’.
• International Valuation Standards:
International Valuation Standards bridging that gap, and are likely to remain The economic pricing models of
Committee the principal way until the industrialized industrialized societies are imbalanced,
economies start to rebalance economic it can be argued, in that they have yet to
• Uniform Standards of Professional
models by integrating the broad range of adapt to the higher value their citizens
Appraisal Practice: Appraisal Institute
benefits offered by building green. place on green practices. Damage to the
of Canada
Historically, construction in emerging environment, for example, can be seen as
• Uniform Standards of Professional
economies has been green. Where people an unpriced economic benefit if the
Appraisal Practice: Appraisal Foundation
are poor, they tend to build with locally – polluter avoids the cost of damage.
• Red Book (Manual of Valuation): Royal LEED® and similar rating systems try to
available materials because these are
Institution of Chartered Surveyors internalize such ‘external benefits’ by
cheaper than those imported or from
• Green Book: UK government’s further afield. Local materials are easier making available credits; pricing models
guidelines on incorporating green and quicker to obtain. Furthermore, jobs make no such allowance.
practices in business and money stay local, reinvested directly To summarise, therefore, developing
• Multiple Account Evaluation Guidelines: back into the local economy. buildings provides jobs – usually local
Province of British Columbia. jobs. The people and business they house
Industrialized economies, however, are able
• Contemporary Environmental to spread their net further in obtaining are sources of wealth, as are the buildings
Accounting – Issues, Concepts and materials, aided by the relative affordability themselves. But buildings can impact
Practice: Schaltegger and Burritt, of transportation. By increasing the use of the environment. It has thus been widely
Greenleaf Publishing non–local materials, however, argued they have three main dimensions –
• Green Development – Integrating environmental sustainability to suffer. societal, financial and environmental.
Ecology and Real Estate: Wilson and This is because the price of fuel does The following section looks at the benefits
others, Rocky Mountain Institute not include a charge to compensate for of green buildings from these three
the resultant pollution. perspectives.
• The Income Approach to Property
Valuation: Baum and Mackmin, Rating systems such as LEED® provide
Thomson Learning an incentive for buying local materials,
• Modern Methods of Valuation: Britton, thus re-establishing the balance. There is,
Davies and Johnson, Estates Gazette however, another major benefit of using
• Various papers on the benefits of green local materials. This is the indirect
building: UK Building Research Institute. economic benefit to local economies of
spending on local materials.

In most economies, construction creates


jobs and wealth locally through local
employment. Contractors then re-spend
their income locally, in effect re-investing
right back into other local jobs.

18
Environmental benefits Indoor air quality Energy Materials and waste
It is still comparatively uncommon for This is the benefit most easily ‘sold’ to According to Rick Nevin and Gregory Benefits include use and re-use of local,
environmental benefits to show up in a occupants. Green buildings offer healthier Watson (The Appraisal Journal, October renewable and recycled materials, helping
balance sheet or income statement. As a air because they are better ventilated, and 1998) real estate markets assign to the local economy and reducing the
result they have yet to figure widely in reduce or eliminate the use of chemicals energy-efficient homes an incremental extraction and processing of virgin
financial decisions. Although environmental in building materials that give off gases. value that reflects the discounted value of resources. The use of more benign
benefits do have links to value, especially if Some green features are also cheaper if annual fuel savings. Their analysis suggests materials improves indoor air quality.
properly marketed, these benefits are often integrated at the design stage; underfloor an incremental home value of $10 – $20 Large amounts of construction and other
seen to accrue to the community and air systems have been shown to cost less for every $1 reduction in annual fuel bills. waste is put to use and diverted from
society rather than to a company balance than overhead systems. While some of this landfill, thereby reducing construction
Green buildings save on energy costs by
sheet. As the real estate industry largely is a direct benefit in reducing capital cost, costs by saving on tipping fees.
reducing total consumption as well as peak
exists to make profits, the environmental there is ample evidence that there is an
energy demand. Green buildings use about Water
benefits of green buildings are best even larger, more tangible and direct
36% less energy than conventional Low-flow fixtures, efficient appliances,
expressed in economic terms. benefit in improved productivity due
structures through a combination of rainwater capture and wastewater
to the healthier and more pleasant
Land/site artificial and natural lighting strategies, treatment lessen use of potable water and
working conditions.
How a building is sited, its use, latitude, controls, natural ventilation, energy – related operating costs. Once again, and as
exposure to sun and wind and so on, can Atmosphere efficient fixtures and the use of renewable discussed in the section on ‘Interpreting
profoundly affect a building’s reliance on Over their lifecycle, buildings are energy resources. the benefits of green building’, operating
mechanical heating/cooling and artificial responsible for about 40% of greenhouse savings do not necessarily offer value from
Arguably, energy savings are one of the
lighting, and hence, its energy costs. gas (GHG) emissions, and green buildings a valuation perspective.
most obvious benefits of green building
Green buildings that are carefully planned are designed to have operating efficiencies
movement and one of the easiest to ‘sell’. Replenishment of the water table through
reduce sprawl, lessen expenditure on new that reduce these emissions. Many
Unfortunately, however, it is a benefit storm water management, which includes
community infrastructure or extend the buildings use heating, ventilation and
frequently presented as a ‘value’ of green permeable pavements and landscape
life of existing infrastructure. A carefully air-conditioning systems which do not
buildings, which is to confuse value with technology, can lower development cost
designed and managed site can yield use chlorofluorocarbons (CFCs),
what energy savings really provide, which charges by limiting the need for storm
construction cost savings, as well as restrict hydrochlorofluorocarbons (HCHCs),
is cost reduction. As discussed in the water infrastructure.
stormwater runoff and erosion, so reducing or halons, and so do less harm to the
section on ‘Interpreting the benefits of
water consumption. These are features that ozone layer. Many atmospheric emissions
green building’, operating savings do not
can also improve a property’s ‘curb appeal’ go largely unpriced because governments
necessarily offer value from a valuation
or site aesthetics and potentially support hesitate to tax atmospheric pollution or
perspective.
higher rental rates (Laverne and Winson- prefer regulation to rewarding good
Geideman; The Influence Of Trees And practice. Of course there are exceptions.
Landscaping On Rental Rates At Office In the US, for example, New Jersey is one
Buildings, 2003) or sale prices (Henry, of six states that offers emission credits
The Contribution Of Landscaping To The to building owners who invest in systems
Price Of Single Family Houses, 1994). reducing air pollution associated with
electricity. Owners can sell these credits to
power plants and others for prices ranging
from $90 to $272 per ton of emissions:
they have tradable market value.

19
Social benefits It is difficult to establish social benefits The Heschong Mahone Group (Skylighting The Value of Good Design and other
Enormous cost savings are being made in in new construction, for tracking and and Retail Sales, 1999) found that ‘adding studies by CABE have shown the
‘soft benefits’ such as increased documentation over time is required. skylighting to the average non-skylit retail substantial productivity benefits of good
productivity, better health and wellbeing, There is promising research to be done in store would be likely to improve its design, which in essence is a subset of
higher academic performance, improved retrofits and renovations, which in Europe performance by 40%’. Pennsylvania Power green buildings. In one example quoted
morale and lower absenteeism. These have are often preferred to tearing down a and Light (Romm & Browning, Greening by CABE, a 21% improvement in hospital
a financial benefit, which is becoming a building. In 1996, a green building was the Building and the Bottom Line, 1998) discharge rate was found by the auditors,
cornerstone of the benefits of green constructed north of London for Longmans found that conversion from general to Sheffield University, after part of the
building. In commercial buildings, House Publishing: the company has since high-efficiency task lighting reduced hospital had been renovated. This may
employee overhead is the highest cost, so been sold twice, and on each occasion the lighting costs by 69% and annual explain why the British government is
improving their productivity and reducing new owner has decided against selling the operating costs by 73%, attributed to committing billions of pounds to revitalize
their turnover and absenteeism may be a building because it was so good to work in. reduced absenteeism and higher the health system, to retain nurses and to
green building’s most significant economic productivity. The payback for electricity improve productivity.
Productivity
contributions to a business. changes alone amounted to 4.1 years,
Productivity gains from better lighting, Image
a 24% return on investment, while total
In a 2004 survey of over 800 green daylighting and air quality in green Although a developer or client (Guidry,
payback amounted to 540%, amounting
building owners, developers, architects, buildings can be enormous, and have the The Appraisal Journal, Winter 2004) ‘may
a simple payback of just 69 days.
engineers and consultants, Turner potential to be a powerful reason to specify a low-energy building, the
Construction showed green buildings integrate green features and practices. At Wal-Mart’s Lawrence, Kansas, ‘Eco-Mart’ consequences may be more profound than
outperforming conventional buildings in skylights were installed to reduce lighting a mere saving in annual fuel bills’. One
Research into this and other ‘soft’ benefits,
seven categories, of which the top three costs, and employees asked for their consequence that benefits the bottom line
however, is hampered (Kozlowski, Building
were social benefits: departments to be moved to the daylit is that the company may find it has a
Operating Management, July 2003) by ‘the
part because sales per square foot were strong marketing advantage it can exploit.
• Greater health and wellbeing of belief that additional studies are
higher there. Reno Post Office (Gottfried, The owner of a green building or the
occupants (86%) unnecessary or the fear that building
in Sustainable Building Technical Manual, company it houses can find that its image
owners may be sued based on evidence of
• Higher building value (79%) 1996) improved lighting, acoustics and is seen much more positively. This helps
poor building performance’. According to
• Higher worker productivity (76%) ‘thermal comfort’: productivity gains that to attract and retain tenants, employees,
the USGBC Building Report (2002) ‘an
‘paid for the entire renovation, to the value clients and suppliers, and thus, arguably,
• Higher return on investment (63%) increase of 1% in productivity (measured
of $400,000-$500,000, in less than a year. to make it more attractive to owners,
• Higher asking rents (62%) by production rate, production quality or
The annual savings in energy use and occupiers and shareholders. A building’s
absenteeism) can provide savings to a
• Higher occupancy rates (52%) maintenance were a free bonus’. Hyde ‘distinctive character can be a symbolic
facility that exceeds its entire energy bill’.
• Higher retail sales (40%). Tools (Romm & Browning) found that message to visitors, community officials,
new lighting enabled workers to improve and the public... including technological
quality control equivalent by the advancement’. (The Business case for
equivalent of $25,000 a year. Since every Sustainable Design in Federal Facilities,
dollar saved on the shop floor was worth US Department of Federal Energy
$10 in direct sales, this retrofit was the Management, 2003).
equivalent of $250,000 extra sales
annually to Hyde.

