Top Five Green Building Market Shape Shifters
Sep/03/2010 08:34
With GreenBuild 2010 on the horizon, which is always accompanied by a flurry of reporting, research and projections for the green building market, I have been thinking about what factors will most influence the green building marketplace over the next 12 months. As in any situation analysis, one must accept to a degree certain definitions of the current market place, with that in mind I am treating the state of the overall economy and its effect on the construction industry as a constant at least for the near future.
So within the current reality of the sustainable building design, construction and operations what are the five most impactful stories to watch?
1. Legislation: CalGreen
The California Building Standards Commission adopted the nation’s first mandatory statewide green building code that January 12, 2010. CALGreen will take effect in California on January 1, 2011 along with the other 11 published parts of the 2010 version of Title 24, the California Building Standards Code. It will be important to watch both the market reaction to the new code and to see how other states look to follow suit or remain at status quo.
2. Financing:: PACE
The excitement and hope for residential energy efficiency programs across the country seemed to all take a collective body blow this summer. The announcement in July by Freddie Mac and Fannie Mae that PACE financing would not be underwritten by their organizations halted a great deal of momentum in the residential marketplace. Earlier this week, the two mortgage giants also indicated that they will not purchase mortgages secured by properties subject to PACE obligations that provide for first lien priority.
With numerous lawsuits having been filed against Freddie and Fannie’s position and Congress potentially weighing in with legislation, the final chapters on the PACE program have not been written yet. Will another creative form of financing evolve to take the place of the PACE program?
3. Standards: FTC Green Guides
While probably more of a personal issue of mine, I do believe that the upcoming release of the revised “Green Guides” by the FTC will have both near and long term ramifications on the green building product market. I anticipate that the new guidelines will support more clarity within the product labeling and certifications arena.
4. Performance: USGBC Performance Initiative
A year ago, touched off by some national media attention, the LEED certification process came under scrutiny for certified buildings not performing up to the “standards”. The USGBC has moved to address this issue with its Building Performance Partnership Initiative. The success of this initiative could bring a whole new level of market acceptance to green building techniques and certainly a foster more accessible actual performance data which I believe the market is definitely hungry to receive. The BPP Initiative was recently expanded, the USGBC has opened the program to all current whole-building LEED-Certified commercial and residential projects.
5. Corporate Attitudes towards Sustainability/CSR
It has been encouraging to watch the growing momentum for overall corporate sustainability programs and some of the related certification programs that have been introducing more accessible tools and entry points in the market place. As a significant component of corporate sustainability, the green building market should continue to benefit from overall organizational strategies and programs. I would think that in the coming year, we will see even more collaboration between CSR and Green Building standards, associations and consultants.
So within the current reality of the sustainable building design, construction and operations what are the five most impactful stories to watch?
1. Legislation: CalGreen
The California Building Standards Commission adopted the nation’s first mandatory statewide green building code that January 12, 2010. CALGreen will take effect in California on January 1, 2011 along with the other 11 published parts of the 2010 version of Title 24, the California Building Standards Code. It will be important to watch both the market reaction to the new code and to see how other states look to follow suit or remain at status quo.
2. Financing:: PACE
The excitement and hope for residential energy efficiency programs across the country seemed to all take a collective body blow this summer. The announcement in July by Freddie Mac and Fannie Mae that PACE financing would not be underwritten by their organizations halted a great deal of momentum in the residential marketplace. Earlier this week, the two mortgage giants also indicated that they will not purchase mortgages secured by properties subject to PACE obligations that provide for first lien priority.
With numerous lawsuits having been filed against Freddie and Fannie’s position and Congress potentially weighing in with legislation, the final chapters on the PACE program have not been written yet. Will another creative form of financing evolve to take the place of the PACE program?
3. Standards: FTC Green Guides
While probably more of a personal issue of mine, I do believe that the upcoming release of the revised “Green Guides” by the FTC will have both near and long term ramifications on the green building product market. I anticipate that the new guidelines will support more clarity within the product labeling and certifications arena.
4. Performance: USGBC Performance Initiative
A year ago, touched off by some national media attention, the LEED certification process came under scrutiny for certified buildings not performing up to the “standards”. The USGBC has moved to address this issue with its Building Performance Partnership Initiative. The success of this initiative could bring a whole new level of market acceptance to green building techniques and certainly a foster more accessible actual performance data which I believe the market is definitely hungry to receive. The BPP Initiative was recently expanded, the USGBC has opened the program to all current whole-building LEED-Certified commercial and residential projects.
