Do green buildings make sense?

Do green buildings make sense?

A study conducted by the University of San Diego and CB Richard Ellis Group, Inc (CBRE) has found that tenants in green buildings experience increased productivity and fewer sick days.

The research was overseen by Norm Miller, academic director and professor at the University of San Diego’s Burnham-Moores Center for Real Estate and was conducted in collaboration with CBRE’s national director of sustainability Dave Pogue, and Ray Wong, CBRE’s director of Americas research.

The research found that tenants in green buildings are more productive, based on two measures: the average number of tenant sick days and the self-reported productivity change. Respondents reported an average of 2.88 fewer sick days in their current green office versus their previous non-green office, and about 55 per cent of respondents indicated that employee productivity had improved. Based on the average tenant salary, an office space of 250 square feet per worker and 250 workdays a year, the decrease in sick days translated into a net impact of nearly $5.00 per square foot occupied, and the increase in productivity translated into a net impact of about $20 per square foot occupied.  

The study additionally showed that green buildings have 3.5 per cent lower vacancy rates and 13 per cent higher rental rates than the market.   “The results of this project are beginning to demonstrate the very real and positive impact of sustainable buildings for both our owners and tenants. We have been seeking ways to make an empirical case for the economic benefits of sustainable practices and the results of this study exceeded our expectations,” said Pogue.

The research effort surveyed 154 buildings under CBRE’s management, totalling more than 51.6 million square feet and housing 3,000 tenants in ten markets across the US. The study defined a green building as those with LEED certification at any level or those that bear the EPA energy star label. Most of the buildings included in the research had also adopted other sustainable practices like recycling, green cleaning and water conservation.  

“This is an exciting time for the commercial real estate industry where great values and great investment upgrade opportunities coexist. This window won’t last forever,” said Miller. “We have now confirmed in this and other studies that green features and energy savings pays off. Tenants care about healthy energy efficient buildings. We also know that green leases and managing to a new and higher standard will soon become the norm. Commercial real estate players have no choice but to learn how to be better in a sustainable way. We know the economics of green will drive the market, not altruism or concern about global warming,” he added.  

The survey also indicated that 18 pc of tenants are willing to pay more for green space, and that tenants believe healthy indoor environments positively impact staff retention (61 pc) and client image (70 pc). Additionally, 71 pc of respondents felt that green lease provisions are increasingly important.