20
Green economic benefits A second assumption is that green Rapid payback resulting from lower Construction cost bias will persist where
Final costs and payback buildings last longer than conventional operations and maintenance costs is short-term perspectives rule (USGBC,
The largest obstacles to green ones. Guidry suggests green buildings may increasingly recognized as the most 2002), for in that case, the interrelationship
construction, according to Turner be ‘built with more durable and low- marketable benefit of building green. between a building, its features, occupants
Construction (2004) are ‘perceived higher maintenance materials may be more Three-quarters of executives in green and surroundings is immaterial. Where
construction costs (by 70% of all adaptable to wide range of tenants and building, Turner continues, say that such green features are part of the design
executives), a general lack of awareness purposes [and] designed with flexible buildings generate a higher return on programme, the cost premium can be nil
[of] the benefits (by 63%) and short-term opens spaces that can significantly reduce investment. Advocates of green building (Syphers, G and others, Managing the Cost
budget horizons (53%)’. Decisions on construction cost and waste’. have to make the case that cost premiums of Green Building, 2003) as it avoids
whether or not to invest in a green are negligible, low or quickly recoverable, inexperienced budgeters creating
While a longer-lasting building might seem
building are most often based upon capital especially as not all developers can profit contingencies to cover their expectation of
a benefit, entailing lower depreciation
costs (Kats, G., Green Building Costs and from the benefits accruing to occupants. cost increases. Syphers identifies the top
rates, the benefit is rendered invisible if it
Financial Benefits, 2003), although lower five barriers to controlling costs as:
cannot be factored into accounting or tax USDOE puts construction costs at less
energy and water bills are sometimes rules. If green buildings are more durable, then10% of the money that has to be • Lack of a clear design goal
taken into account. In other words, the net the fact has to be established and factored spent over a building’s life, but between • Midstream attempts to
value of green buildings could be better into analyses of asset value. 60 and 85% (Morton, Building Operating incorporate green
proven and more persuasively told: the Management, November 2002) of the real
focus on cost without understanding the Experienced green building executives • Decentralized management of
cost to business is staffing. Some green
resultant value is an impediment. estimate construction cost premiums at green building
building features can increase costs, but
between nil and 14%, inexperienced • Lack of experience or knowledge
Since green building is still relatively new USDOE reports that it is usually possible
executives at up to 20% (Turner Study):
however, design budgets may under-or to lower lifecycle costs significantly, • Not enough time or funding.
Katz says premiums on LEED®-rated green
overestimate costs, so fuelling the recovering them even in the case of
buildings may average 2% and other
assumption that green buildings cost more high-value green features within three
studies generally support this (for example
than conventional structures. Kats, on the to five years.
Morris/Matthiesson's ‘Costing Green’,
other hand, estimates the average payback David + Langdon 2004). Considering that salaries and employee
(or return on investment) of a green well-being are the biggest item in a
building at about ten times the average Such uncertainty over the cost increment
company’s overhead (Kozlowski), a green
cost of building it. may amount to the entire development
building is cheaper if an owner-occupier
profit, could wipe out equity and deter
considers the building’s life-cycle cost in
risk-averse lenders who see the potential
relation to the employee and thus,
for cost overruns in new construction
productivity benefits.
methods (green roofs, for example).
Little wonder, then, that the real estate
and financial sectors remain sceptical. And
all the more unfortunate that such cost
studies have yet to be consistently paired
with an understanding of the benefit of
the additional construction cost; if, for
instance, an extra cost of 20% were to
result in 40% increase in value, would not
the cost be worth it?
21
Interpreting the benefits of The incentive for a landlord in a net lease A green building component’s life cycle Rating systems such as LEED® can add to
green building will be to make tenants aware that green may not match a five-year cash flow value for occupants, for such systems
The benefits of green building have to be features reduce tenants’ operating costs projection, and this causes a problem discourage the use of volatile organic
translated and quantified from a valuation and potenially more importantly, can in valuation. The remainder life should compounds (VOCs) and inadequately –
standpoint. There are International improve productivity. If so, tenants may be valued at the end of the projection, maintained or faulty ventilation systems,
Valuation Standards (IVS) to which be prepared to pay some of the benefit yet those other than valuers/appraisers whose cost to employers in sickness,
national or local valuation standards back as more rent, and to renew the may not account for the longer remainder absenteeism and productivity can exceed
relate in one way or another. In the US, lease, which is both a cost saving and an life in the payback calculation, causing the the cost of using low – VOC materials.
for example, individual states provide a investment risk mitigation factor. In a gross valuation and comparison to be Studies of over 11,000 workers in 107
local tier of practice and standards through lease, green cost reductions – and the incomplete or inaccurate. buildings (Kats) showed ‘a 1% increase in
the licensing of real estate agents and investment cost to obtain them – may productivity (equal to five minutes per
In general, from a valuation point of view,
appraisers. There are also national appraisal directly benefit the landlord: but may be working day) is equal to $600 to $700 per
the green building industry might benefit
standards established by the Appraisal more than offset by the tenant having no a year, or $3 per sq. ft. per year... over 20
from differentiating better between cost
Foundation. Canada has provincial licensing incentive to switch off the lights. Where a years and at a 5% real discount rate, the
saving and value. Cost and value are not
of real estate agents but the Appraisal landlord sees no benefit or it is too present value of the productivity benefit is
the same.
Institute of Canada produces national negligible to figure in an appraisal, there is about $35 per sq. ft. for (LEED®) Certified
standards of appraisal although some no effect on asset value. Value to occupier and Silver level buildings, and $55 per sq.
provinces are edging towards provincial From the literature, it appears that the ft. for Gold and Platinum buildings’.
Sadly, some literature chose to criticise the
standards. Valuation can thus be affected greatest value of green
failure of valuers/appraisers to reflect cost With studies starting to show such
by government intervention that harms features/performance is to be found in the
savings in asset value. But none reviewed benefits, the question now is whether
having single, international standards. value to the occupant. Green practices can
were written by professional owners and investors are pressing real
benefit tenants substantially, yet valuers
Cost savings valuers/appraisers or considered that lease estate brokers to market these benefits to
have yet to account fully for this. One
Valuers and others sometimes mean structures affect whether cost reductions potential tenants, using studies that
reason is that the benefit could be kept
different things by the same word. Take benefit value. None mentioned that gross demonstrate the added value. If energy
entirely by the occupant, and not flow
the word ‘value’ itself. High-efficiency leases effectively incentivise tenants to be savings, like better internal air quality
through to increase the asset’s value.
light fixtures, for example, are often said wasteful in their energy consumption, accrue to the occupier, why should these
to ‘add value’ when, to a valuer, they thus harming value, or that this might Much of property valuation is to do with not represent added value?
merely reduce costs. To an occupier, the considerably exceed the cost savings. the market value of a building, although
fixtures can impact productivity positively the market increasingly sees buildings as a
A fundamental problem of valuation is
or negatively – more related to the impact service, with the result that the concept of
on the workspace than the type of light.
that while advocates of green buildings
‘value to occupier’ is gaining ground. IF ENERGY SAVINGS,
see ‘value’ in the longer life cycle of
Since cost reduction flows over a period of some developments, valuers may not.
Building occupancy costs are commonly LIKE BETTER INTERNAL AIR
time however, it affects ‘value’ as lower 10% or less of the costs of operating a
operating cost payments resulting from a
The payback periods sought by investors
business. If so, productivity benefits and QUALITY ACCRUE TO THE
vary from country to country, but a survey
higher capital investment. In other words, by BT (2003) notes perceptions of ‘long-
savings on business operations are of OCCUPIER, WHY SHOULD
cost reduction may be of ‘value’ to a greater worth to occupants than savings
tenant, affecting investment value only
term’ as five years or less in the UK.
on real estate, which makes a building with THESE NOT REPRESENT
US markets focus on initial yield and
indirectly. see cost-reduction benefits over longer
green design features of considerable ADDED VALUE?
potential value to its occupants.
periods as additional risk. These are
comparatively short investment horizons
from a valuation perspective.
22
How valuers and Investment Approach Cost Approach
appraisers value Sometimes called the ‘Income Approach’, One definition of the Cost Approach
Cost should never be confused with the Investment Approach, for example, to valuation is that of the Appraisal
value, but in valuation terms the former is defined by the Canadian Uniform Foundation, which calls it ‘the cost
is easier to define than the latter. Here are Standards of Professional Appraisal to replace or reproduce the property
the main approaches to valuing a real Practice as ‘a study which reflects the being appraised’.
estate asset: relationship between acquisition price
The problem with cost approaches is that
and anticipated future benefits of a real
Direct Comparison they may ignore the benefits of green
estate investment’. This approach
The Direct Comparison Approach to Value building features and performance and
dominantly uses projected income
compares one property with another, their effect on asset value. To compound
rather than comparables to arrive at
adjusting for dissimilarities, to arrive at a this problem, and because green building
value, and tries to model how a possible
value. A problem with Direct Comparison is aspects often have higher construction
investment purchaser might assess the
that adjustments can be made too costs, corporate accounts may reflect cost
benefits of the asset's income flow.
sweepingly for the smaller differences disproportionately, impacting debt without
between the subject and comparable The Investment Approach adjusts for offsetting recognition of value benefit.
property to be accounted for. Benefits both the time and size of each aspect of What is more, depending on the amount
from improvements in energy efficiency, an asset’s operating costs, and so adjusts by which cost is depreciated, it is unlikely
for example, could reduce operating costs more easily and fully for the operating that the original cost will depreciate or end
but unless the difference is fairly large, costs of a green building than under at the same life cycle rate as that of a
an adjustment may not be made for the Direct Comparison. Adjustments for life green building. Put simply, cost approaches
capitalized benefit. cycle and replacement costs may also are less accountable to the benefits
be more accurate. obtained from green building.
Many appraisers working on a valuation
have yet to ask for sufficient detail about The Investment Approach has its pitfalls. Alternative approaches
the differences in comparables to enable There are technical differences in the way Other approaches to valuation are
them to identify the differential in values. valuers in North America and the UK available, often from outside the valuation
Since valuation is a client-led discipline, define and apply this method. Many profession, in an attempt to integrate
it is up to valuers/appraisers’ clients – features of a green building may cost more environmental, societal, community,
developers, investors and lenders – to to begin with, but the building may last economic and financial aspects:
require appraisers to include green longer and be cheaper to operate. The
Triple Bottom Line: (TBL): an approach
considerations in adjusting comparables. discounted cash flow ‘Investment Horizon’,
that tries to weigh economic, social and
It is hardly the valuer’s fault if the market a predominantly North American way of
environmental performance. Although
is slow to differentiate between green calculating value with the Investment
broad agreement has yet to be reached on
and conventional buildings, leading to the Approach, needs careful adjustment if the
methods of valuing and auditing natural
conclusion that green building features and improved lifecycle and longer income
capital (air, water, soil, for example), TBL is
practices have little or no impact on value. stream are not to be overlooked. ‘Term and
catching on, although it is often used in
Reversion’, a method more frequently
tandem with, rather than instead of, other
applied in the UK, can adjust better for the
valuation methods.
different lifecycle of a green building.

23
Full-Cost Accounting: this approach Accounting treatments
presents the full cost of implementing Much has been noted of the link between
decisions, and therefore includes accounting and valuation. Both professions
environmental, social and economic are made up of not one but a number of
implications of decisions. While a useful organizations, sometimes even within one
way of evaluating green components’ country. Accounting standards in general,
lifecycle, operating cost/benefit and capital however, are becoming more stringent in
cost/benefit, Full-Cost Accounting does not the wake of financial problems such as
detail how to include the broader aspects those of Enron and Nortel. They are also
in a full analysis and is criticized for lacking shifting towards market valuation: away
strongly-developed standards. from cost approaches and towards fair
value, which embeds the option of using
These and other alternative approaches
market value.
to valuation are gaining acceptance, as
many companies assess and report their Use of cost approaches for corporate
environmental and social as well as their accounts may fail to benefit companies
financial performance. Investors, according with green buildings because the value is
to the City of London’s 2003 report not properly reflected. Governments are
Investing in the Future, are beginning to especially vulnerable to this: government
recognize green issues as a factor in accounting standards deem many assets
business success. Increasingly, investors ‘Special Purpose’ and require a cost
identify key environmental and social risks approach. Accounting standards may thus
to short-and long-term business value, and perhaps be holding back the green building
take them into account in investment and industry, unless market value is adopted for
corporate governance. With the financial corporate reporting. International Financial
sector moving or being edged towards Reporting Standards have moved towards
green-consciousness, it can be argued that market value; however take-up seems
if accountants, appraisers and valuers do inconsistent and slow to take effect in
not adapt to TBL and other alternatives, North America.
they risk falling out of step with the needs
These changes are likely to favour green
of their clients. When a government of the
buildings, for if such buildings have
status of the Corporation of the City of
benefits in value exceeding the cost of
London is covering more holistic
making the building green, then a value-
approaches to value, it is time the
based approach will more accurately
valuation and accounting professions
reflect that benefit. Although accounting is
embraced such an approach in valuation
moving in the direction of International
and accounting standards.
Financial Reporting Standards, both
valuation and accounting standards have
yet to adapt fully to cover companies’ wish
to report adequately on social, community
and environmental as well as purely-
financial performance.
24
CASE STUDIES AND INTERVIEWS

In an ideal world, the way to assess the In this way, proxy financial information was Industrial
relationship between the market value of a collected, which includes: 6. Phillips Eco-Enterprise Centre,
real estate asset and its green features and Minneapolis, Minnesota, USA
• Initial construction costs
related performance is to compile detailed (office and industrial)
financial information on each green • Operating costs
Retail
building, using case studies. Each green • Operating performance 7. Mountain Equipment Co-op Store,
case study would then be matched with a • Occupant satisfaction levels Montreal, Québec, Canada
comparable conventional building.
• Occupant health Residential
But while this may be a greener world, • Marketing and absorption periods 8. The Solaire, New York City, New York,
it is still less than ideal. Detailed financial USA (apartment building)
• Vacancies
information has yet to be widely shared on 9. Cranberry Commons, Burnaby,
conventional buildings or collected on • Rent levels
British Columbia, Canada (co-housing)
green buildings to the extent that research • Tenant inducements.
Educational
can be conducted. Nonetheless, an Detailed interviews were held at 10. Adam Joseph Lewis Centre for
alternative comparative approach yielded 12 buildings of five different kinds, Environmental Studies, Oberlin College,
valuable results. across Canada and the United States. Ohio, USA
The research team developed a survey Office buildings 11. The C.K. Choi Building for the
and interviewed stakeholders who included 1. Green on the Grand, Kitchener, Institute of Asian Research, Vancouver,
tenants, developers, owners, architects and Ontario, Canada British Columbia
project engineers and occupiers, depending
2. SAS Building, Toronto, Ontario, Canada 12. The Liu Centre for the Study of Global
upon the type of property. The survey had
(under construction) Issues, Vancouver, British Columbia.
to be sufficiently detailed to cover the
questions raised by this study, but still 3. Ottawa Paramedics Building,
broad enough, given the different property 2465 Don Reid Drive, Ottawa, Canada
types and geographic locations, to provide (under construction)
a useful cross-section of opinion supported 4. Vancouver Island Technology Park,
by factual data. Victoria, British Columbia, Canada
5. 260 Townsend Street, San Francisco,
California, USA (renovation)

25
Summary of property information

Index Property Name/Location Property Status Ownership Type Single/ Completed Building Green Designation
Type Multi-Tenant area (sq.ft.)

