Value Beyond Cost Savings - Green Building Finance Consortium

Appendix GSustainable Property Cost-Benefit ChecklistPotential Property Costs Description of Cost Applicability Analysis 120• Product / system performance: combining newsystems and technologies• Energy cost volatility• Contractor experience / performance• Service provider performance• Building underperformance• Market underperformancemet. Sufficient value is key to equity investors, particularlydevelopers; whose profitability is driven by sales pricesonce the project is complete.Unlike conventional properties, not only does the markethave to be strong for the property, but there is also amore significant issue relative to commercial broker andappraiser recognition of that value. While both thecommercial brokerage and appraisal industries areramping up their training and education efforts in thesustainability area, it will take a number of years for theseservice providers to increase their understanding andacceptance of sustainability benefits.One of the key market risks that need to be assessed iswhether the level of sustainable property investmentmatches the demand by tenants and investors in themarketplace. For example, while a high level platinum orgold LEED building is a very desirable outcome,depending on the types of space users and most likelybuyers in the marketplace, it is possible that the level ofexpenditures required to reach the highest levels ofsustainability might be viewed as an over-investmentrelative to the market. This type of risk is similar to thatexperienced by all developers, who must match theirbuilding design and quality successfully with marketdemand, or risk the consequences.Another interesting area of risk that needs to beconsidered is that of the building enclosure. DanielLemieux, AIA, in a recent article, stated it this way:“Energy efficiency is not the only goal of a sustainablebuilding. Other goals include indoor environmental qualityand durability. Simply put: uncontrolled rainwaterpenetration, condensation and moisture ingress are threeof the most common threats to the long-term durability,structural integrity and performance of the buildingenclosure. In the past, statistical data has suggested thatcollectively they represent up to 80% of all construction285