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Five Fallacies about Green Buildings

David Baggs, CEO and Technical Director

There are a number of common fallacies in the market that one often hears in the initial conversations about green or sustainable buildings that in fact are not necessarily true. That's not saying they are never true, only that they don't have to be so if people think or act in ways that avoid these outcomes. Five common fallacies I often hear are:

  1. Developers don't care about sustainability;
  2. If the client doesn't want sustainability 'there is nothing we can do';
  3. Green Buildings cost a lot more;
  4. Buyers won't pay more for green buildings;
  5. Fitout doesn't matter, it's base buildings that count.

The reality can be very different. Let us take each fallacy one by one and discuss them:

Fallacy #1: Developers don't care about sustainability: Indeed many developers will say they don't care about 'going green'. However, if one carefully explains a number of issues to them, they increasingly see this issue in a different light. Let me explain this statement.

The world has become aware of climate change and the consequent food and resource shortages, massive increases in flooding, storms, droughts, cyclones, winds and consequent sandstorms and sea level rises. Company owners are aware of 'Sick Building Syndrome' where workers get sick, stay away from work more often and are less productive at work because of the emissions of materials and finishes used in buildings, poor ventilation and lighting.

The markets in many countries are now highly aware of these issues and factor in extra market value due to buildings that are green. These factors have seen a massive growth in green buildings in recent years  e.g. in early 2007 in Australia, there were 88 commercial office building projects registered with the Green Building Council of Australia; in late 2010, approximately 580 office projects were registered.

Furthermore, the property owners association, The Property Council of Australia (PCA), has seen green buildings yield better tenants that stay longer so in 2007 mandated that buildings will not be rated 'A Grade' unless they are the equivalent of 4 Green Stars (equivalent to LEED Silver). The other main reason they give for this requirement is that it assists in 'Future-proofing' their assets over time.

In the past, one might have thought that 'over time' meant 10-20 years, however in the light of the above growth in the green office building sector in Australia (and experienced in other countries as well e.g. the United States even throughout the global financial crisis) 'over time' might now be reasonably taken to mean timeframes like 12-24 months!

Whether it be for Stars or precious metals (Silver, Gold or Platinum), Green Rating Schemes have been demonstrated to lead to an increasingly rapid uptake in green buildings and the average buildings rate higher over time.

This has been exemplified all around the world by green building rating schemes such as LEED® (United States and many other countries such as India and China), BREEAM (UK) and Green Star (Australia, New Zealand and South Africa) where as soon as the tools are released, the race for best green building begins. Importantly, while it starts at the front end on large projects, every building in the market competes in the same sector and the demand for green ratings soon filters down into different levels of the market. It also filters into different sectors of the market such as housing, health and hospitality almost immediately.

How does this affect the bottom line? Well one case in point based on personal experience in relates to a major apartment development of approx 2000 units about 6 years ago in Green Square in Southern Sydney where all buildings were designed to meet the same high, green standards. The developer decided to market 3 of the 11 stages under the project names 'Eco#1', 'Eco#2' and 'Eco#3'. Even though 5 other stages of the development were on sale at the same time, these sold the fastest and sold out completely before the other stages had gained any significant sales traction.

So, back to the developer who might initially not be so 'keen to go green'. If the immediate future of the market is to go massively green, and it will be widely employing green ratings, with the time scale of the uptake in green buildings shortening rapidly and his/her building project not being delivered typically for 12-60 months - what market will he (or she) be delivering their buildings into? Is it the same one that now seems not to care so much now?

Probably not - it is much more likely that it will be a market significantly more attuned to wanting and valuing green buildings appropriately. If so, how much is a conventional project worth when all the buildings around it are green and the market wants green product first? As much as if it was green too?

Probably not - hence what we have, is a rapidly changing market where any developer, whether they be 'build and sell' or 'build and hold' style will be better off from a capital value on resale point of view and will end up with more cash in the bank (even in the relatively short term) if they offer the market green rated buildings.

Fallacy #2 If the client doesn't want sustainability there is nothing we can do: As an architect who has been involved in designing and delivering green buildings and professional development programs for nearly 30 years this statement has been heard from architects and consultants too many times to count.

The plain fact about many aspects of sustainability is they can be delivered without cost and many should and could be just a part of a 'good design response'. 'Climate sensitive' or 'Passive solar' design is the first place to start, then many energy and water efficient devices are the same market cost as the cheaper ones if you look hard enough or know where to look. Many healthy materials, products and finishes also cost similarly or even less than many 'glitzy' finishes. It is a mistake to think that unless a building is bristling with solar panels or cells it cannot deliver some improved green building outcomes.

Fallacy #3 Green buildings cost a lot more: If you take a normal design process and add green technology to the design you can almost guarantee it will cost more to achieve the same ends. If on the other hand one approaches the design process with an 'Integrated Design' approach where the whole building is designed as an integrated system and experienced consultants and smart processes are used, then certain synergies can be found. Synergy is literally the 'golden word' of green building design. Because synergy = savings. Where synergy can be found systems can be eliminated or downsized. Savings found in one part of the project can be used to offset extra costs in other areas. Hence while really smart green buildings might cost a little more, they don't have to cost a lot more and in the US, some LEED Platinum rated buildings have been delivered at average market build costs.

Fallacy #4 Buyers won't pay more for green buildings: This may have been the case in the past, but the savvy buyers already are. A chance meeting with a UK property buyer at Citiscape Abu Dhabi in 2008 led to the explanation that he had, the previous week paid 30% above market to purchase a substantial Dubai building because it was sustainable, with transparent solar cells in the windows and a host of other green credentials 'because with climate change and carbon trading, that is where the market is going and I want my property to hold its value' was his statement over coffee.

This is not an isolated opinion, and one that will become rapidly more prevalent once current pent up demand has been somewhat satisfied. The plain reality is that utilities are becoming more expensive and green buildings save money as evidenced by recent US research gleaned from surveys of over 1300 US green buildings.

Green Premium?
Here's how two building standards programs cut the energy use and enhanced the finances of newly built green commercial buildings in the US based on information from the US Green Building Council.

 

Energy savings

Rent premium,
per sq. ft.

Increase in
occupancy rates

Sales premium, per sq. ft.

LEED certified

25-30%*

US$11.24

3.8%

US$171

LEED Gold & Platinum

Approx 50%

* 25-30% for all LEED buildings, including certified, silver, gold and platinum grades. For gold and platinum, the savings approach 50%.

Source of Information: www.usgbc.org/News/USGBCInTheNewsDetails.aspx?ID=3648

Fallacy #5 Fitout doesn't matter, it's base buildings that counts: From an environmental perspective, detailed life-cycle assessment of a 40,000m2 office buildings over a 40 year life-span (by Treloar et al, 1999) has shown that the interior fitout has at least as much energy embodied in the furniture, wall and floor finishes than the operational energy of the building over the same period, if not more. This is because of the number of times internal fitout is replaced when leases end or companies move.

If we only focus on the dollar driven aspects, then we can also see that from an occupying company point of view, one of the major benefits of green buildings is the increased staff productivity from less time off and better concentration. The US and Australian Green Building Councils research shows figures typically between 2-16% but up to 25%. With salaries typically the biggest cost centre in an organization's budget the savings can be significant. But the full productivity benefits will not accrue if conventional fitout is used even in a green building. So why stop at the base building. Integrated fitout or green rated tenant fitout will deliver the full productivity benefits of the green building's potential.

There are many other fallacies about green buildings that are increasingly being shown to be the products of old-thought patterns and responses to the market that are rooted in today. The successful design teams and building developers tomorrow will be those who look to the future to find their current directions, not the past.