Green Building: Trends to Buffer, Not Bust Your Bank Account
by Joel on September 23rd, 2008
At a recent conference on green building and investing, a number of important critical trends were highlighted for the burgeoning green building industry. Put on by Infocast, the conference was one of the better gatherings I’ve attended on the subject.
One interesting session focused on the increasing complexity of green leases. A particularly salient discussion explored whether tenants should be eligible for rent reductions, or even lease nullification, should the building not achieve a LEED rating. Another interesting facet centered on roof rights and whether tenants deserved some say over where HVAC units were placed, since poor planning could limit or even eliminate future solar options – indeed, this issue is one ShoreBank has faced as we have sought to add on-site energy generation on our leased facilities.
Other topics that received considerable attention were the operational issues facing green buildings given findings from a new study funded by the USGBC that documented how often green buildings failed to achieve the energy performance predicted by pre-construction energy modeling. Among the recommendations was a need for greater training among building engineers, and perhaps, greater reliance on technology and outsourced building managers. It is a problem particularly for our non-profit customers since these organizations’ portfolios contain both the most out-dated, and the most technologically sophisticated, buildings. Having staff who are able to run both on a shoe-string budget is a lot to expect.
Finally, the conference included a fantastic session on appraisal issues facing green buildings. The most interesting comment was that investors, and increasingly banks too, now believe green buildings have less chance of obselescance than other buildings – especially as carbon markets and caps become more and more likely in coming years. This belief is beginning to influence valuations and the underwriting of these projects.
Tags: community development, energy conservation loans, green banking, green building, ShoreBank, triple bottom line
Joel,
Many thanks for spreading the word about this conference. I have to “second the motion” on all your points: green leases was a hit! That discussion touched a (positive) nerve with a lot of the audience and there is evidently serious demand from green builders and investors to learn more. We (InfoCast, Malachite and myself) have received lots of great feedback on all the subjects you write about and think that your contribution from ShoreBank also did a lot to move the market forward in better understanding and adopting green buildings. Thanks!