A Green on the Grand, Kitchener, Office New Investment Multi-tenant 1996 23,573 C-2000 (Natural resources
Onatrio, Canada construction Canada)

B SAS Building, Toronto, Office Under Owner occupied Multi-tenant Late 2005 115,000 Applied for LEED® certified
Ontario, Canada construction (52%)

C Ottawa Paramedics Building, Office Under Investment Single tenant Dec. 2005 100,000 Applied for LEED® certified
Ottawa, Ontario, Canada construction

D Vancouver Island Technology Park, Office New construction Investment Multi-tenant 2001 184,000 LEED® gold
Victoria, B, Canada

E 260 Townsend, San Francisco, Office Renovation Owner occupied Single tenant 2002 66,947 LEED®-EB gold
California, USA (100%)

F Phillips Eco-Enterprise Centre, Office/ New construction Investment Multi-tenant 1999 64,000 None (several green
Minneapolis, Minnesota, USA industrial awards received)

G Mountain Equipment Co-op Store, Retail New construction Owner occupied Single tenant 2003 48,438 C-2000 (Natural resources
Montreal, Quebec, Canada (100%) Canada)

H The Solaire, New York City, Residential New construction Investment Multi-tenant 2003 357,000 LEED® gold
New York, USA

I Cranberry Commons, North Residential New construction Owner occupied Multi-tenant 2001 26,662 None (several green
Burnaby, BC, Canada (100%) awards received)

J Oberlin College, Oberlin, Educational New construction Owner occupied Single tenant 1998 13,600 None (several green
Ohio, USA (100%) awards received)

K(i) CK Choi Building, Vancouver, Educational New construction Owner occupied Single tenant 1996 30,000 None (several green
BC, Canada (100%) awards received)

K (ii) Liu Centre, Vancouver, Educational New construction Owner occupied Single tenant 2000 18,800 None (several green
BC, Canada (100%) awards received)

26
Why they went green Vancouver Island Technology Park, The Solaire, New York City: the owner
Of the 12 American and Canadian Victoria: British Columbia Buildings of the site, Battery Park City Authority,
developments where interviews were held, Corporation, the developer and former is mandated to promote green building
five have a designation from a green rating owner, is committed to green building practices, while the developer, Albanese
body, two have applied for designation and practices. The project was developed Organization, wished to market an extra-
five have no plans for designation but each recognizing that technology parks need healthy building which offered tenants
has received several green awards. to be pleasant and healthy places of materials and systems of even higher
The Green on the Grand, Kitchener: work if high-calibre employees are to quality than BPCA’s environmental
the developer, Ian Cook Construction, be attracted and retained. The University guidelines.
acquired the site at a time of downturn in of Victoria Properties Investment Inc on Cranberry Commons, Burnaby: the
the housing market and needed to offer behalf of the Vancouver Island Park Trust resident co-owners wanted a building
something special. Enermodal Engineering, is the new owner. whose green features included a higher-
the lead tenant and project engineer, 260 Townsend Street, San Francisco: than-usual amount of amenity space.
shared Ian Cook’s interest in a green green building is a core belief of the Adam Joseph Lewis Centre for
building, and the project won a C-2000 owner/occupant and builder, Swinerton Environmental Studies, Oberlin College:
award of $400,000 to assist with the Family of Companies. Such a building Oberlin’s Environmental Studies Program
design and construction. was thought the best way both of had outgrown the basement of a campus
SAS Building, Toronto, Ontario: accommodating Swinerton employees building which, being cramped, having
the SAS corporate philosophy is to be and of demonstrating to clients how asbestos insulation and coal-fired
socially-responsible and a leader in green-building practices can be electricity and no natural light, was
innovation. While there was no conscious incorporated into an existing building. ‘fundamentally contradictory’ to the
decision to go ‘green’, during construction Phillips Eco-Enterprise Centre, department’s teachings.
it became clear that green-building Minneapolis: the owner, the Green This larger, purpose-built centre elsewhere
features would be better for staff and Institute, is a non-profit organization, in the college grounds houses current
for the surrounding district. which had moved from re-using building activities appropriately and provides for
Ottawa Paramedics Building, Ottawa: materials and into property development. expansion. Green building features figure
the occupant requested a LEED®-certified A green building was seen as a way of prominently in the Oberlin curriculum,
building. attracting companies in the energy and and many are incorporated in the new
environmental businesses to a rundown development.
area where they would create jobs.
The C.K. Choi Building for the Institute
Mountain Equipment Co-Op Store, of Asian Research, and The Liu Centre for
Montreal: the Mountain Equipment the Study of Global Issues, Vancouver:
Co-Op has established a policy of building the C.K. Choi Building was part of a
green, and in particular of eliminating university expansion scheme which
ozone-depleting substances from its included a demonstration green
developments. building, built for the same budget as a
conventional structure. The success of
the C.K. Choi development and the
favourable media coverage paved the
way for the Liu Centre.

27
The General Expectations of
CASE STUDY
Going Green
We asked whether project met the original
general expectations for a variety of aspects.
A B C D E F G H I J K AVERAGE
Interestingly, it was absorption and lower
Rent 4 – 3 4 – 3 – 5 3 – – 3.7
turnover that exceeded more expectations
than other factors. Yield (rate of return) 5 – 3 4 – 4 1 5 5 – – 3.9

Marketing success 5 – 3 5 – 4 1 3 5 – – 3.7

Level of absorption of space/units 5 – – 4 – 4 – 4 3 – – 4.0

Operating cost 1 – – 4 4 3 3 3 5 4 3 3.3

Initial construction costs 2 – 3 3 3 2 1 3 1 3 4 2.5

Ongoing maintenance costs 1 – – 4 4 2 3 3 – 3 3 2.9

Tenant allowances 3 – – 2 – 3 – – – – – 2.7

Turnover of space (vacancy) 3 – – 5 – 4 – 4 4 – – 4.0

Reduction in internal 5 – – 5 4 2 – 3 – – 1 3.3


fit-out costs (churn)

Average score 3.4 – 3 4 3.8 3.1 1.8 3.7 3.7 3.3 3.3

3.5 3.1 1.8 3.7 3.3

A Green on the Grand, Kitchener, Ontario, Canada – Office building KEY


B SAS building, Toronto, Ontario, Canada – Office building (UC) – Office building
C Ottawa Paramedics building, Ottawa, Ontario, Canada – Office building 1 Not met
D Vancouver Island Technology Park, Victoria, British Columbia, Canada – Office building 2 Partially met
E 260 Townsend, San Francisco, California, United States – Office building 3 Met
F Philips Eco-Enterprise Centre, Minneapolis, Minnesota, United States – Office/Industrial building 4 Partially exceeded
G Mountain Equipment, Co-op Store, Montreal, Quebec, Canada – Retail store 5 Exceeded
H The Solaire, New York City, New York, United States – Residential apartment building
I Cranberry Commons, New Westminister, British Columbia, Canada Co-housing project – Residential apartment building
J Oberlin College, Oberlin, Ohio, United States – Educational facility
K CK Choi building and Lui Centre, Vancouver, British Columbia, Canada – Educational Facilities

UC Under construction

28
The financial benefits of going green
CASE STUDY
We tested the extent to which financials
were quantifiably met, and contrasts with
more general expectations shown in the
A B C D E F G H I J K AVERAGE
previous table. The results were different
with some contributors offering no opinion Rent 4 – 1 3 – 3 – 2 – – – 2.6
on the financials.
Yield (rate of return) 5 – 1 2 – 5 – 2 2 – – 2.8
Overall, the most impressive financial
Marketing success 1 – 1 5 – 4 – – 4 – – 3.0
benefits of green features reported were
the competitive advantage offered by the Level of absorption of space/units 1 – – 5 – 4 – – 4 – – 3.5
positive impact on the marketing of a
Operating cost -1 – – 3 4 1 – – 3 2 1 1.9
property and the speed with which space
or units were leased/sold. Rent and yield Initial construction costs -4 – 1 1 1 -2 – – -4 -1 -1 -1.1
were also impressive.
Ongoing maintenance costs -4 – – 3 4 3 – – 4 -2 -2 0.9

Tenant allowances 1 – – -2 – -1 – – – – – 0.0

Turnover of space (vacancy) 1 – – 3 – 1 – – 4 – – 2.3

Reduction in internal 1 – – 4 – -4 – – – – -1 0.0


fit-out costs (churn)

Level of occupancy 1 – – – 1 – – – √– – – 1.0

Average score 0.5 – 0.4 2.4 0.9 1.5 – 0.4 1.5 -0.1 -0.3

1.1 1.45 – 1.0 -0.2

A Green on the Grand, Kitchener, Ontario, Canada – Office building KEY


B SAS building, Toronto, Ontario, Canada – Office building (UC)
C Ottawa Paramedics building, Ottawa, Ontario, Canada – Office building Exceeded
D Vancouver Island Technology Park, Victoria, British Columbia, Canada – Office building 1 0 - 2%
E 260 Townsend, San Francisco, California, United States – Office building 2 3 - 5%
F Philips Eco-Enterprise Centre, Minneapolis, Minnesota, United States – Office/Industrial building 3 6 - 10%
G Mountain Equipment, Co-op Store, Montreal, Quebec, Canada – Retail store 4 11 - 20%
H The Solaire, New York City, New York, United States – Residential apartment building 5 21 - 50%
I Cranberry Commons, New Westminister, British Columbia, Canada Co-housing project – Residential apartment building 6 51 - 100%
J Oberlin College, Oberlin, Ohio, United States – Educational facility 7 Over 100%
K CK Choi building and Lui Centre, Vancouver, British Columbia, Canada – Educational Facilities

UC Under construction Fell below


-1 0 - 2%
-2 3 - 5%
-3 6 - 20%
-4 21 - 50%
-5 51 - 100%
-6 Over 100%

29
Who knows what?
CASE STUDY
Architects have been central to the
green building movement, and
unsurprisingly nine out of eleven
A B C D E F G H I J K AVERAGE
interviewees rated architects as having
a good or excellent understanding of the Lenders 4 1 2 2 2 1 – 3 2 – – 2.1
field, giving them an average 4.2 out of
Architects 4 5 5 4 4 3 5 4 2 5 5 4.2
five. Planners ranked second with an
average score of 3.6, six of the eleven Appraisers 3 1 – 2 2 1 – – 2 – – 1.8
interviewees ranking them as good or
Planners 3 4 4 3 3 3 5 4 2 4 5 3.6
excellent. Appraisers scored lowest,
at 1.8, below real estate brokers at Developers 2 1 4 5 2 4 1 4 2 4 2 2.8
two and lenders at 2.1. Three of the
Tenants 2 2 3 3 3 2 – 3 2 5 2 2.7
projects, however, had no involvement
with third-party lenders, appraisers or Brokers 2 1 – 2 2 1 – 4 – – – 2.0
real estate brokers.
Average score 2.86 2.14 3.6 3 2.57 2.14 3.67 3.67 2 4.5 3.5

2.8 2.14 3.67 2.8 4

A Green on the Grand, Kitchener, Ontario, Canada – Office building KEY


B SAS building, Toronto, Ontario, Canada – Office building (UC)
C Ottawa Paramedics building, Ottawa, Ontario, Canada – Office building 1 No understanding
D Vancouver Island Technology Park, Victoria, British Columbia, Canada – Office building 2 Limited understanding
E 260 Townsend, San Francisco, California, United States – Office building 3 Understanding
F Philips Eco-Enterprise Centre, Minneapolis, Minnesota, United States – Office/Industrial building 4 Good understanding
G Mountain Equipment, Co-op Store, Montreal, Quebec, Canada – Retail store 5 Excellent understanding
H The Solaire, New York City, New York, United States – Residential apartment building
I Cranberry Commons, New Westminister, British Columbia, Canada Co-housing project – Residential apartment building
J Oberlin College, Oberlin, Ohio, United States – Educational facility
K CK Choi building and Lui Centre, Vancouver, British Columbia, Canada – Educational Facilities

UC Under construction

30
Making professionals more What occupants like best
green-conscious about green
Although two of the twelve properties
Respondents suggested a number of ways Health and productivity are the two
had yet to be completed, and some
to make it easier for appraisers, brokers most popular direct and indirect
interviewees spoke only for occupants, the
developers, lenders, planners and financial benefits of green buildings,
interview responses suggest occupants are
tenants/purchasers to understand while lower occupancy costs – perhaps
more interested in indirect benefits which
green practices. These include: the most tangible direct financial benefit
are more difficult to quantify but which
of the five categories – came last, after
• Educating consumers to demand better may yield the most significant financial,
marketing/promotion and energy
buildings operational and wellbeing benefits.
consumption.
• Providing more, simpler, and better
information on the consumer’s
benefit from green practices CASE STUDY
• Get the project team together to
understand the impacts of green
features throughout the life cycle A B C D E F G H I J K AVERAGE
of the project. This team should Energy consumption 1 – – 5 1 4 – 2 2 2 3 2.5
include architect, developer,
occupant and others Operating costs 5 – – 4 5 5 – 3 2 5 4 4.1

• Understand the project’s impact on Health 3 – – 2 3 1 – 1 – 3 2 2.1


the productivity of its occupants
Productivity 4 – – 1 2 1 – – – 3 – 2.2
• Do more to identify the benefits for
tenants of investment properties, Marketing and promotion 2 – – 3 4 3 – 4 4 1 1 2.8
and not just for owner-occupied Other (i.e. overall environment) – – – – – – – – 1 – – 1.0
developments
• Visit completed green buildings to A Green on the Grand, Kitchener, Ontario, Canada – Office building
see how they work B SAS building, Toronto, Ontario, Canada – Office building (UC)
C Ottawa Paramedics building, Ottawa, Ontario, Canada – Office building
• Carry out more post-completion D Vancouver Island Technology Park, Victoria, British Columbia, Canada – Office building
E 260 Townsend, San Francisco, California, United States – Office building
follow-up studies F Philips Eco-Enterprise Centre, Minneapolis, Minnesota, United States – Office/Industrial building
G Mountain Equipment, Co-op Store, Montreal, Quebec, Canada – Retail store
• Provide an occupant’s manual on H The Solaire, New York City, New York, United States – Residential apartment building
your building’s green features I Cranberry Commons, New Westminister, British Columbia, Canada Co-housing project – Residential apartment building
J Oberlin College, Oberlin, Ohio, United States – Educational facility
• Launch an awareness/information K CK Choi building and Lui Centre, Vancouver, British Columbia, Canada – Educational Facilities
campaign to educate tenants and users.
UC Under construction

