Commercial and industrial buildings account for approximately 40% of energy consumption in the U.S. Because of this fact and in conjunction with the movement toward environmentally friendly products and actions around the world, the commercial real estate industry has started to analyze and correct some of its traditional practices which affect the environment in a negative way. In the commercial real estate arena, a significant way in which a commercial real estate owner or developer can contribute to the environment is by reducing a building’s carbon footprint by “greening” existing buildings or incorporating “green” elements when developing new buildings. “Greening” is a process aimed at attaining environmental friendliness accomplished by adding “green” elements to a commercial building. Green elements include things such as building products made of recycled material, solar energy generating panels, insulating roofs partially covered with vegetation and soil, energy efficient lighting, energy efficient electric goods and water efficient landscaping.

While going green is the environmentally conscious thing to do, it can be capital intensive up front. Any major green project undertaken should involve a consultant to help achieve maximum benefit. If a commercial real estate owner/developer is willing to delay a return on investment, going green may be a good financial move in the long run. By using environmentally friendly methods of building and operation, not only will the commercial real estate owner/developer be helping the environment, but he will also likely see an increase in efficiency and decrease in operating costs. As an example, project costs have been recouped in the form of energy savings in less than one year in past green projects with energy savings continuing throughout the life of the project.

An additional bonus of going green may arise in the landlord/tenant setting. As tenants become more environmentally conscious, landlords who have focused on greening their properties may be able to better compete in the marketplace. Some studies have shown that Leadership in Energy and Environmental Design (LEED) certified buildings, a designation earned by meeting certain criteria established by the U.S. Green Building Council, are commanding rent premiums of more than $11.00 per square foot over their non-LEED certified building competitors and have an almost 4% higher occupancy rate. Additionally, studies have shown that some LEED certified buildings have sold for an average of over $170 per square foot more than comparable non-LEED certified buildings.

In addition to lower operating costs, higher rent per square foot and higher resale value per square foot, an additional way that going green may be beneficial is through the use of governmental incentives when developing or remodeling. State and local governments have begun to realize the importance of going green and have made available incentives such as tax credits, grants and rebates for the use of green technology. Additionally, over 25 states, 20 counties and 95 municipalities have mandated some level of green criteria for new and renovated public buildings and some jurisdictions have even mandated some level of green criteria for selected private new construction and renovations.

If building a new building or remodeling an existing building, significant attention should be paid to the costs and benefits of going green in the process. Costs may be increased up front; however, significant gains may be realized in the form of decreased operating costs, governmental incentives and higher rent/resale value. Greening a new or existing building should be at the forefront of any construction discussion.