Despite the rapid U.S. growth of the green building movement, the vast majority of non-Fortune 500 companies and organizations looking for Class A office space do not specifically demand green buildings, let alone require that their office space be LEED-certified. Green buildings, the author notes, are not necessarily an easy sell to brokers and tenants in markets where green is not the norm, especially if they cost more than typical Class A rent.
This article discusses the tactics used by green developers to keep and expand their market share in the face of this challenge. Many are devoting considerable effort and resources to educating brokers and tenants on the value of sustainable design and green building. The key is to get them to see past the 3-4% premium over market rates to the benefits of 20% savings in electrical costs, a 38% reduction in potable water consumption and a 16% increase in average worker productivity.
The author notes that some developers are bypassing the price-point debate entirely and concentrating on using an integrated design approach to ensure their projects come in at or near market rate. Examples are given of how developers did things like cut one foot of height per floor to help cover the additional first costs of a building’s underfloor air distribution system.
This article claims that time is on the side of the green building movement as growing demand leads to the potential for premium lease rates in the near future and this, together with the higher perceived value of green buildings, is bringing in more developers who plan to sell in as little as five years.