31
Appraisers, lenders and insurers Financial and non-financial benefits
In one case, that of Minneapolis’ Phillips Perceptions vary widely with project and
Eco-Enterprise Centre, the developer was occupant, although savings in energy
able to convince the appraiser that higher consumption were popular. Financially,
rents were achieved by the building’s green the easiest features to quantify are energy
features and the appraiser reflected this in consumption and operating cost savings.
the analysis. Otherwise, where an appraiser From occupants’ point of view, however,
was involved, green features were rated as less-quantifiable benefits such as air
lowering operating costs only where the quality, absence of noise, and natural light
information was both available and were all prized.
verifiable. Some projects, however, were
self-financed and did not involve an
appraiser. In other cases, the impact on CASE STUDY
insurance could not be quantified because
the developer/owner or user had a blanket
insurance policy covering more than one A B C D E F G H I J K AVERAGE
location, only one of which might be a Overall 5 – – 5 5 5 – 4 – 5 5 4.9
green building.
A Green on the Grand, Kitchener, Ontario, Canada – Office building KEY
Environmental costs and benefits
B SAS building, Toronto, Ontario, Canada – Office building (UC)
Green v. non-green features C Ottawa Paramedics building, Ottawa, Ontario, Canada – Office building 1 No understanding
D Vancouver Island Technology Park, Victoria, British Columbia, Canada – Office building
In the few cases where detailed payback 2 Limited understanding
E 260 Townsend, San Francisco, California, United States – Office building 3 Understanding
analysis had been done, the returns on F Philips Eco-Enterprise Centre, Minneapolis, Minnesota, United States – Office/Industrial building 4 Good understanding
G Mountain Equipment, Co-op Store, Montreal, Quebec, Canada – Retail store
green features were significant and 5 Excellent understanding
H The Solaire, New York City, New York, United States – Residential apartment building
paybacks short, although items such as I Cranberry Commons, New Westminister, British Columbia, Canada Co-housing project – Residential apartment building
J Oberlin College, Oberlin, Ohio, United States – Educational facility
photovoltaic panels are expensive and
K CK Choi building and Lui Centre, Vancouver, British Columbia, Canada – Educational Facilities
slow to pay for themselves. Green on
UC Under construction
the Grand, 260 Townsend Street and the
Phillips Eco-Enterprise Centre had tracked
the comparative initial cost of green
features compared to conventional
construction, but there were no directly
comparable non-green projects. Overall
construction costs seem to be higher in
most cases, although this difference
will lessen with the increase in industry
experience, availability of technologies
/materials and demand.

32
A question of attraction What’s the most important
Of the seven interviewees who answered environmental feature?
the question ‘To what extent did green Using less energy is ranked as the most
features attract tenants or the user?’, important factor in developing a project,
all but one ranked green features as scoring 4.8 out of five, rating as extremely
‘extremely important’. Lighting, low-VOC important in all but one project. Using
building materials, good indoor air quality, sustainable materials and improved air
ventilation and building systems (such as quality comes a close second, while green
ground-source heat pumps) were other roofs were seen as least important.
draws. Energy consumption and energy
efficiency, however, were not considered
CASE STUDY
very important. Energy consumption and
associated operating cost savings were
frequently cited as financially-
A B C D E F G H I J K AVERAGE
advantageous features. This suggests that
energy consumption tends to be a primary Using less energy 5 5 4 5 5 5 5 5 4 5 5 4.8
measure by which the financial benefits of
Using sustainable materials 5 5 4 5 4 5 5 5 4 4 5 4.6
green buildings are demonstrated, because
it is easier to quantify, although not valued Using recycled or salvaged 5 3 3 4 4 5 5 5 2 4 5 4.1
by the end user as much as health and material
productivity gains. The findings seem to
Using less water 5 4 3 4 3 4 5 5 4 4 5 4.2
underscore the relative importance of cost
saving measures versus the benefits to Green roofs 1 2 1 – 1 5 3 5 1 – 1 2.2
occupiers and to productivity.
Indoor air quality 5 5 4 5 5 5 4 5 3 5 5 4.6
Green goes to market
Average score 4.33 4 3.17 4.6 3.67 4.83 4.5 5 3 4.4 4.33
Higher rents and reduced lease-up periods
were achieved as a result of green features
in at least three developments, Green on 4.0 4.83 4.5 4 4.4
the Grand, The Phillips Eco-Enterprise
A Green on the Grand, Kitchener, Ontario, Canada – Office building KEY
Centre and The Solaire. In addition, half the B SAS building, Toronto, Ontario, Canada – Office building (UC)
sample buildings had market comparables, C Ottawa Paramedics building, Ottawa, Ontario, Canada – Office building 1 Not important
D Vancouver Island Technology Park, Victoria, British Columbia, Canada – Office building 2 Somewhat unimportant
albeit with limited data. Where cited, green E 260 Townsend, San Francisco, California, United States – Office building 3 Neutral
features were thought to have had a F Philips Eco-Enterprise Centre, Minneapolis, Minnesota, United States – Office/Industrial building 4 Somewhat important
G Mountain Equipment, Co-op Store, Montreal, Quebec, Canada – Retail store 5 Extremely important
positive effect on marketing by providing a H The Solaire, New York City, New York, United States – Residential apartment building
competitive advantage. Most projects were I Cranberry Commons, New Westminister, British Columbia, Canada Co-housing project – Residential apartment building
J Oberlin College, Oberlin, Ohio, United States – Educational facility
seen to be market-leaders because of the K CK Choi building and Lui Centre, Vancouver, British Columbia, Canada – Educational Facilities
technologies employed and the publicity
UC Under construction
they attracted.

33
Rankings on the green social register
CASE STUDY
The reputations of professionals involved
in surveyed green buildings rose as a result
of the wide and favourable publicity
A B C D E F G H I J K AVERAGE
inspired by the coverage in the media,
in business and the community, and Reducing absenteeism rates 2 4 – – 4 4 1 – – 3 3 3.0
through accreditation bodies.
Increasing productivity 2 5 – 4 5 5 1 – – 3 3 3.5
About half the projects found measurable
Improving employee health 2 5 – 5 5 5 – – – 3 5 4.3
benefits to the bottom line, sales or
service, whether through productivity or Improving indoor air quality 2 5 – 5 5 4 – 5 – 5 5 4.5
exposure. If not measurable, the impacts
Increasing employee morale 4 5 – 4 4 4 3 – – 5 5 4.3
were thought positive.
Increasing corporate
Some projects had such a great effect on
or civic image 5 4 – 5 4 5 5 5 – 5 3 4.6
the community, to the extent of
converting municipalities to green Increasing corporate or
buildings, or of persuading students or civic leadership in social/
organizations to change their own environmental responsibilty 5 4 – 4 4 4 5 5 – 5 5 4.6
environments. Higher expectations were
Average score 3.14 4.57 – 4.5 4.43 4.43 3 3 – 4.14 4.14
created in the community, the SAS
Building and the Phillips Eco-Enterprise
4.2 4.43 2.1 2.1 4.1
Centre being two projects that proved the
catalyst for transforming local economies. A Green on the Grand, Kitchener, Ontario, Canada – Office building KEY
B SAS building, Toronto, Ontario, Canada – Office building (UC)
Asked ‘Which social issues were factors in C Ottawa Paramedics building, Ottawa, Ontario, Canada – Office building 1 Not important
D Vancouver Island Technology Park, Victoria, British Columbia, Canada – Office building
developing your project?’, most E 260 Townsend, San Francisco, California, United States – Office building
2 Somewhat unimportant
3 Neutral
respondents cited better corporate or civic F Philips Eco-Enterprise Centre, Minneapolis, Minnesota, United States – Office/Industrial building 4 Somewhat important
G Mountain Equipment, Co-op Store, Montreal, Quebec, Canada – Retail store
image, leadership in social/environmental H The Solaire, New York City, New York, United States – Residential apartment building
5 Extremely important

responsibility and improving indoor air I Cranberry Commons, New Westminister, British Columbia, Canada Co-housing project – Residential apartment building
J Oberlin College, Oberlin, Ohio, United States – Educational facility
quality. Reducing absenteeism was seen as K CK Choi building and Lui Centre, Vancouver, British Columbia, Canada – Educational Facilities
least important.
UC Under construction

34
CASE STUDIES:

35
GREEN ON THE GRAND, KITCHENER, ONTARIO, CANADA

Grand on the green, good for The quality of the proposals won the Building envelope: operating cost benefit Although popular with tenants, the pond is
business too project $400,000* from Canada’s C-2000 from the use of wood as the main reported to have created maintenance
Green on the Grand, on Kitchener’s east program to help with design and material, a renewable material that costs headaches for the landlord that impact
side, is a two-floor office building of construction. C-2000 was a demonstration much the same as other materials, but mechanical systems.
20,452 square feet completed in 1996 programme sponsored by the CANMET made possible a structure that is airtight
Mechanical systems: with hindsight, the
overlooking the Grand River. The property Energy Technology Centre of Natural and has insulation three times better
system would be piped differently: using a
has always enjoyed high occupancy levels Resources Canada to encourage high than standard.
modular system rather than a centrally-
and is fully leased. Having carried out a standards of energy performance, water
Lighting: natural daylight pleases workers controlled system allowing for the
post-occupancy audit and tenant survey, conservation, site ecology maintenance
and electricity consumption for lighting is variation of loads required in a multi-
both landlord and tenant regard Green and indoor environment.
half that typical of other offices. tenanted building.
on the Grand as a success from the
Green on the Grand stands on a rise
environmental, investment, occupancy, Ventilation: natural and mechanical, The tenant ranked the principal gains as in
overlooking the Grand River, and was built
social and marketing points of view. independent of the heating and cooling energy consumption, marketing and
as two off-set rectangles, facing south to
system, the ventilation system supplies promotion, employee health, productivity,
The landlord is Ian Cook Construction catch the sun, make best use of daylight,
outdoor air to all offices. Cheap to run, and operating costs.
(ICC), a home builder, and the building’s and to offer most offices in the five suites
yet makes for good working atmosphere.
lead tenant/project engineer is Enermodal a river view.
Engineering (EE), a provider of innovative Lack of ambient noise: noise does
Appropriately for a waterside building,
solutions to reduce the energy, water carry through the floor, although in general
Green on the Grand is thrifty in its water
consumption and environmental impact of sound quality in offices is good.
use. The building requires about 30% less
building designs.
water than conventional office buildings, a Operable windows: tenants like the
Green on the Grand was built at a time saving achieved by the harnessing of windows that can be opened, and wish
when it was hard to lease office space. rainwater for landscape irrigation, the that fewer were fixed shut.
On the other hand, the developer had installation of water-conserving bathroom
Pond: cooling and heating at Green on
acquired the land relatively cheaply. fixtures, and a specially-built pond as an
the Grand are by the most
Encouraged by the possibility of grants for alternative to a cooling tower. Green on
environmentally benign fuel available,
a green building, ICC and EE agreed on an the Grand has also achieved a 72%
natural gas. Both rely on radiant heating
environmentally state-of-the-art facility. reduction in drinking water consumption.
and cooling rather than forced air systems.
This would employ the latest in energy-
Ian Cook, President of Cook Homes Waste heat is sent not to a rooftop cooling
saving and environmentally-friendly
and Steve Carpenter, President of -tower but to a landscaped pond and
features, and so attract tenants who,
Enermodal Engineering, lists in descending waterfall for loss through evaporation.
spoiled for choice, otherwise might not
order of financial benefit to landlord or
commit to taking space.
tenant the following green features of
Green on the Grand:

36
Developer and major tenant found The example set by Green on the Grand
that architects, lenders, appraisers and will be easier to follow once there is more
planners understand green building incentive for an owner/investor to ‘build
more than developers, tenants and green’, in the shape of a greater correlation
real estate brokers do. between savings in energy costs and
benefit to the landlord. At present, the
Enermodal, says President Steve Carpenter,
advantage is to the owner-occupant. Under
measurably profits from its connection
a conventional net lease, it is the tenant
with Green on the Grand. The publicity,
who benefits from energy efficiency and
national and international, has generated a
operating cost savings, while the owner is
rapid expansion of the company’s business
stuck with the initial capital and
requiring Enermodal to double the office
continuing maintenance costs.
space it occupies. Similarly, Ian Cook,
* Unless otherwise stated, dollar values are those of the
President of Ian Cook Construction reports relevant country: in this case, 400,000 Canadian dollars.
that the good publicity has helped to
boost awareness of his company and sales
of its homes. Green on the Grand’s comment:

The developer sees Green on the Grand CREATE A DEMAND FOR THE
as an investment, based upon the rents PRODUCT, AND THEREBY, ACHIEVE
achievable at the time of completion.
ECONOMIES OF SCALE.
Lower mortgage financing was not available
because of the building’s green features,
and their impact was not reflected in the
lender’s appraisal. Insurance was actually
higher than otherwise, on account of the
wooden construction. In the developer’s
opinion, the building’s green features have
yet to make higher rents achievable. On the
other hand, the development was
undertaken at a time when the office rental
market was weak: it was the green features
that got Green on the Grand noticed, so
much so that the project was fully leased
at completion.

