The one question I am asked more often than any other on the subject of green building is, How much more does it cost? For a long time I cited various statistics indicating premiums in the range of 2.5% to 5% or so. But a while ago it dawned on me that this was actually misleading. My new response is that "how much more" is the wrong question. The appropriate question is, How much less does it cost?
Thinking only in terms of first costs is extremely short-sighted. What you really want to know about is the life-cycle cost. Over a building's useful life, the cost of operations and maintenance can easily equal or exceed the original construction cost. Building green, or carrying out green retrofits, nets substantial reductions in energy use, water use, waste water disposal, solid waste disposal, and maintenance, generally resulting in relatively short pay-back periods and high returns on investment.
An excellent case in point is the retrofit of Adobe System's headquarters in San Jose, CA. The cost of the retrofit was $1.4 million. Of that amount, $389,000 was offset by grants and rebates from the city, state, and local utilities. And while Adobe's staff grew by 35% since 2001, their electricity consumption is down 35%, natural gas use is down 41%, potable water consumption dropped 22% and their landscape irrigation consumes 75% less water than before. All this is netting Adobe an annual cost savings of $1.2 million and earned the project LEED-Platinum certification.
But this kind of financial return still only tells part of the story. Green workplaces have been shown to improve productivity and reduce absenteeism. For most businesses, savings on operating costs for office buildings pale in comparison to productivity increases because salaries typically run five to six times higher than all other costs combined, so even small increases in productivity have a big impact on the bottom line.
In a future post I will go into more detail about research documenting improved worker productivity in green offices. It's pretty interesting stuff. But for the moment, a few statistics will paint the picture in broad strokes.
A study published by Deloitte & Touche reports that in a survey of organizations that had carried out LEED-certified green retrofits, 87% saw an improvement in workforce productivity, 75% saw an improvement in employee health, and 73% reported that they had achieved cost reductions as a result of implementing green measures. Respondents also reported substantial reductions in energy costs and higher apprasial values.
Other recent studies of green buildings have documented higher occupancy rates, higher rents, and sales premiums as high as $171 per square foot as compared with comparable properties with standard construction.
So, how much less does it cost to build green, anyway?