Value Beyond Cost Savings - Green Building Finance Consortium

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Value Beyond Cost Savings: How to Underwrite Sustainable PropertiesSubstantial work has been completed providing an emerging theoretical foundation linkingsustainable property investment and improved financial performance and value. We presenta chronological listing of key work in Appendix E.Sarah Sayce, Louise Ellison, and Judy Smith from the United Kingdom began publishingpapers around 2003 and early 2004 that began to integrate sustainability into the appraisalof property worth. Their work was part of the Sustainable Property Appraisal Project 63 andwas the first we reviewed that specifically addressed the theoretical foundation for linkingsustainable property attributes and property performance. 64Chris Corps and a team consisting of Cushman Wakefield, LePage, Busby Perkins + WillBuildGreen Consulting, and DTC (UK) led a collaborative project and published “GreenValue” in late 2005, still one of the best theoretical and empirical pieces of work linkingsustainable property attributes and value. Chris Corps continued his work in the valuationarena through his founding of the Vancouver Valuation Accord and his continuingauthoring of important theoretical and empirical works, including his May 2009 coauthorshipwith Theddi Wright Chappell of “High Performance Green Buildings: What’s ItWorth?” and “Valuing Sustainability,” which he wrote as a special report of theCommission for Environmental Cooperation in the fall of 2007.David P. Lorenz and Thomas Lütztendorf of Germany, who have written a series of papersthat explore in detail the relationship between sustainability and market value and risk,have made substantial contributions. Simultaneous with the work by Lorenz andLütztendorf, a number of Australians, including Richard Reed, John Robinson, GeorgiaMyers, Phillip Kimmet, and Stefan Trück, began developing additional theoretical supportfor the relationship between sustainability and the value of buildings. Their work and thework of many other important Australian sustainability authors was formalized into theYourBuilding.org website (http://www.yourbuilding.org/), which today is one of the bestorganized and most accessible websites providing a foundation for the linkage betweensustainable property attributes and financial performance and value, written from acommercial real estate perspective.Researchers in Japan have also made important contributions. Since 2005, Sumitomo Trusthas been studying environmental added value. The Japan Real Estate Institute is studyingsustainable valuation practices internationally. Professor Tomonari Yashiro of the Instituteof Industrial Science at the University of Tokyo has been actively involved in key valuationresearch and has helped to tie together the relationship between sustainability and value.Kei Owada, of the Mitsubishi Research Institute and Masato Ito, of the Sumitomo Trustand Banking Company, Ltd., have also been publishing more recently on the critical63 This research project was made possible through the financial support of the Department of Trade and Industry,Prudential Property Investment Mangers, Investment Property Forum, Boots Properties, and the ongoing support ofDrivers Jonas, IPD, Universities Superannuation Scheme and Forum for the Future.64 Sarah Sayce has been publishing papers on these and related topics since the 1990s.92
Value Beyond Cost Savings: How to Underwrite Sustainable Propertiesrelationships between sustainability and value. “A Note On Environmental Added Valuefor Real Estate” can be found at:http://www.sumitomotrust.co.jp/csr/innovation/real-estate/pdf/200511.pdfSumitomo Trust's research on environmental added value is available at:http://www.sumitomotrust.co.jp/csr/innovation/real-estate/01english.htmlIt is also important to acknowledge the significant theoretical and background researchcontributions of all of the authors of the research studies discussed earlier in this chapter.These researchers include Norm Miller, Jay Spivey, Dave Pogue, Andy Florance, PietEichholtz, Niles Kok, John Quigley, Franz Fuerst, Patrick McAllister, Brian Ciochetti,Mark McGowan, and Jonathan Wiley, Justin Benefield and Ken Johnson and others. Whilethe focus of the statistics/modeling-based research is on proving an empirical relationshipbetween sustainable certification and rent or value, each of the key papers authored bythese individuals provided important theoretical and background research that built off thefoundation that had been established by earlier authors.The Royal Institute of Chartered Surveyors and the Appraisal Institute have also providedleadership in developing the theoretical foundation for sustainable valuation. The RoyalInstitute of Chartered Surveyors, an international organization (operates out of 146countries) of over 100,000 property professionals, has been a key sponsor and promoter ofmuch of the work done to date in the industry. In addition to organizing and sponsoringmeetings of sustainable valuation professionals, sponsoring specific research in Canada,United States, United Kingdom, Australia, Germany, and other countries, and supportinggroups like the Green Building Finance Consortium and others working on these issues, theRoyal Institute of Chartered Surveyors has an active sustainability publication program,publishing special reports and surveys on sustainable property issues. In addition to theirspecific work on sustainable property valuation, they are active worldwide in many otheraspects of the relationship between sustainability and property.The Appraisal Institute, a global membership association of professional real estateappraisers with 25,000 members in 91 chapters throughout the world, has supportedpublication of green valuation articles and sponsored the development of a green valuationeducational seminar, created by Theddi Wright Chappell and Timothy Lowe, whichprovides a strong introduction on the key green value issues confronted by valuers. 65CoStar (http://www.costar.com/), the largest provider of real estate information, marketingand analytics in the United States and the United Kingdom, has also demonstrated strongleadership by making its data useable and available for sustainable property research,providing financial support for research, and contributing significant staff time to supportbetter research and analysis.65 Theddi Wright Chappell and Tim Lowe are pro bono members of the Green Building Finance Consortium’simplementation team. Chris Corps is a member of the Consortium’s Advisory Board.93
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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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