37
SAS BUILDING TORONTO ONTARIO, CANADA

Green is as green does The SAS Building, built on the site of an Jerry McDermott, Manager Real Estate
SAS Institute Inc. did not plan to develop open-air car park, has eight floors above Development, SAS Institute (Canada), lists
a green building as its new Canadian ground, and a further three below for two additional environmental benefits of
headquarters, but having incorporated one underground parking. The developer will the SAS Building:
practical measure after another, SAS found occupy 52% of the structure’s 115,000
Reducing ‘heat island effect’: the roof is
that the project within sight of meeting square feet rentable area and lease the
covered with a white membrane to reduce SAS comment:
the requirements of Canada’s Leadership in rest. Having decided that development was
the tendency of buildings and roads to act
Energy and Environmental Design green the best financial option, SAS decided that LOOK AT THE BOTTOM LINE,
like giant storage heaters. The large
building rating system (LEED®). These the way to get the most out of the AND CONSIDER ONLY THE
amounts of concrete, asphalt and bricks
practical measures included energy-saving investment was to build the best-possible
used 'soak up' heat in the daytime, store it, DIRECT INCREMENTAL COSTS
features, abundant natural light, nearness place in which to work, while availing itself
and then release the energy at night. The
to public transport and the use of of the economies in operating costs OF SUSTAINABILITY VERSUS THE
site was previously a paved parking lot.
resource-efficient building materials. offered by green features. ENERGY COST REDUCTION IT
Improving the neighbourhood: replacing a
SAS Institute Inc., of Cary, North Carolina, Raised floor air conditioning: saves on YIELDS.
parking lot with eight storeys of office
USA, is the world’s largest privately-owned energy costs, and allows each occupant the
space helps to regenerate the district, and
software company, and regards itself as highest level of individual control.
the underground parking space removes
socially-responsible as well as a leader in
Daylighting: operating costs reduced by polluting vehicles from the street as well
innovative technologies. SAS’s prime
full-height low-emission glazing on the as the paved surface which contributed to
motive in building a new national HQ for
south and west sides which allows the the heat island effect.
SAS Institute (Canada), however, was
sun's heat and light to pass through the
financial. It would have been prohibitively As the developer will not occupy the SAS
glass into the building, yet blocks heat
expensive to extend the lease on its Building before late 2005, it is too early to
from leaving the room, so reducing heat
current Toronto HQ, and there seemed to quantify all costs and benefits. Building
loss considerably. A sky-lit atrium extends
be nowhere else in the Canadian financial costs, however, were ‘marginally’ higher
through the top three of the eight above-
capital to meet the company’s than those of conventional construction.
ground floors, admits natural light, saving
requirements. SAS’s solution was to As a consequence, SAS seeks higher rents
on lighting costs and solar heat gain.
develop its own HQ, the SAS Building, than otherwise, and current firmed-up
which is on the north side of King Street, Reduced energy consumption: overall offers show tenants willing to pay more
on the edge of the financial district. energy consumption is projected to for the SAS Building’s combination of
between 30% and 50% that of a convenient location and the green-feature
conventional office building, much of this financial benefits of lower operating and
saving related to lighting features. energy costs, plus staff benefits such as
superior indoor air quality and lighting.
Water consumption: all rainwater is
collected in tanks, treated and re-used in Although it is too early to quantify the
the washrooms. impact on the bottom line, the developer
reports that the SAS Building’s green
In assessing the relative benefit of such
features generate positive publicity in the
features, impact on workspace quality and
national daily press, in journals and in
on the bottom line was regarded as equally
industry presentations, thus increasing
important.
knowledge of the SAS Institute (Canada)
and strengthening the brand.
38
OTTAWA PARAMEDICS BUILDING OTTAWA ONTARIO, CANADA

Driving a green bargain Health-conscious requirements include an In all, estimates the general contractor,
When the City of Ottawa decided that its indoor air quality plan to protect Aecon-Westeinde Alliance, there was a
Ottawa Paramedic Services needed a construction workers as well as the future ‘green premium’ of about 1.2 %, or
purpose-built headquarters, it is hardly occupants. The ventilation system has $230,000, to pay for the green features
surprising that the city also decided that carbon dioxide monitoring to keep air necessary for the LEED® certification
the building should embody features that fresh, and materials used in adhesives, Ottawa sought. To offset against this extra
made life as healthy as possible for the carpets, paints and sealants are required to cost, there was the prospect of a $60,000
people working in or living around it. The be low on volatile organic compounds. grant to reward energy savings. According
building, moreover, would have to be Nine-tenths of ‘normally occupied’ interior to Michael Sullivan of Forum and Robert
LEED®-certified. spaces have windows. A target of at least Vaillancourt of the City of Ottawa, LEED®
25% better energy performance than certification is ‘onerous and expensive’,
This, then, was the brief that Ottawa gave
Canada’s Model National Model Energy yet the city thought it important to show
to its private-sector co-developer, Forum
Code for Buildings is to be met by environmental leadership at a time when
Leasehold Partners who, with Aecon-
measures such as high-efficiency the city was preparing to make LEED®
Westeinde Alliance, designed and built the
condensing boilers for space and water certification a requirement for new
new Ottawa Paramedic Service HQ, 2465
heating, high-efficiency windows and municipal building. The 25% energy
Don Reid Drive, scheduled for completion
lighting. CO2 demand control sensors will savings, however, would pay back
in December 2005. Forum financed the
also reduce ventilation when offices are incremental costs within five years.
$20 million construction costs, and will
not being used.
lease this 100,000 square foot project for
Ottawa Paramedics Building’s comment:
30 years, at the end of which the building Recycled and locally sourced building
reverts to the city. Meanwhile, the property materials were used as far as possible, IMPROVE DATA ON SAVINGS
manager, Trammel Crow Company Canada, much of which would otherwise have ACHIEVED: FOR THIS PROJECT,
has committed to ‘green housekeeping gone into landfills. Native plants requiring
40% ENERGY SAVINGS ARE
practices’. no irrigation have been chosen for
landscaping. ANTICIPATED ON ELECTRICAL AND
MECHANICAL SYSTEMS.

39
VANCOUVER ISLAND TECHNOLOGY PARK VICTORIA BRITISH COLUMBIA, CANADA

Even the salmon like it Completed in 2001, at a time when the Two other green developments are now
Vancouver Island Technology Park (VITP) technology boom was about to bust, the under way locally: the University of
is a 35-acre site on the southern tip of 184,000-square-foot Phase One of VITP Victoria Medical Sciences Building for
Vancouver Island, a campus-like is now 98% leased to 25 companies. In doctor training; and an 18-building
countryside setting containing a salmon- March 2005, VITP's developer and former Dockside Development initiated by the
spawning creek and criss-crossed by owner, the British Columbia Buildings City of Victoria, which was chosen over a
pathways and trails. Persuading the Corporation (BCBC), also the Crown conventional development. Green building
municipality in which VITP is situated that agency responsible for British Columbia’s is now integral to many BC government
a green development would be better for property assets, sold VITP to the University developments, and BC government
local salmon habitat was one challenge the of Victoria Properties Investment Inc. suppliers and contractors are changing
developer faced. The approved strategy (UVPI) for $20,200,000. their business products and services to
included developing parking lots with car- better align them with this change in
While it is difficult to quantify the
pooling spaces and plug-ins for hybrid market demand.
incremental value green features brought
vehicles, and an innovative grass/gravel
to the sale, they did improve its Overall, BCBC reports that rents exceed
system to reduce runoff and vehicle-
marketability. BCBC says it was able to expectation, as do absorption, operating
related site contaminants that might harm
lease up more quickly than otherwise, and maintenance savings, all attributed to
fish. There are no storm drains, water filters
thus reducing development costs, and the green features, although tenant allowances
or separators: the unpaved surfaces and
green features made the project more have been higher than expected.
microbes in the soil do their work.
marketable to prospective purchasers,
Vancouver Island Technology Park’s
Other green features help to attract and improving liquidity.
comments:
retain tenants in the high-technology
Dale Gann, General Manager of VITP, PLAN WELL FROM THE START –
industry, whose employees often work
says that VITP was conceived as an
long hours. Media attention and the LEED® GET THE PROJECT TEAM TOGETHER
investment property. The investment is
Gold certification gave free publicity to
achieving market rents and operating TO UNDERSTAND THE EFFECTS OF
VITP and its tenants. What has really
cost savings, raising awareness of LEED® GREEN FEATURES OVER A
impressed tenants, however, is the quality
and green practices. Local economic
of the lighting, heating, ventilating and air BUILDING’S LIFECYCLE AND THE
development gains are also noted by
conditioning systems in the buildings. One
BCBC as the result of VITP attracting INTERDEPENDENCIES BETWEEN
tenant, E-traffic Solutions, said in less than
high-technology companies, and the BUILDING COMPONENTS.
a year after moving into VITP, their
creation of high-paying jobs and a well-
productivity rose 30%.
educated workforce. PLAN FOR AND CONDUCT MORE
AND BETTER POST-OCCUPANCY
AUDITS TO MEASURE HOW GREEN
BUILDINGS IMPROVE OCCUPANTS’
PRODUCTIVITY.

40
260 TOWNSEND STREET SAN FRANCISO CALIFORNIA, USA

Don’t tell the clients, show them Productivity is also up. One factor is the The annual operating cost savings are
Swinerton Family of Companies is a move from a 25-storey high rise with very estimated at $28,535, or a payback of
large contractor and construction manager little space in which employees could less than four years. One useful
that sees in 260 Townsend a multiple gather, to a building which, besides better comparable with three conventional
opportunity to create value, accommodate lighting and air quality, has open-air buildings of a similar size in San Francisco
its employees, and to provide an rooftop terraces. One of these can shows them to have combined gas and
educational centre to show its clients and accommodate up to 200 people. Staff get- electricity consumption of 87.9, 70.5 and
suppliers how to build green. Swinerton togethers, the company says, have 63.0 kBtu per sq. ft. a year, compared with
acquired the seven-storey building in 2002, improved communication and the flow of the 51.1 kBtu of 260 Townsend.
when it was nine-tenths empty after 16 ideas. 260 Townsend’s terraces are
years’ occupancy by a previous tenant, landscaped with native plants, which
260 Townsend Street’s comments:
during which time maintenance problems, reduce storm runoff and heat island, effect.
including ductwork contamination, had VISIT 260 TOWNSEND TO SEE FOR
Temperature, CO2 and humidity are
been allowed to build up. 260 Townsend YOURSELF.
monitored by state-of-the-art Emcor fully-
has since been renovated and upgraded to
digital building management system (BMS)
a standard that has won the property SEEK OUT CONFERENCES ON
with dedicated Internet access. The BMS
LEED® – EB (Existing Buildings) Gold
also maximizes use of outside air, the HOW TO UNDERSTAND AND
certification.
building is totally non-smoking, and air IMPLEMENT GREEN PRACTICES.
This is an owner-occupied property, and quality is further maintained by an
since no third party was involved in the insistence upon low-impact fertilizers, INVOLVE LOCAL UTILITY
financing, there has been no lender’s cleaning and pest-control chemicals. The
COMPANIES TO TRAIN THE PROJECT
appraisal that took into account 260 BMS also runs the HVAC system to meet
Townsend’s green features. However, actual rather than estimated demand, thus TEAM AND BUILDING – USERS IN
William Krill, Operations Manager and saving over 30% on utility bills. High- ENERGY-SAVING TECHNOLOGIES.
Green Building Chairman, Swinerton efficiency light fixtures with motion
Builders, said the company’s aims in this sensors complement best use of daylight, ESTABLISH CONTINUING
development were direct return from direct and indirect. It is too early for the EDUCATION AND TRAINING IN
energy savings, improved productivity and developer/occupier to quantify the savings
on operating costs due to the building’s
GREEN PRACTICES FOR EVERYBODY
the business development and marketing
benefits of building green. green features, but one indication is INVOLVED.
available. Premium and savings were
The company has received a number of
tracked for each green item during
direct referrals as well as a number of
construction. The total additional cost was
project opportunities through hosting
estimated at $107,547 or $1.13 per sq. ft.
meetings of the US Green Buildings
(including 28,179 sq. ft. of indoor parking),
Council Big Users Group. In the two years
2.01% over the entire project cost.
since acquiring and redeveloping 260
Townsend, Swinerton has also signed
contracts for about $500 million of new
LEED® projects, five times more than in
the equivalent preceding period.

