Value Beyond Cost Savings - Green Building Finance Consortium

Value Beyond Cost Savings: How to Underwrite Sustainable Properties• Principle Two: Failure to understand market research methods will lead to failurein interpretation and application.• Principle Three: Sweat the details when applying market research to propertylevel decisions.These principles are summarized below and presented in more detail in Expanded ChapterIV.Principle One: Different decisions require different types of market dataSustainable property market performance research can be interpreted and applied in manydifferent ways. Unfortunately, if a user of market research does not understand the detailsof the market research, or the types of decisions that it is most applicable to, researchresults and conclusions can be misused and misunderstood, as happens frequently regardingsustainable properties in the industry and media.One particularly important framework for differentiating sustainable property investmentdecisions is illustrated in Exhibit IV-5 below. This framework, based on traditionalmanagement consulting practice, differentiates strategic or enterprise decisions frombusiness unit or operating decisions.Exhibit IV-5Sustainable Property InvestmentDecisionsStrategic decisions are those made by pension fund boards, corporation boards, CEOs, andother leaders who must make decisions about how they are going to respond to the broaderissue of sustainability, and the more specific issue of sustainability within their real estateportfolios. Statistics/modeling-based research, surveys, valuation theory and othermarket/performance research that “generally” addresses the importance of sustainableproperty is important and applicable to these decisions.78