Research by real estate giant makes case for green buildings.

Real estate Giant CB Richard Ellis issued a report outlining the financial upsides and downsides of building green.

09/25/2009


Real estate giant CB Richard Ellis (CBRE) recently issued a report on the economics of green buildings. The conclusion of the report, " Who Pays for Green? The Economics of Sustainable Buildings ", states that basic level of certification adds between 2% and 3% to the cost and higher levels of accreditation add 5% to 7% to construction costs.

Key findings from the CBRE report include:
• Although developers will reap some rewards in terms of higher rents and enjoy higher rates of rental growth, the rates of additional rent is about the same as the excess development costs (2% to 6 %), so the additional rental value is neutralized.
• Improvements in energy savings can be between 10% to 50%
• Residential customers will pay some premium for green, but not necessarily the actual cost of the green improvements.
• Extra value will need to accrue from the investment markets for the lower risks and higher valuations of green buildings.
• The sustainability agenda will continue to grow in importance in the real estate sector, and will increasingly affect the behavior and decision-making of occupiers, investors, and developers.
• While there is currently no single agreed definition or measure of what constitutes a green building, the tools that exist for assessing the environmental credentials of a building are becoming more widely used and accepted.
• Even the ambition of producing a zero-carbon development -- which is more demanding than even the highest levels of BREEAM or LEED accreditation -- would potentially add less than 15% to development costs.
• There are still a number of unresolved issues in assessing the scale and source of payback for incurring these additional costs, particularly in terms of investment value and pricing. However, evidence on rental transactions indicates that green buildings achieve a rental premium similar in proportion to the scale of additional development costs for mid-range levels of certification.

Read about other green and sustainable building studies here .





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