41
PHILLIPS ECO-ENTERPRISE CENTRE MINNEAPOLIS MINNESOTA, USA

From solid waste to solid gain By completion in 1999, 40% pre-leasing An appraisal conducted to secure low- Phillips Eco-Enterprise
Minneapolis’s Phillips Eco-Enterprise Centre had been achieved, but there was 75% interest government financing resulted Centre’s comments:
is an industrial office property absorption within the first year and full in the lender concluding that there was BETTER QUANTIFICATION OF
development in a high-crime, low- occupancy within two years. Net lease incremental value in the project’s greater
employment neighbourhood on a site that rates achieved were between 5% and energy efficiency. Only after evidence POST-OCCUPANCY BENEFITS OF
had been earmarked for a solid waste 10% above market rate for conventional had been presented did the appraiser GREEN FEATURES.
transfer station. The centre’s owner is the buildings, developer Corey Brinkema accept that higher-than-average rents
non-profit Green Institute which, having concluding that green features contributed were being achieved. MORE FOLLOW-UP ANALYSIS (THE
started in the business of re-using building to higher rents, shorter lease-up period DEVELOPER AND FUNDER ON THIS
Projected operating costs were lower
materials, had then moved on to property and the ability to target a specific group
because of the building’s energy-efficient PROJECT HAD NO FUNDING LEFT TO
development. With what is now the Phillips of tenants.
characteristics, and contributed to a COMPLETE THIS ANALYSIS).
Eco-Enterprise Centre, the Green Institute
The Centre now has 18 tenants, many in 5% to 10% net rental premium. A post-
wanted to show that this downtown site
the energy and environmental industry, occupancy survey concluded that the MORE PEOPLE NEED TO BE SHOWN
could be put to more productive use than
more in the non-profit sector than the building systems resulted in a development
solid waste transfer. The result is a 64,000 THE BENEFITS OF GREEN PRACTICE
Green Institute would like. Construction 35% more energy-efficient than one with
sq. ft. development, one-third offices and IN INVESTMENT PROPERTIES AS
costs were about 3% higher than with a a typical high-energy furnace, and that the
two-thirds industrial space. It is a
conventional building, although rates of building’s energy exchanges and the use of WELL AS IN OWNER-OCCUPIED
development, which has created over 100
return are similar, thanks to the higher natural light resulted in a total energy
jobs in a rundown district, while meeting PROPERTIES, BECAUSE MANY OF THE
rents the green features command. Had usage 40% lower.
the proprietor’s strict financial criteria. GREEN PROJECTS COMPLETED IN
more been known about green building
Lower mortgage financing charges
Developed as an investment property on practices in the 1990s, the Centre could THE USA AND CANADA SO FAR ARE
were not available because of the green
the Green Institute’s behalf by Corey have been completed more quickly and
building features, and the requirement OWNER-OCCUPIED.
Brinkema, now Principal of Trillium for less than its $5,800,000 cost.
for substantial pre-leasing involved the
Planning & Development, the Phillips Eco-
Much of the building’s steel and brick is developer in ‘significant’ marketing efforts.
Enterprise Centre is the first speculatively-
salvaged or locally sourced, and water According to the developer, however, the
built green business centre in the US. The
capture allows all storm water runoff to be Centre poses less risk for the lender than
State of Minnesota provided $1,500,000 in
used onsite. In the warehouse section, an equivalent conventional building. Its
equity funding, and Welsh Companies
sunlight is reflected by skylights and sun- green features extend the building’s useful
undertook third-party leasing.
tracking mirrors which reflect up to ten life and result in higher occupancy, thus
Requirements included a minimum 50%
times more lumens in the morning and improving the quality of the income
pre-leasing and the rents that could be
later afternoon than ‘passive’ skylights. stream, residual value and overall security
achieved at the time in the market to
A 30-kilowatt photovoltaic array on the of the financing.
secure debt financing coverage and third-
warehouse roof is the region’s biggest
party financing. The Phillips Eco-Enterprise Centre has
single solar energy installation. There was
won professional, city, state, national
additional expense in building wells, due
and international awards, but The Green
to the shallowness of the surrounding
Institute has decided against LEED®
bedrock, with payback estimated at seven
certification as being too expensive in
years. In fact, payback was within four
time and money.
years due the heat pump system’s running
entirely on low-cost electricity, when other
projects rely upon increasingly expensive
42 natural gas.
MOUNTAIN EQUIPMENT CO-OP STORE MONTREAL QUEBEC, CANADA

All the news that’s fit to build According to MEC’s Marie-Eve Allaire and Mountain Equipment Co-op’s
The Mountain Equipment Co-op (MEC) Corin Flood, the co-operative regards the comments:
store in Montréal made the newspapers, Montréal store as an investment property DEVELOPERS DEVELOP WHAT EDUCATE THE CONSUMER. THERE ARE
and to some extent newspapers have as well as an embodiment of the group’s
helped to make the store. This green green philosophy. In deciding to act as its THEY THINK THE MARKET WANTS, ALREADY MANY DESIGNERS WHO
development made news, and the walls of own developer, MEC reasoned that it could AND DON’T OFFER GREEN CARE ABOUT ENVIRONMENTAL
the structure are insulated with shredded achieve three things: avoid paying the BUILDINGS BECAUSE CUSTOMERS DESIGN, AND ARE EXCITED ABOUT
newspapers. MEC is a consumer co- developer’s profit, build the store the way
operative and Canada’s leading supplier of it wanted, and benefit from lower DON’T KNOW ENOUGH ABOUT WORKING FOR A CLIENT WHO IS
good-quality outdoor clothing and gear, operating costs. MEC, however, does not THEM, INCLUDING CUSTOMERS OPEN TO GREEN CONCEPTS.
with over 1.8 million members worldwide. measure rate of return on the investment WHO COULD AND WOULD PAY
The co-op’s approach to building is in real estate, preferring the rate of return
conditioned by corporate goals, one of on the business. FOR GREEN IF THEY WERE OFFERED
which is to ‘reduce the ecological impact THE CHOICE. MEC SAYS THERE IS
The energy efficiency of Montréal’s
of running our business while increasing A LOT OF ‘GUILT MONEY’ THAT
Mountain Equipment Co-op store
the positive impact we have on people and
outperforms Canada’s Model National CUSTOMERS WOULD SPEND ON
communities’. Acting upon this principle,
Energy Code by 69.2%, a calculation based
the Montréal store is the third in MEC (the BETTER CHOICES IF CHOICE
upon the first year of operation. Two PV
other two are at Ottawa and Winnipeg) to WAS OFFERED.
panels power the solar domestic water and
meet the environmental and energy
irrigation systems, helping to limit costs to
performance objectives of Natural MARKET PRICING IS DISTORTED BY
an estimated at $50,000 a year, a third
Resources Canada’s C2000 standard, and is
that of a conventional building. Although IGNORANCE OF GREEN VALUES,
the first in Québec.
LEED® was used as a guide to the design ESPECIALLY AMONG DEVELOPERS,
MEC, the tenant, also acted as developer, of the development, MEC has not applied
thus reducing its lease rate. MEC’s for certification, because of the time it AND CUSTOMERS CAN BUY ONLY
Montréal store opened in May 2003, at a takes and because some of the design WHAT IS OFFERED. IN THE ABSENCE
cost of $6 million, or $123.87 per sq. ft., requirements are thought to be overly- OF KNOWLEDGE AND CHOICE,
which was above budget but not because elaborate.
of its green features. PEOPLE WILL CONTINUE TO MAKE DO
WITH CONVENTIONAL BUILDINGS,
One unusual aspect of the MEC store is
that materials and waste management is BASED UPON THE CURRENT,
designed so that, subject to local by-laws, INACCURATE, SYSTEM OF PRICING.
parts of the structure and façade can be
taken down and reused somewhere else in
the future. Interior space design limits
waste through design with walls that can
easily be taken down, moved and
reassembled. Air is not drawn into the
building from ground level, where it might
be polluted by highway traffic.

43
THE SOLAIRE NEW YORK NEW YORK, USA

Green ice at cocktail time Among The Solaire’s Green features are The Solaire’s comments:
Among the health-conscious green 35% lower energy and drinking water MAKE THE COMMITMENT TO
features of the Manhattan’s The Solaire is consumption, and 65% reduction in peak
a central water filtration system, backed by demand for electricity. BPCA’s BUILD GREEN FIRST, AND THEN
refrigerators, which double-filter drinking requirements, however, account for only DECIDE HOW TO IMPLEMENT IT
water and ice. The Solaire, a 27-storey 75% of The Solaire’s green features, for the COST-EFFECTIVELY.
residential apartment development of developer wanted a better building that
293 units and 357,000-sq. ft. with onsite incorporates higher-quality materials, as GIVE TENANTS OPTIONS
parking, is in Battery Park City on the west well as systems which are healthier for the
BECAUSE THE MARKET IS NOT
side of New York’s financial district. It occupants.
adjoins the site of the former World Trade STATIC AND DEVELOPERS NEED
Martin Dettling, Vice-President of The
Centre, and was completed in August 2003 TO BE ABLE TO RESPOND TO
Albanese Organization, says energy
after a nine-month delay because of the
efficiency features provided the best CHANGING PERCEPTIONS.
terrorist attacks of 11 September.
payback, because they both attracted
The Solaire cost $116 million to build, grants and reduced energy costs. Indoor air
$76 million in hard costs, and $40 million quality, however, was almost as significant,
soft costs, a total equating to $325 per sq. for this proved to be a big marketing gain
ft. or $395,904 per unit. Extra costs due to for the project. One family reported that
green features were not quantified, as on moving to The Solaire their daughter, an
most of the features were a requirement asthma sufferer, began sleeping soundly for
of the tender. A joint venture by developers the first time. The Solaire was leased up
The Albanese Organization, Inc. and within six months, lower water and
Northwestern Mutual Life Company, The electricity charges proving a particular
Solaire is the first building designed to draw. The development’s popularity
meet environmental guidelines set in the brought with it a 5% rent premium, one
year 2000 by the Battery Park City that was not envisaged when the project
Authority (BPCA). The project received was first proposed.
LEED®-NC (new construction) Gold
Once the Solaire was completed, the
certification, and grants include $3,200,000
developer successfully lobbied the local
over five years from a New York State
water board to reduce its charges, having
Green Building tax credit and $560,000
demonstrated a saving of over 25% in
from the New York State Energy Research
water usage. Air quality is maintained by
Development Authority.
an advanced central air-filtration system,
with 24-hour monitoring, including carbon
monoxide levels in the garage, and every
bath and kitchen has 24-hour exhaust.
This energy-conserving development also
has PV panels that generate 5% of The
Solaire’s energy at peak loading.

44
CRANBERRY COMMONS BURNABY BRITISH COLUMBIA, CANADA

Green from go One feature of note in this courtyard Although the street was a city
Cranberry Commons is a housing co-op development is the unusual amount and development area, the key site was
of green-minded people who range from high finish of common amenity spaces, privately owned. Once the co-op had
young couples in their 20s to a woman in which are seen as a shared asset. Design bought this site, however, the city was
her 80s. The co-op aspect of the and construction of such spaces to balance willing to sell neighbouring lots, until the
development was taken into account by privacy and community is expensive, says present 0.46-acre site had been assembled.
the lender’s appraisal, but not the many Cranberry Commons resident and Site acquisition led to the next hurdle: the
other green features. On a busy developer’s representative Ronaye city had zoned the area for townhouses,
commercial street, half an hour’s bus ride Matthew, who adds that the appraiser and at first the floor space ratio (FSR) of
from downtown Vancouver, the 26,662 sq. understood this concept and how to value common spaces was included in the total.
ft. co-op has 22 apartments and ‘common asset spaces’. Had the City of Burnaby not agreed to
townhouses, and was completed in 2001 take common amenity spaces out of FSR,
Cranberry Commons is owner-occupied,
at a cost of $5,317,750, or $239 per sq. ft., the project would have been more
and homes rarely change hands but values
$241,698 per unit. The developer, expensive to build. Lastly, the city required
are claimed to between 15% and 20% per
Cranberry Commons Co-housing there to be 38 parking spaces at Cranberry
cent higher than for similar footage in
Development Consulting, is a company Commons when the co-owners see a need
conventional properties, although
created by the future owners of the for only 21, and the city refused their offer
construction costs were higher. Yield,
homes: the same company also to trade some additional environmental
marketing success, operating and
financed the project and directed design features in exchange for releasing the 17
maintenance savings are all considered to
and development. redundant spaces for other use.
have exceeded expectations, while sale
Members have tried to build in prices and absorption met expectations, Cranberry Commons comments:
sustainability features at every stage, and initial construction costs were higher MAKE MORE INFORMATION ON
from site selection, through in-floor than expected. Even at Cranberry
radiant heat (less noise, dust), to the Commons, however, green features take GREEN BUILDING PRACTICES
installation of solar roof-panels, which second place in financial performance to AND MANAGEMENT AVAILABLE.
halve domestic hot-water load. High- higher sale price, lower operating costs and CRANBERRY COMMONS CO-OP
volume fly-ash concrete was used in the rate of resale.
offstreet parking and other flooring, MEMBERS WANTED TO ADOPT
To realise their plans for sustainable co-
putting to constructive use this waste SUSTAINABLE PRACTICES, BUT
operative living, the Cranberry Commons
product of burning coal, while halving the FINDING THAT CONSULTANTS
residents had to overcome a number of
greenhouse gas emitted in making cement.
hurdles. The first was that the project took ‘DIDN’T HAVE TOO MUCH TO
The production of cement around
shape during a slow building market, when
Vancouver, the developer points out, OFFER’, HAD TO OBTAIN ADVICE
risk was out of fashion and it was difficult
produces half as much CO2 as all personal ELSEWHERE. MANY GREEN
to assemble sufficient members. That done,
automobiles combined.
to find and acquire the site, co-op BUILDING DECISIONS WERE
members had to compete with
‘INTUITION-BASED’ RATHER THAN
conventional developers who are
sophisticated land purchasers. FORMED WITH HARD DATA.

