Value Beyond Cost Savings - Green Building Finance Consortium

Value Beyond Cost Savings: How to Underwrite Sustainable PropertiesSummary of Development Cost ResearchThe evidence from key research and case studies analyzing the performance of sustainableproperties regarding development costs (often referred to as “first costs”) is that a certifiedsustainable property costs 0-2% more, with higher levels of certification costing up to 10%more. Many major construction companies (Swinerton, Webcor, Turner, etc.) publiclypromote that sustainable construction should cost no more, and the research shows that inmany cases it does not. (Expanded Chapter IV provides a detailed analysis of first costanalysis and the most important research to date on the topic)In November 2009, Davis Langdon completed a Cost Study for the Urban GreenCouncil, which found that LEED certified high rises came in at an average cost of $440 persquare foot compared to $436 per square foot for non-LEED projects. On commercialinteriors, the cost of $191 per square feet was actually $6 dollars lower than for non-LEEDprojects. This study was based on construction costs for 38 high-rise multi-family buildingsand 25 commercial interiors in New York City.A July 2009 Study by Davis Landgdon: “Cost of Affordable Green Housing inPortland and Seattle” looked specifically at the costs for affordable green housing andreached the conclusions that there was no statistically significant difference in constructioncost between the green-rated and standard populations.One of the best analysis of comparative cost to date, again competed by Davis Langdon, isshown in: “The Cost of Green Revisited: Reexamining the Feasibility and Cost Impactof Sustainable Design in the Light of Increased Market Adoption,” Lisa Matthiessen,Peter Morris, David Langdon, 2007.http://www.davislangdon.com/USA/Research/ResearchFinder/2007-The-Cost-of-Green-Revisited/This study is an update of Davis Langdon’s July 2004 study entitled “Cost of Green: AComprehensive Cost Database and Budgeting Methodology”. The updated study comes toessentially the same conclusion as the earlier study – “there is no significant difference inaverage costs for green buildings as compared to non-green buildings.”The study methodology was to analyze a total of 221 buildings, 83 of which were designedwith a goal of achieving some level of LEED certification and 138 of which did not have agoal of sustainable design. The authors note “it is important to keep in mind that thedifference between these groups is simply that the LEED-seeking buildings were designedwith LEED certification in mind, while this was not one of the goals for the non-LEEDbuildings.” They further note that most of the non-LEED-seeking buildings would haveachieved 10 to 20 LEED points had they applied. The study included an analysis ofacademic buildings; laboratory buildings, library buildings, community centers andambulatory care facilities.Other key findings from the study are as follows:61