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Half of Occupiers Would Pay More for Green Space

Fully half of corporate real estate executives are willing to pay more for leased space that is “green”, up from 37 percent in 2009, according to a survey.

The poll by real estate services firm Jones Lang LaSalle and property professionals’ association CoreNet Global also found that 92 percent of respondents consider sustainability criteria in their location decisions.

The proportion of respondents willing to pay more for “green leased space” is now 50 percent, according to the survey, which was conducted in the fourth quarter of 2010. Another 23 percent said they would pay more in rent if it were offset by lower energy costs.

The survey found that operational costs and employee health are now running neck-and-neck as reasons for seeking environmentally friendly leased space. From 2009 to 2010, the proportion of respondents ranking energy costs as the most important sustainability metric fell from 37 to 32 percent. At the same time, the proportion choosing employee health and productivity as most important rose from 29 to 31 percent.

Jones Lang LaSalle described the shift as “small but important”.

It said that the jump in the percentage of respondents saying they would pay extra for green leased space may be a reflection of today’s more stable economic climate.

“The Sustainability Survey results reflect an evolution that we’re seeing in the industry,” Jones Lang LaSalle’s chairman of energy and sustainability services Dan Probst said.

“Five years ago, a corporate real estate executive might have thought sustainability was a costly way to make the company look good to employees. Two years ago, that same executive probably focused on energy management as a way to save money in the short run. Today, he or she may be pursuing green strategies that enhance employee productivity.”

“Corporations increasingly view sustainability strategies as a permanent aspect of their business, and real estate executives are key to implementing those strategies,” said Michael Anderson, manager of research and the knowledge center at CoreNet Global.

But corporate executives are more willing to invest in space they own than to pay extra for leased space. Most survey respondents – 57 percent – said one to three years is an acceptable payback period for energy efficiency measures in owned space. Just four percent said they expect strategies to pay for themselves the first year, while 30 percent said payback periods of three to five years may be acceptable, and 9 percent would consider sustainability measures with even longer payback periods.

“Although a lot of energy management strategies pay for themselves the first year, many companies have exhausted those opportunities and want to go to the next level,” Probst said. “By replacing lighting systems or putting in ‘smart’ systems, companies may see their investment pay off within three years. A more extensive retrofit or a solar power installation usually will take longer to pay for itself, but still make sense in some situations for financial reasons, or as a way for a company to demonstrate a commitment to sustainability.”

Other findings of the survey:

  • Green building certifications are considered by 88 percent and energy labels by 87 percent in administering their portfolio.
  • 48 percent of occupiers would pay up to a ten percent premium for sustainable space, while only two percent expect to pay over ten percent.
  • Corporate real estate directors are highly involved in providing sustainability performance data and funding sustainability oriented investment, with the purpose of reducing cost and increasing employee satisfaction.

Picture: A building leased by Deutsche Bank, which Jones Lang LaSalle found and helped to bring up to LEED Gold standard.

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