Thursday, April 30, 2009
Does green construction make economic sense?
It seems that every press release we get at Midwest Real Estate News these days touts some sort of energy efficient or environmentally friendly feature of a new retail center, medical office or multi-family building.
Everyone wants to be "green." And they're not shy about promoting that fact.
The big question, though, centers on economics: It's one thing for municipalities, for instance, to want their administrative offices to earn LEED recognition. But what about other property owners? Will we continue to see retail giants, hospitals or corporations continue to clamor for green stores, facilities or headquarters?
I have a feeling that we won't unless green building makes economic sense. In other words, will the green features of a building -- which certainly add to its cost -- have enough of a payback in reduced energy costs so that they make economic sense?
Scott Pickands, executive vice president of Chicago-based Reed Illinois Corporation, tackles this issue in a column he recently submitted to Midwest Real Estate News. Pickands, though, looks at green building in the healthcare field. It's an interesting subject because healthcare construction is one of the few commercial sectors doing fairly well these days. According to Pickand's numbers, healthcare construction accounts for more than $17 billion annually and nearly 10 percent of the total dollar amount of all construction completed in 2008. Because of this, Pickand says, the healthcare community has the opportunity to play a key role in the green movement.
Pickands brings up the obvious, though: This won't happen unless the members of the healthcare community understand that green features, though more costly upfront, have a huge payback. Pickands writes that sustainable design elements usualy add 5 to 8 percent to the cost of a building's construction. The energy savings over the life of the building, though, can reach 25 to 30 percent.
For the rest of Pickands' column, be sure to check out the May/June issue of Midwest Real Estate News. In the meantime, let's hope that the healthcare community truly does embrace green building. And if you're a contractor? Better brush up on your green skills.