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October 30, 2007

Corporations Will Pay Premium For Sustainable Real Estate

Seventy-nine percent of respondents to a recent CoreNet Global and Jones Lang LaSalle survey say that sustainability is a near-term business issue that’s important today, or will be in the next 1-2 years.

For the survey, CoreNet Global and Jones Lang LaSalle queried more than 2300 attendees of CoreNet Global Summits on four continents in recent months.

According to the survey, most companies are willing to pay for sustainable real estate solutions. Seventy-seven percent say they are willing to pay a premium for sustainability and 22 percent expect to pay the sameBut there’s also a gap between what sustainable real estate solutions actually cost and the perception of what they will cost. Studies indicate that designing buildings energy efficiently, or building them to LEED certification will cost about 1-5 percent more than conventional construction, and the incremental cost is falling.

Many companies still don’t realize that the cost of sustainability has come down. A large proportion of respondents thought sustainable designs were more expensive that they really are. Respondents’ perceptions varied widely:

- 52 percent said premiums will be five percent or more to build in a sustainable manner; 22 percent of them believe green buildings will cost 10 percent more than conventional building
- 38 percent said sustainable buildings will cost 1-5 percent more, and one percent say it’s actually less expensive, while eight percent said those buildings will cost the same.

Despite the opportunity to apply techniques to make buildings more environmentally friendly, respondents to the survey found obstacles to sustainability that have hindered widespread adoption:

- Only 17 percent said that there is good, or widely available, sustainable real estate solutions in markets where their companies need to locate offices
- 42 percent reported patchiness and said the supply chain is good in some markets but not others
- 41percent view overall availability as limited or minimal

While sustainable building is becoming more critical the world over, its intensity varies from continent to continent. According to the results:

- 61 percent of respondents in Europe feel sustainability is a critical business now
- 53 percent feel that way in Australia, while
- 44 percent of respondents who attended the Denver Global Summit feel that sustainability is critical now

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