5. Corporate Attitudes towards Sustainability/CSR
It has been encouraging to watch the growing momentum for overall corporate sustainability programs and some of the related certification programs that have been introducing more accessible tools and entry points in the market place. As a significant component of corporate sustainability, the green building market should continue to benefit from overall organizational strategies and programs. I would think that in the coming year, we will see even more collaboration between CSR and Green Building standards, associations and consultants.
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IFMA Foundation's Study on Sustainability and Energy Efficiency in CRE
Sep/02/2010 06:29
As green building and sustainability have grown beyond a niche market, it becomes critical to assess and understand decision points and the variety of customer motivations and priorities. The Economics of Sustainability in Commercial Real Estate (IFMA Foundation and Manhattan Software, July 2010) by Kristian Peterson and Ross Gammill is an in-depth analysis of the incentives and motivations related to sustainability and energy efficiency in commercial real estate. The research examines the various decision making parties throughout the real estate management chain in existing office buildings.
In addressing the question of why more existing buildings have not been retrofitted, the study research was based on a qualitative study including interviews and a quantitative analysis utilizing financial modeling.
From the Executive Summary
"The white paper concludes that financial considerations are the primary drivers behind
real estate investment decisions. Secondary factors that drive investments in energy efficiency
improvements include: fostering a positive public image, winning new business and focusing on
environmental responsibility. Recommendations to increase investment in energy efficiency are
also provided within the white paper. Increased investment in energy efficiency will result if
managers recognize that energy efficiency projects can decrease the volatility of returns, and
that these returns are maximized by making the investment in energy efficiency prior to significant
lease rollover."
To download the study
email registration required
In addressing the question of why more existing buildings have not been retrofitted, the study research was based on a qualitative study including interviews and a quantitative analysis utilizing financial modeling.
From the Executive Summary
"The white paper concludes that financial considerations are the primary drivers behind
real estate investment decisions. Secondary factors that drive investments in energy efficiency
improvements include: fostering a positive public image, winning new business and focusing on
environmental responsibility. Recommendations to increase investment in energy efficiency are
also provided within the white paper. Increased investment in energy efficiency will result if
managers recognize that energy efficiency projects can decrease the volatility of returns, and
that these returns are maximized by making the investment in energy efficiency prior to significant
lease rollover."
To download the study
email registration required
What is motivating Green Building?
Sep/01/2010 06:49
In the results from the Opening the Door to Green Building Communications Study, a joint survey conducted by the Northeast Ohio Chapter of the USGBC and Sustainable Rhythm, respondents overwhelmingly indicate reducing overhead, energy efficiency and ROI as the primary motivators for pursuit of green building practices, and many echoed the sentiment directly:
“In my industry, payback, ROI, and guarantees of energy reduction/costs are bottom-line motivations for constructing/retrofitting buildings.”
“The green building sector needs to stop the selling job of "social responsibility" /GHG reduction/brand development and focus more on $$$ and energy efficiency and cost reductions”
“Some of my clients think 'green' and 'sustainable' are bad words, but they are fine with 'energy efficient'.”
In other words, “conscientiousness” is not – at least not yet – a primary motivator for the pursuit of green building practices. As the research above indicates, the perception of going green is not as significant as the business case for implementing green practices.
But knowing what motivates a buy is not enough: knowing how to communicate in a manner that will motivate that buy is critical, and language is important. According to the building owner/developer category of the study, “Energy Efficient” is the most effective term to communicate the green-building value proposition for buyers with 67% rating it between “effective” to “highly effective” while the word “green” garnered only a 24% rating.
“In my industry, payback, ROI, and guarantees of energy reduction/costs are bottom-line motivations for constructing/retrofitting buildings.”
“The green building sector needs to stop the selling job of "social responsibility" /GHG reduction/brand development and focus more on $$$ and energy efficiency and cost reductions”
“Some of my clients think 'green' and 'sustainable' are bad words, but they are fine with 'energy efficient'.”
In other words, “conscientiousness” is not – at least not yet – a primary motivator for the pursuit of green building practices. As the research above indicates, the perception of going green is not as significant as the business case for implementing green practices.
But knowing what motivates a buy is not enough: knowing how to communicate in a manner that will motivate that buy is critical, and language is important. According to the building owner/developer category of the study, “Energy Efficient” is the most effective term to communicate the green-building value proposition for buyers with 67% rating it between “effective” to “highly effective” while the word “green” garnered only a 24% rating.
Its not the color..Its the bottom line
Aug/31/2010 07:47
Walking the exhibit floor at a green building conference, a colleague mentioned that a red or blue booth would really stand out in the sea of green that swam before our eyes. Now so prevalent in all of the exhibitors’ booths, product packaging and service firm collateral, green in all its shades looks to be “the new black.” Wading through the associated claims, certifications and sustainability verbiage that now populate the built-environment marketplace, he added, has become another dizzying challenge.