45
ADAM JOSEPH LEWIS CENTRE, FOR ENVIRONMENTAL STUDIES, OBERLIN COLLEGE OBERLIN OHIO, USA

Those who teach can also do The Environmental Studies Program not The ‘Living Machine’ is a sunlight-powered Adam Joseph Lewis Centre’s comments:
Oberlin’s Environmental Studies only chose to develop a sustainable natural wastewater treatment system, CREATE A WEBSITE WITH REAL-TIME
Program was fast outgrowing its own building: the program was also obliged to which eliminates the need for off-site
environment, the basement of a campus be self-sustaining, in that it also had to treatment, and significantly reduces the DATA ON THE BENEFITS OF
building. This was not only cramped, but find the money. With Oberlin as the building’s water consumption. Heating and BUILDING GREEN.
the pipes were insulated with asbestos, the developer, the centre was funded through cooling throughout the development is by
electricity was coal-fired and there was no the contributions of The Lewis Family closed-loop geothermal wells. The Adam ENABLE INTERESTED PARTIES TO
natural light. In short, says Cheryl Wolfe- Foundation of Cleveland and of the Joseph Lewis Centre has also taught the EXPERIENCE A GREEN BUILDING,
Cragin of Oberlin’s Environmental Studies Progressive Insurance Company. developer a thing or two. Were the project
ESPECIALLY, AS IN THE CASE OF
Program, it was an environment being started today, the developer would
Construction costs for the 13,600 sq. ft. THE ADAM JOSEPH LEWIS CENTRE,
‘fundamentally contradictory’ to the have chosen simpler systems. Secondly,
centre, at $4,800,000 ($353 per sq. ft.),
department’s teachings. provide ventilation by a mixture of fresh NATURAL DAYLIGHT AND INDOOR
include outlay on two items not normally
and re-circulated air, and not 100% fresh
The answer was to move to a larger, found in a conventional development, AIR QUALITY.
air, which existing systems find difficult to
purpose-built centre elsewhere in the $400,000 for wastewater treatment,
recycle. It was also difficult to find an CREATE AWARENESS THAT A GREEN
college grounds. This would not only known as the ‘Living Machine’, and
engineer who understands the systems and
house current activities in an appropriate $500,000 for a PV system. These two BUILDING CAN GENERATE ITS OWN
knows how to operate and maintain the
environment, but also provide for features added 19% to building costs, but
closed–loop groundwater system. ELECTRICITY: THIS PROJECT
expansion as well as livening up an total operating costs are lower than
underused section of the campus. expected, and such is the media interest The developer foresees two main GENERATES 58% OF ITS NEEDS.
Green building features figuring generated that, with an article in Time and problems for people considering a similar
prominently in the Oberlin curriculum, a television profile on ABC News, inquiries development, one being the shortage of LAUNCH A MEDIA ‘BLITZ’
many are incorporated in the new are now handled by a full-time staff qualified engineers, and the other being PROMOTING THE BENEFITS OF
development, Adam Joseph Lewis Centre member. One story generated is that of a the limited knowledge of the necessary SUSTAINABILITY.
for Environmental Studies, which was student who, though badly affected by the computer control systems. The Adam
completed in 1998. The centre is now a gases emitted by materials in conventional Joseph Lewis Centre is a high-performance
focal point of the academic programme, buildings, was able to work in the Oberlin building, requiring very specialized
practising what it preaches, attracting development. Off-campus, Wal-Mart has knowledge to operate, and the lack of
students and staff, as well as providing an now agreed to changes in its plans and suitably qualified engineers is seen as
example to its surrounding community. building practices for a store opening a barrier to wider adoption of its
Energy savings of 63% are being achieved, outside Oberlin. sophisticated technologies. Secondly,
making a ‘living laboratory’ of the building the computer controls require a level of
both for students and the thousands of programming knowledge and a grasp of
visitors who tour and study it. Electricity the systems logic and capabilities that is
usage is a third less than other campus hard to find.
buildings, while usage of the space by
other departments means that it is twice
as busy as originally envisaged, placing
greater demands upon building systems
and management.

46
C.K. CHOI BUILDING FOR THE INSTITUTE OF ASIAN RESEARCH,
LIU CENTRE FOR THE STUDY OF GLOBAL ISSUES UNIVERSITY OF BRITISH COLUMBIA VANCOUVER, CANADA
East, west, payback’s best Along the way, the centre overcame a The C.K. Choi building replaced a parking C.K. Choi Building and the
The C.K. Choi Building, a research centre, popular misconception that the building lot, and existing trees were preserved to Liu Centre comments:
and the Liu Centre, a policy and conference would prove to be substandard because benefit from their shade and the removal DISPEL IGNORANCE. MANY
facility, are neighbouring green buildings so many building materials were re-used: of CO2 from the air. The Liu Centre also
amid trees on a university campus, itself 60% of primary wood structure, and 100% preserved trees, restricted the use of heavy PEOPLE BELIEVE, MISTAKENLY, THAT
on a promontory. of exterior brick cladding for example. One machinery to protect tree roots and to GREEN COSTS MORE TO BUILD
user was discovered to have an allergic limit soil compaction, and used native THAN CONVENTIONAL; THERE IS
Finance is as much a part of the
reaction to the building, but it was found ferns and wild grasses to restore the forest
relationship between these two buildings LITTLE UNDERSTANDING OF THE
that a joint had not been caulked. Once floor and reduce irrigation.
as shared commitment to green features.
this had been put right, the allergy VALUE A GREEN BUILDING CAN
Both were developed and are owned by Three things would have been done
subsided: had this been a conventional CONTRIBUTE, AND IT’S ALSO HARD
the University of British Columbia (UBC). differently were the projects being started
building, the problem would probably have
The 30,000 sq. ft. C.K. Choi Building came today. First, renewable energy sources FOR PEOPLE TO UNDERSTAND HOW
been neither discovered nor dealt with.
first, and was completed in 1996, the would be used: previously they were too
THEY CAN CONTRIBUTE TO
18,800 sq. ft. Liu Centre four years later. Among its many honours, the C.K. Choi expensive. Secondly, the buildings rely
The C.K. Choi Building cost $4,400,000, or Building numbers the BC Hydro Smart upon natural ventilation, the acoustics of SOLVING GLOBAL PROBLEMS SUCH
$150 per sq. ft., and was financed 50:50 by Energy Award, and listing as one of which are difficult to manage. Lastly, a AS GREENHOUSE GASES AND
UBC and private donations. It was planned American Society of Architects’ top ten geothermal/geoexchange ground source
NATURAL RESOURCE DEPLETION.
as part of a university expansion buildings. According to Jorge Marques, heat pump system would have been
programme, with provision for it to be a UBC Energy Manager and Freda Pagani, installed, offering still more energy savings. YET DEVELOPING, LIVING AND
green building, provided it could be Director, Sustainability, the public acclaim With no third-party lender involved, there WORKING IN GREEN BUILDINGS
demonstrated that construction would with which the development has been was no appraisal required, and the question
CAN MAKE A DIFFERENCE.
cost no more than a conventional design. greeted, nationally and internationally, has of achieving lower financing costs did not
In this, the C.K. Choi succeeded, while also boosted UBC’s reputation, and paved the arise. UBC reports, however, that one LAUNCH AN AWARENESS CAMPAIGN
meeting targets for resource and energy way for the development of the Liu Centre, donor was a Buddhist who ‘appreciated’
use. Operating energy savings are 50% a second green building. the green features. In common with most TO INFORM STAKEHOLDERS OF THE
greater than those achieved by Vancouver’s green developments, there was no ability FINANCIAL AND NON-FINANCIAL
Completed in 2000, the Liu Centre
Energy By-Law. to achieve lower insurance premia, in this BENEFITS OF SUSTAINABILITY.
cost $3,100,000 or $165 per sq. ft., $15
case because there is a blanket policy for
per sq. ft. more than the C. K. Choi, the Liu
the entire campus. Building insurance costs THE LIU CENTRE, IN A MOVE THAT
Centre having a more generous budget, the
may even have increased due to the higher
earlier development having demonstrated COULD BE USEFUL ELSEWHERE,
replacement costs for the two buildings:
the operational savings possible with HAS PREPARED A MANUAL THAT IS
replacement is higher than for
green building.
conventional structures and does not DISTRIBUTED TO ALL OCCUPANTS TO
As befits the spectacular setting, care depreciate as quickly.
HEIGHTEN AWARENESS OF GREEN
for the site was the developer’s first green
consideration in both cases. FEATURES AND TECHNOLOGIES.

47
ECOHOMES SCHEME WARRINGTON CHESHIRE, ENGLAND

People will pay for green features Research for the present study by Developer's comments:
As part of this study, English Partnerships English Partnerships found residential DEVELOPERS SHOULD ORIENT
sponsored research into six residential property developers citing lack of customer
developments throughout England, three interest in green homes. Several developers BUILDINGS ON A SITE TO MAKE THE
designed and built to British Research claimed that occupiers remove green BEST USE OF ITS NATURAL LIGHT
Establishment EcoHomes ‘Very Good’ features from a new home or subsequently AND PREVAILING WINDS.
building standards and three developed install ecologically unfriendly appliances
to current conventional building such as tumble-dryers or power showers. BETTER UNDERSTANDING OF
regulations. It proved impossible to Public ignorance of the benefits of green
THE FACT THAT ARCHITECTS’ AND
compare the green and non-green house features perpetuates the pursuit of the
prices on a like-for-like basis because conventional. LANDSCAPING ARCHITECTS’ FEES
access to key financial data was severely ARE NO HIGHER FOR ECOLOGICAL
The Warrington project, however, may
limited. Nevertheless, one housing
suggest a latent customer interest and THAN NON-ECOLOGICAL
development in Warrington in the north-
commercial opportunity is being DEVELOPMENTS. IT IS WHEN THE
west of England bears out the contention
overlooked. To date, 15% of Warrington
that customers are interested in green DEVELOPER HAS A CHANGE OF
buyers have signified willingness to pay
features and, if necessary, will pay more
over 6% more for a green home. This is a MIND ALONG THE WAY THAT
for them. We were asked to respect the
development of 116 houses being built to COSTS MOUNT.
confidentiality of the information provided.
no formal ecological standard, averaging
According to an online survey of 912 1,252 sq. ft., and costing £216,198 (£173 MANY GREEN FEATURES ARE
potential home buyers in the UK carried per sq. ft.). The developer, however, created
COST-EFFECTIVE, AND DEVELOPING
out in June 2004, 82% of people would be and actively promotes a package of green
prepared to pay an extra 2% for an features, marketing them as a separate TO A REASONABLE ECOLOGICAL
‘environmentally-friendly’ new home, and product. The features, STANDARD DOES NOT COST MORE
17% as much as 5%. This research, for the Photo Voltaics, wind turbine (to produce
THAN FOR CONVENTIONAL
Council for Architecture and the Built electricity) and rainwater recycling (for
Environment, the World Wildlife Fund, and toilets), cost a total of £13,700, the BUILDINGS.
mortgage provider HBOS, shows the most developer estimating that energy savings
valued green features to be higher energy offer payback within 3.8 years, with the
efficiency, lower operating costs, better air possibility of selling excess energy to the
quality and daylight, use of low-allergy and National Grid. The offer required take-up
environmentally-friendly materials, and by at least seven houses to cover the cost
water efficiency. of the wind turbine (£49,000, £7000
per house).

48
49
GLOSSARY

Some terms used in the report Chlorofluorocarbons (CFCs), a group of Also the basic annual interest rate
The definitions offered are condensed chemicals containing carbon, chlorine, and uoted on a promissory note or on a
from The Environment Dictionary by fluorine, whose stability and low toxicity loan agreement and levied throughout
David D. Kemp (Routledge, 1998), and make them ideal for refrigeration and air the term of the loan on the initial amount
Dictionary of Architecture and conditioning, as well as propellants in of principal, not withstanding that the
Construction, edited by Cyril M. Harris aerosol spray cans. Inert at surface interest is compounded other than
(McGraw-Hill, 2000). temperature and pressure, they become annually or repayments of principal are
unstable in the stratosphere where chlorine made by instalments during the term of
Absorption, the number of units of
is released as they break down. Chlorine in a loan.
property that will be leased or sold in a
turn initiates a catalytic chain reaction
given period of time; the time taken for a First costs, in North America, the costs
that leads to the destruction of ozone.
given number of units to be let or sold in of physical construction, although in the
a given market. Churn, moving the tenants or occupiers of chronological sense other capital costs
a building for financial advantage, for precede them.
Appraisal, an expert opinion on the
example moving tenants between floors to
value of a property; the act or process of Grey water, waste water which does not
improve the appearance of leasing activity
estimating value. contain the products of bodily functions,
or generate extra commissions for a broker.
such as that produced by bathing,
Appraiser, a professionally skilled,
Discounted Cash Flow (DCF), the present showering, dishwashing, and so on. Often
trained, and experienced person who
value of the estimated future cash flow to used for lawn and garden irrigation.
provides an estimate or opinion on the
be derived from an investment in a capital
quality, worth or value of real of personal Halons, synthetic organic compounds
asset, over a given period of time. DCF can
property; someone appointed to carry out that contain bromine and commonly used
also mean the technique for analyzing the
an appraisal. in fire extinguishers. Halons are more
viability of a capital investment project by
destructive of the ozone layer than CFCs
Capital costs, include the purchase price discounting all budgeted, or projected,
of the ozone layer
of buildings, construction costs such as income and expenditure flowing from or
labour and materials, and the related into a project, including the initial outlay Heat Island, Urban Heat Island, the name
architectural, engineering, legal, tax and and any residual value. given to the situation in which at certain
pre-occupancy interest costs. times the temperatures within a built-up
Envelope, the imaginary shape of a
area are higher than those in surrounding
Capitalization rate, a rate of discount or building, indicating its maximum volume;
countryside. Heat islands occur at night
percentage selected as appropriate for the used to check the plan with respect to
when wind speeds are low and skies clear,
conversion if income into capital. A rate zoning regulations.
usually in summer. Vegetation and soil are
sufficient to provide a return to an investor
Face rate, the nominal interest rate replaced by brick, concrete and asphalt,
for accepting the risk of capital investment
payable for a period of one year which have a greater heat capacity, and
as well as a return, or recapture, of the
assuming the entire principal remains release that heat overnight. HVAC, heating,
capital invested.
outstanding during the year, and interest is ventilating, and air - conditioning system.
accrued only once a year, as compared to
the effective annual interest rate which is
the true rate payable when interest is
compounded at intervals of less than
a year.

