July 6, 2007

Short Ownership Periods Require Quick Payback On Green Building Initiatives

Businesses are launching initiatives to make their buildings environmentally friendly, and aiming for a return on their investment, Investor’s Business Daily reports. The stakes are big. Every time you drive down the operating cost of a building by $1, you increase its market value by $10.

But building management has changed. “Ten to 20 years ago, institutional investors held onto large office buildings for a decade or longer, but today the average period of ownership has fallen to five years or less,” said David Pogue, senior managing director with CB Richard Ellis Group CBG. “With ownership periods so short, it’s hard for a responsible third-party manager to propose building improvements with a seven-year payback.”

Even inexpensive adjustments can result in big cost savings. For instance, cost studies have shown that daytime instead of nighttime janitorial service can cut the annual energy bill of a 100,000-square-foot office tower by more than 10 percent, as lighting and air conditioning can be shut down earlier.

CBRE has set a goal to become carbon neutral by 2010 and a plan to assist clients with energy efficiency programs at the 1.7 billion square feet of building space that the company manages.

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