And this is from one “insider” to another – people “in the biz” trying to differentiate the meanings and messages of “green” within a familiar conference-hall landscape. If it is this difficult for insiders, how challenging must it be for our clients??
According to the JWT Anxiety Index Report, The Recession and Its Impact on the Environment, “Some of the language we use to talk about being green is not clear to consumers or even defined at all. Other terms such as “going green” are clearer, making consumers think of a product or marketing, but with a tinge of cynicism.”
Whether you wrap the message in green, blue, orange or red – and perhaps we could use a little more of the color spectrum back in the picture -- the most important current question is how can we impact our client’s bottom line, and then how do we stand out above and beyond the areas of Planet, Prosperity and People. Listening to your market – what it needs now and what will impact it later -- is the first priority.
And this is from one “insider” to another – people “in the biz” trying to differentiate the meanings and messages of “green” within a familiar conference-hall landscape. If it is this difficult for insiders, how challenging must it be for our clients??
According to the JWT Anxiety Index Report, The Recession and Its Impact on the Environment, “Some of the language we use to talk about being green is not clear to consumers or even defined at all. Other terms such as “going green” are clearer, making consumers think of a product or marketing, but with a tinge of cynicism.”
Whether you wrap the message in green, blue, orange or red – and perhaps we could use a little more of the color spectrum back in the picture -- the most important current question is how can we impact our client’s bottom line, and then how do we stand out above and beyond the areas of Planet, Prosperity and People. Listening to your market – what it needs now and what will impact it later -- is the first priority.
Rhythm Recommended Reading 8/30/10
Aug/30/2010 14:42
Labor Day is just around the corner, its time to move away from your sustainable beach reading to sustainable building reading.
The following recommendations highlight a few reports released this summer covering corporate sustainability, green building health and green building and the human experience.
The first report, published by Deloitte, Sustainability in Business Today: A Cross-Industry View examines the commitment at 48 companies to a sustainable aspirations and the gap between those aspirations and enabling actual sustainable business practices.
The following recommendations highlight a few reports released this summer covering corporate sustainability, green building health and green building and the human experience.
The first report, published by Deloitte, Sustainability in Business Today: A Cross-Industry View examines the commitment at 48 companies to a sustainable aspirations and the gap between those aspirations and enabling actual sustainable business practices.
Sustainability in Business Today: A Cross-Industry View
Deloitte-sustainability-survey
Deloitte
Chris Park and Kathryn Pavlovsky
The Effects of Green Building on Employee Health and Productivity looks to shed some light on a area of green building benefit that has really yet to be quantified. Two case studies are examined analyzing the health and productivity changes experienced by tenants moving from a conventional building to a LEED certified building.
Effects of Green Buildings on Employee Health and Productivity
Effects of Green Buildings on Employee Health and Productivity
Amanjeet Singh, MS, Matt Syal, Phd., Sue C. Grady, Phd, MPH, Sinem Korkmaz, Phd
The USGBC Research Groups’ Green Building & Human Experience concludes that and opportunity exists to “shift green building from the implementation of Best Practices toward an evidence-based practice based on practice‐based evidence.”
Green Building and Human Experience
Green Building & Human Experience
United States Green Building Council, by Chris Pyke, Sean McMahon, Tom Dietsche
U.S. Green Building Council® Research Program White Paper , June 10, 2010
Truth or Consequences: Green Building Products
Aug/29/2010 09:01
Often when discussing green building I encounter a crinkled nose, furrowed brow and roll of the eyes when I mention green building products. I must admit that I completely understand specifiers and owners’ frustration.
Though the industry has done better recently. One still needs a machete to cut through the “green marketing weed-like” overgrowth regarding green building product claims and certification types. What does this overgrowth hide? The market’s demand for actual performance data and return on investment information for sustainable construction and building systems product types.
Hopefully the upcoming release of the FTC’s updated Green Guides, which the development of included a focus area specifically on green building and textiles will spur a version of Truth or Consequences for the building industry. See Environmental Leader’s coverage here
Though the industry has done better recently. One still needs a machete to cut through the “green marketing weed-like” overgrowth regarding green building product claims and certification types. What does this overgrowth hide? The market’s demand for actual performance data and return on investment information for sustainable construction and building systems product types.
Hopefully the upcoming release of the FTC’s updated Green Guides, which the development of included a focus area specifically on green building and textiles will spur a version of Truth or Consequences for the building industry. See Environmental Leader’s coverage here