Use the Internet to research one (1) company that is focusing on sustainable development
Over the past few years, the concept of green building has gone from the periphery of the real estate and construction industry to a central component. LEED (Leadership in Energy & Environmental Design) has become a mainstream buzzword and has come to dominate the market. In 2010, the General Service Administration, the management agency of the federal government, mandated all newly constructed or significantly renovated buildings achieve at least LEED Gold Certification. The US Green Building Coalition, the organization that established LEED, has grown significantly in size and influence. In 2005, the USGBC had 5,886 members; today that number sits at nearly 19,000. During that same span, the total square footage of commercial space that is LEED certified has increased from around 50 million to over 1 billion. The LEED model is the most widely-recognized brand in green building.
But despite its notoriety, there are still many people that are not familiar with LEED, do not understand the process, and/or do not see the benefit in green building practices and standards. LEED was created in 1994 by Robert Watson, a senior scientist at the Natural Resources Defense Council. It has grown considerably in size and scope since that point. In 2009, the standard entered its latest version LEED v3, following an ongoing process of review. And while there was originally only one standard, there are currently six:
The LEED certification process is based on a standardized scoring model. Each building is judged in six categories.
Point totals vary according to the LEED standard being pursued. For example, LEED-NC & LEED-CS are scored on a 69-point scale, with 23 being the minimum score for certification. LEED-CI, on the other hand, follows a 110-point scale and has a minimum certifications core of 40. But each standard has four levels of certification – LEED Certified, LEED Silver, LEED Gold, and LEED Platinum. Platinum is the highest level of certification and, as such, is the most difficult to achieve. Through January, there were only 10 buildings in Ohio that had achieved Platinum certification.
Like the scoring system, the costs and benefits of LEED certification can vary significantly based on the type and size of the building and the level of certification desired. In order to apply for certification, applicants are required to pay a registration fee and a certification fee. In addition, there are other added costs involved in the process. These include premiums for construction, administration costs, and commission costs. According to a 2003 report by Greg Kats to California’s Sustainable Building Task Force, this price premium for green construction can vary from just 0.66% for LEED certified buildings to as much as 6.5% for LEED Platinum certified buildings. But this premium has been coming down in the last few years. In Seattle, for instance, the premium for LEED Silver buildings has fallen from 3-4% in the late 1990s to under 2%.
Furthermore, Kats concluded that the benefits associated with green building far outweigh the costs incurred. They determined that, on average, the cost premium for LEED buildings came to $4 per square foot. The total financial benefits, however, came out to $48.87 per square foot for LEED certified & Silver buildings and an impressive $67.31 per square foot for Gold & Platinum buildings. In essence, over a 20-year lifecycle of the buildings, the benefits of LEED certification measures outweigh the costs anywhere from 12.2-16.8 times.
The benefits of green building come not only from reduced energy costs; they also come from a number of top line benefits, including lower operation and maintenance costs, improved employee productivity, and a decrease in time lost due to employee illness. According to a 2009 article from the Journal for Sustainable Real Estate, the benefits from improved productivity and indoor air quality (IAQ) in green buildings is likely even higher than Kats estimated. Whereas Kats concluded that improved IAQ provided a benefit of $37-55 per square foot, Miller et al found that the total for owner occupied buildings was likely $153.61 per square foot. They also found that the average value added per work from improved productivity & better IAQ was $5,204 and $1,228.54, respectively. This can help to explain why green rental spaces also generate higher rents for their property owners. A 2008 study from CoStar determined that LEED spaces have a rent premium of $11.33 per square foot and have a 4.1% higher occupancy rates.
In conclusion, the literature and research to date demonstrates that, though the upfront costs of LEED certification can scare away some businesses and developers, the long-term benefits far outweigh the investment. In future posts I will delve into LEED for Commercial Interiors and explore some of the pertinent criticisms of the LEED system.
– See more at: http://www.cosemindspring.com/Topics/Sustainability/Greening%20Your%20Business/An%20Overview%20of%20LEED%20-%20Its%20Costs-%20Benefits-%20and%20Components.aspx#sthash.9WvhDARh.dpuf