50
Net lease, a lease that require the lessee Retrofit, retrofitting, the adaptation
to pay the operating expenses resulting of an existing structure or appliance
from his or her occupation of the premises, to meet needs that did not exist when
including real estate taxes and the structure or appliance was first built.
assessments, repairs, maintenance, One example is the addition of extra
insurance premiums, and utility costs. insulation to homes to save energy and
cut costs as energy prices rise.
Net Useable Area, the area that a
tenant or occupier may actually use for the ROI, return on investment.
purpose for which he or she is occupying
Swale, tract of low, usually wet land;
the building.
depression in a tract of otherwise flat land.
Net Operating Income, net income
Term and reversion valuation, the
receivable from a property after all
conventional method of assessing the
operating expenses have been paid and an
capital value of a property that will
allowance made for bad debts and
generate a variable income.
defaulting tenants, but before payment of
capital or interest on any loans and before Turnover, the rate at which properties are
income taxes. sold; the rate at which tenants move in
and out of a leased property.
Payback Analysis, a method of
investment analysis that measures the Valuation, the act or process of
time required for the total net income or determining the value or worth, an
cash flow, generated by an investment, to assessment of the market value of a
equal the initial capital cost of that property at a given time.
investment. Also a method of comparing
Years’ purchase, a sum of money which if
investments that takes no account of the
invested now will produce an annual return
stage at which income is received over the
of one unit of value for a given number of
payback period.
years; the present capital value of the right
Remainder, a residual interest or estate to receive one unit of value per annum
in land. An estate in land that comes into over an appropriate term at a required rate
effect as a right to possession upon the of return.
natural determination of an immediately
Yield, the net income of profit from an
preceding estate.
investment expressed as a percentage of
Residual value, the value of an its cost or the capital invested, usually
interest in property for the remaining, calculated at an annual rate; the actual
or residual terms of a lease. The present rate of return on capital.
value of the right to receive the rent and
profits reserved under a lease for the rest
of its term.

51
BIBLIOGRAPHY

Bordass B.and Cohen R.; 2003, Property Needs Sustainability; Building Services Journal, Gottfried, David A. 2004. A Blueprint for Green Building Economics. In The Economics of
September Green Building, Conference Proceedings, The Simon Fraser University City Program &
GVRD, Vancouver, November.
BT/Forum for the Future, 2003: Just Values – Beyond the business case for sustainable
development. Gottfried, David A. 1996. The economics of green buildings. In D. A. Gottfried & L. N.
Simon (Eds.), Sustainable building technical manual. USA: Public Technology Inc.
Building Research Establishment (BRE) published several related papers on ‘Sustainable
buildings:’ each with subtitles ‘benefits for occupiers,’ ‘benefits for constructors,’ ‘benefits Green Buildings: Key Market Developments and the Growth of LEED® as of Sep. 2004.
for designers’ and ‘benefits for developers.’ They are available on-line at www.bre.co.uk/ Green Buildings BC website www.greenbuildingsbc.com/new_buildings/other-
resources.html
Cassidy, Robert et al. 2003. White Paper On Sustainability: A Report On the Green Building
Movement. Oak Brook, IL: Building Design & Construction. Guidry, 2004. How green is your building? An appraiser's guide to sustainable design.
www.bdcmag.com/newstrends/BDCWhitePaperR2.pdf The Appraisal Journal, Winter, 62.

Chou M and G Parker. 2000. Recognition of Energy Costs and Energy Performance in GVRD, 2003. The Economics of Green Building, Conference Proceedings, The Simon Fraser
Commercial Property Valuation. Institute for Market Transformation, prepared for the New University City Program & GVRD, Vancouver, November.
York State Energy Research and Development Authority New York Energy $mart Program.
GVRD, 2003. Sustainable Building Design. Principles, Practices and Systems. Vancouver: GVRD.
Available at URL: www.imt.org
Heerwagen, Judith H 2004. Green Buldings, Organizational Success, and Occupant
City of London, 2003: Financing the Future
Productivity, Jan 22
CMHC, Energy-efficient Housing Made More Affordable with Mortgage Loan Insurance,
Henry, M.S. 1994. The contribution of landscaping to the price of single family houses:
www.cmhc.ca/en/moinin/moinbuho/moinbuho_022.cfm
A study of home sales in Greenville, South Carolina. J. Environ. Hortic. 12:65–70.
Commission for the Advancement of the Built Environment (CABE): The Value of Good
Heschong Mahone Group, 1999. Skylighting and Retail Sales. An Investigation into the
Design, November 2002
Relationship Between Daylighting and Human Performance, Condensed Report. Fair Oaks,
Coriolis, 2003. Do Development Cost Charges Encourage Smart Growth and High CA: Heschong Mahone Group.
Performance Building Design? Vancouver, BC: West Coast Environmental Law.
Institute for Location Efficiency (ILE), www.locationefficiency.com/
Doxsey, W. Laurence, 2001 [1998]. Sustainability Evaluation of Capital Improvement
Institute for Market Transformation (IMTS), 2003. Valuing the Future of Sustainable
Projects. Austin, Texas: Sustainable Communities Initiative.
Products, Buildings & Vehicles, Executive Summary. Washington, DC: Institute for Market
Fannie Mae(a), Energy Efficient Mortgage, Transformation mts.sustainableproducts.com/downloads/econ_summary.doc
www.fanniemae.com/homebuyers/findamortgage/mortgages/energyefficient.jhtml;
Institute for Market Transformation (IMTS), 2002. Hidden Value: Recognizing The Asset Value
jsessionid=4NKNBSTBLX1BXJ2FQSISFGFHQWCI4IV5?p=Find+a+Mortgage&s=
Of High-Performance Buildings. Washington, DC: Institute for Market Transformation.
Mortgage+Solutions&t=By+Alphabetical+Listing
Institute for Market Transformation to Sustainability (IMTS), 2002. Sustainability and the
Fannie Mae(b), Smart Commute Initiative,
Bottom Line. Building Operating Management, May.
www.efanniemae.com/hcd/single_family/mortgage_products/smartcommute.html
Johnston Controls, 2004, CaseStudy: National Geographic Society, Washington,
Feder, Barnaby, 2004. Environmentally Conscious Development. New York Times, August 25.
District of Columbia
Federal Energy Management Program (FEMA), The Business Case for Sustainable Design in Federal
Kats, Gregory, 2003a. Green building costs and financial benefits. Westborough:
Facilities, www.eere.energy.gov/femp/technologies/sustainable_federalfacilities.cfm
Massachusetts Technology Collaborative, November.
Federspiel CC. 2001. Costs of Responding to Complaints. Indoor Air Quality Handbook. eds.
Kats, Gregory 2003b. The Costs and Financial Benefits of Green Building: A Report to
JD Spengler, JM Samet, and JF McCarthy. McGraw-Hill, New York.
California’s Sustainable Building Task Force. California: Capital E. October.
www.usgbc.org/Docs/News/News477.pdf
52
Kozlowski, David, 2003. Green gains: Where sustainable design stands now. Building Rocky Mountain Institute, 1998. Green Development: Integrating Ecology and Real Estate.
Operating Management. July www.facilitiesnet.com/bom/Jul03/Jul03environment.shtml Toronto: John Wiley.

Kozlowski, David, 2002. Defining the Future of Green Buildings. Building Operating Romm, Joseph J, and William D. Browning, 1998 [1994]. Greening the Building and the
Management, September. Bottom Line. Snowmass, Colorado: Rocky Mountain Institute.

Kozlowski David, 2001. Taking Energy to the Bank, Building Operating Management, March. Schaltegger & Burritt’s: ‘Contemporary Environmental Accounting – Issues, Concepts and
Practice’ (Greenleaf Publishing).
Kozlowski, David, 2000. Can Green be Gold. Building Operating Management. November.
Syphers, G., Baum, M., Bouton, D., & Sullens, W., 2003. Managing the Cost of Green Building.
Laverne, R. J. and K. Winson-Geideman, 2003. The Influence Of Trees And Landscaping On
Oakland, CA: Kema Consultants.
Rental Rates At Office Buildings, Journal of Arboriculture 29(5):
www.kemagreen.com/KEMAGREEN/Portals/0/ManagingtheCostofGreenBuilding.pdf
Loftness V, R Brahme, M Mondazzi, E Vineyard, and M MacDonald. 2002. Energy Savings
The Tellus Institute: Green CDC Initiative: ‘The Costs and Benefits of Green Affordable
Potential of Flexible and Adaptive HVAC Distribution Systems for Office Buildings. Air-
Housing: Opportunities for Action’ at page 4.
Conditioning and Refrigeration Technology Institute (ARTI), Arlington, Virginia. Available at
URL: www.arti-21cr.org/research/completed/finalreports/30030-final.pdf Trusty, W.B. and Scott Horst, 2003. Integrating LCA Tools in Green Building Rating Systems.
Kutztown, PA: ATHENA Institute International.
Lovens, Amory (1998): Research Study
Turner Construction, 2004. Construction Execs: Green Building Leads to Increased Efficiency
Matthiessen Lisa F, Peter Morris, 2004. Costing Green: A Comprehensive Cost Database and
and ROI. GreenBiz.com www.greenbiz.com/news/news_third.cfm?NewsID=27182
Budgeting Methodology. Davis Langdon Adamson, July.
Turner Construction: Turner Green Building Market Barometer
Mills, Evan, Lawrence Berkeley National Laboratory, 2004, From ESCO to Energy Services
Partner: Amplifying Real Estate Value through Energy & Water Management UBC, GVRD, 2003. Why Build Green? Ten Key Questions Answered. Vancouver: University of
British Columbia and Greater Vancouver Regional District, November.
Morton, Steven, 2002. Business Case for Green Design. Building Operating Management,
November www.facilitiesnet.com/bom/Nov02/Nov02environment.shtml Urban Land Institute (ULI), 2003. Green Buildings and Sustainable Development: Making the
Business Case
Nevin, Rick and Gregory Watson, 1998. Evidence of Rational Market Valuations for Home
Energy Efficiency. The Appraisal Journal, October. United Kingdom's Climate Change Levy was introduced in 2001 and is designed to
incentives more efficient building operation through charges to commercial applications.
Newsday, 2003. Their Goal: Eco-Friendly Buildings; October 20
More information is at www.cclevy.com/
www.usgbc.org/News/usgbcinthenews_details.asp?ID=492
United Nations: The Protocol to the United Nations’ Framework Convention on Climate Change
Nicklas, Michael H. and Gary B. Bailey, Undated. Student Performance in Daylit Schools:
Analysis of the Performance of Students in Daylit Schools. Raleigh, NC: Innovative Design USDOE, 2003. The Business Case for Sustainable Design in Federal Facilities. United States
www.deptplanetearth.com/pdfdocs/studentdaylit.pdf Department of Energy Federal Energy Management Program.
Norman, Wayne and MacDonald, Chris, Business Ethics Quarterly, March 2003: ‘Getting to USGBC, November 2002. Building Momentum. National Trends and Prospects for High-
the bottom of Triple Bottom Line’. Performance Green Buildings ww.usgbc.org/Docs/Resources/043003_hpgb_whitepaper.pdf
Norwich and Peterborough Building Society, Green Commercial Mortgage, USGBC, Undated. Making the Business Case for High Performance Green Buildings. Brochure.
www.npbs-commercial-mortgages.co.uk/green_mortgage.html www.usgbc.org/Docs/Member_Resource_Docs/makingthebusinesscase.pdf
Packard Foundation, 2002. The Sustainability Report and Matrix. The David and Lucile Packard USGSA 2004. GSA LEED Cost Study, Final Report. US General Services Administration,
Foundation: Los Altos Project. October, www.packard.org/index.cgi?page=building October www.wbdg.org/ccbref/ccbdoc.php?category=gsa&docid=280&ref=1

Reguly, Eric, 2004. Ottawa should be building on Kyoto. Globe and Mail, Thursday October 21. von Paumgartten, Paul, 2003. Business Case for High-Performance Green Building.
Journal of Facilities Management, June.
53
von Paumgartten, Paul, 2003. The Economic Impact of Green Buildings. November. NAREIT:
www.nareit.com/portfoliomag/03novdec/vested.shtml

Whitson, Alan, 2003. Why Green Buildings? Keynote speech at Municipal Green Building
Conference & Expo. Newport Beach, CA: Alan Whitson Company.

Wilson, Alex, 2004. Productivity and Green Buildings. Environmental Building News,
Vol. 13(10).

Yates, 2001. Quantifying the Business Benefits of Sustainable Buildings, draft.


London: Centre for Sustainable Construction, Building Research Establishment.

Yudelson, Jerry, 2004. Forecasting the market demand for green buildings. Daily Journal of
Commerce, September www.djc-or.com/SpecialPubs/
index.cfm?page_editorial_id=34639#

The following texts are specifically noted as covering principles of valuation and as helping
to create a bridge to sustainability:

The International Valuation Standards (published by the International Valuation Standards


Committee);

The Appraisal Institute of Canada’s Uniform Standards of Professional Appraisal Practice;

The Appraisal Foundation’s Uniform Standards of Professional Appraisal Practice;

The Royal Institution of Chartered Surveyors Red Book (Manual of Valuation);

UK Government’s Green Book – which sets out guidelines on incorporating sustainable


practices in business cases;

The province of British Columbia’s Multiple Account Evaluation Guidelines (1993 – now
discontinued but remain valid);

Contemporary Environmental Accounting – Issues, Concepts and Practice (Schaltegger &


Burritt: Greenleaf Publishing);

Green Development – Integrating Ecology and Real Estate (Wilson, Uncapher, McManigal,
Lovins, Cureton & Browning: Rocky Mountain Institute);

The Income Approach to Property Valuation (Baum & Mackmin: Thomson Learning);

Modern Methods of Valuation (Britton, Davies & Johnson: Estates Gazette);

Several papers on the benefits of sustainability published by the UK Building Research


Establishment – as previously noted.

54
www.rics.org/greenvalue
For information contact:
mchambers@rics.org
green@astrics.com

The Royal Institution RICS Americas


of Chartered Surveyors The Chrysler Building
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© 2005 Royal Institution of Chartered Surveyors

September 2005/50261/C.Schofield
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