Real Estate Forum - November 2008

SURE, THE FINANCIAL CRISIS AND economic downturn have taken up much of decision makers’ brainpower for months now. But believe it or not, there are other issues still relevant to the commercial real estate industry. One of them is sustainable building.

Findings from the second annual “Green Survey: Existing Buildings,”

conducted jointly by Real

Estate Forum, GlobeSt.com, the Building Owners & Managers Association International and the US

Green Building Council, prove that out. Of the more than 250 industry professionals who participated in the online poll, nearly 87% said that the greening of their portfolio is a high priority for their firms. (For more about the respondents, see sidebar.) That number is higher than last year’s results, when 81.5% said that going green was a leading agenda item. The results of the survey were released this month at USGBC’s Greenbuild 2008 Conference & Expo in Boston.

Clearly, participant comments show that the country’s economic instability hasn’t dissuaded commercial real estate professionals from focusing on this issue. “We believe it is the only way to do business,” noted a general contractor, who operates on the West Coast. “We have minimum green standards that we include on every project.”

An executive vice president and chief operating officer at a national private equity firm offered a similar assessment: “It appears to be where the commercial real estate market is heading from both a marketing and a regulatory perspective. We want to be on the cutting edge.”

“Tenants are demanding it,” added a developer based in the Southeast, “and it makes sense both operationally and economically.”

Even those who are not staunch proponents of sustainability recognize that this is the wave of the future. “Although I am only lukewarm on the green building movement, I acknowledge that it has hit a tipping point,” said a president of a Western regional development company, who has

some 30 years in the business. “You’d better get with the program or you will be passed by the herd.”

On the whole, the survey results revealed that enthusiasm is generally very high for green initiatives. Yet while many firms are encouraging environmentally friendly practices among employees

Results from our second

annual poll show that the

green movement continues

to gain momentum

and tenants alike, the industry is still in the early stages of actual implementation. Companies aren’t spending a lot of money on it, and portfolios are still, for the most part, under-greened.

That may be due to the perception that day-to-day maintenance on sustainable assets costs more than it does for traditional properties. Even though green buildings are believed to have significant long-term cost savings because of lower energy usage, nearly half of the professionals polled, some 44.7%, said they are more costly to keep up. This is slightly higher than last year’s results ( 43.9%). “Efficiency requires more diligent maintenance,” remarked a director with a national property management firm, adding that green “cleaning products are generally at a premium.”

Some 34.4% of respondents believe that there is no difference in maintenance costs for green and non-green properties, while almost 21% claimed that green was less expensive. “Cost differences more than pay for themselves over time,” observed a vice president/general manager of a property management outfit in the Southeast. “Many green procedures reduce OpEx.”