Value Beyond Cost Savings - Green Building Finance Consortium

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Value Beyond Cost Savings: How to Underwrite Sustainable PropertiesKey findings included:• The Szencorp Building was the highest scoring Australian building in theinternational sustainable buildings benchmark dataset, achieving a ‘Good Practice’rating for overall performance.• Perceived productivity was in the top 9 percent of Australian buildings, but thiswas actually a 1.5 percent decrease from the 2006 results, which showed a 13percent increase in productivity. Building use studies research shows only 30percent of buildings have positive productivity ratings.• Tenants rated the Szencorp Building’s image and design as very positive, placing itfourth in the Australian dataset for image.• The speed at which problems such as temperature were addressed rated better thanthe national benchmark.• The 2006 study revealed tenants were very happy with the level of artificial andnatural light, but the 2009 study showed that the tenants believed there was notenough natural light.• 86 percent of staff were dissatisfied with ventilation, 70 percent were dissatisfiedwith cooling and 79 percent dissatisfied with heating. However, forgiveness forthese matters was also high.• 54 percent of tenants said they felt “more healthy” working in the SzencorpBuilding.• The building’s overall performance rating improved from 76 to 80 out of 100.• Travel to work by bicycle increased from 5 percent in 2006 to 11 percent in 2009,but 61 percent of occupants travel to work by car, showing the importance ofbehavior programs alongside good building design.There is growing market information available on the demand for green by different typesof tenants (CoStar data on leases for example) and survey data that reflect differentdemographics, geographies, and other key issues. These studies are improving and beingdone more frequently.For example, CoStar released some very interesting information on the leases and buildingsthat have been identified as green, as shown in Exhibit IV-7. This chart shows that for allleases signed in the database that CoStar maintains, law firms were the most likely tenantsector to sign leases in green buildings, with over 14% of all leases signed nationally ingreen buildings. As this data gets more robust, and can be effectively analyzed at a90
Value Beyond Cost Savings: How to Underwrite Sustainable Propertiessubmarket level, it will provide significant insights into the potential space user demand forsustainable buildings based on the likely tenant profile that an owner is focused on serving.Rank by %Sq. Ft.GreenExhibit IV-7Demand for “Green” Differs by Type of TenantCoStar Data: Leases March 2006 to March 2008Industry SectorGreenLeasesGreen Sq.Ft.% GreenSq. Ft.1 Law firms 131 2,219,470 14%2 Insurance 49 953,423 10%3 Financial Institutions 108 2,029,324 9%4 Agricultural/Mining/Utilities 70 1,661,257 8%5 Real Estate 38 305,006 5%5 Accountants 17 127,266 5%7 Computers/Data Process 43 952,157 4%7 Engineers/Architects 39 391,518 4%9 Business Services 95 862,683 3%9 Medical 23 463,029 3%9 Government 14 242,322 3%12 Personal Services 67 899,447 2%12 Communications 8 206,441 2%14 Manufacturing 40 1,027,090 1%14 Retailers/Wholesalers 34 733,814 1%16 Transportation 6 138,687 0%Source: CoStar Group Study—Presentation, April 2008d. Foundational Background and TheoryThis category includes foundational background research and theoretical studies thataddress key issues in sustainable property valuation and financial analysis. This work istypically completed by academics, leading industry specialists, trade groups and/orgovernment. Theoretical research on valuation and financial performance of sustainableproperties has received contributions from around the world since about 2000. 6262 We identify a number of key researchers working on sustainable valuation and financial performance, but the list is byno means comprehensive; we apologize in advance for leaving out key researchers and look forward to hearing fromothers working in the field.91
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Appendix FSustainable Property Fina
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Appendix GSustainable Property Cost
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Appendix HDiscounted Cash Flow Anal
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Property Type: CBD OfficeSquare Fee
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Value Beyond Cost Savings - Green Building Finance Consortium

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