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Green Building Obstacles

Lower Operating Costs Is No. 1 Reason to Build Green, ‘Perceived’ Higher Costs Is Biggest Obstacle

Green Building ObstaclesGlobal green building is expected to double by 2018, according to a study.

The report finds the percentage of firms expecting to have more than 60 percent of their projects certified — by LEED or another green building program — is expected to grow from 18 percent currently to 37 percent.

Additionally, the top sector for green building growth is commercial construction. The study finds almost half — 46 percent — of respondents expect to build a green commercial project in the next three years.

The report, from Dodge Data & Analytics and United Technologies Corporation, on which the World Green Building Council (WorldGBC) was a research partner, follows an earlier study from 2013 that Green Building Councils also contributed to.

For both reports, a green project means one that is either certified or built to qualify for certification under a green building standard such as LEED, BREEAM, the German Sustainable Business Council’s DGNB System, Green Star and others.

Similar to other recent studies, this one finds the no. 1 business benefit to green building is lower operating costs, such as reduced energy costs and total lifecycle costs. This finding also corresponds to the 2012 study. A particularly high percentage (81 percent) of US respondents, where green building is outpacing overall construction growth, cite reduced costs as the top benefit.

Another global business benefit: building owners report seeing a median increase of 7 percent in the value of their green buildings compared to traditional buildings.

The top driver for green building is client demand, jumping from 35 percent in 2012 to 40 percent in 2015. It’s followed by environmental regulations, which 35 percent of respondents said was the biggest trigger to build green (compared to 23 percent in 2012).

“More people recognize the economic and productivity value that green buildings bring to property owners and tenants, along with the energy and water benefits to the environment, which is driving the green building industry’s growth,” says John Mandyck, chief sustainability officer at United Technologies Corporation.

However, the no. 1 obstacle to green building, according to the report, is higher perceived first costs. Some 70 percent of US respondents say this is the biggest challenge.

Does this mean the perception of green building costs doesn’t match the reality? In an interview with Environmental Leader, Donna Laquidara-Carr, industry insights research director at Dodge Data & Analytics, says it’s not that simple.

“Studies have demonstrated that a green building, especially one built to meet LEED certified or LEED silver standards, can cost the same or even less than a traditional building,” Laquidara-Carr says. “This is especially true as green becomes more mainstream, with a high level of experience on green projects in the workforce and a wide variety of green products and services available.”

But, she says “very green projects” such as Platinum LEED — the highest level of the US Green Building Council’s certification — can cost more.

“We have certainly found in our green research over the years that the concern about and expected increase in cost reported often exceeds that demonstrated by studies of actual cost,” Laquidara-Carr says. “In addition, more experience with green building in our studies has also correlated directly with lower additional first costs for building green, so experience is also a key factor.”

She says focusing on “perceived” first costs gives the building industry two points to address: “The need for greater education about how affordably green projects can be built and additional green resources in developing markets to help reduce any incremental cost increase to building green that may be present.”

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2 thoughts on “Lower Operating Costs Is No. 1 Reason to Build Green, ‘Perceived’ Higher Costs Is Biggest Obstacle

  1. Industry research, including Turner’s own Green Building Market Barometer (published every other year since 2004), has consistently shown the actual first cost premium for LEED certified buildings is less than perceived, and that first cost premium results in a reduction in operating costs and significant savings over time.

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