Value Beyond Cost Savings - Green Building Finance Consortium

Value Beyond Cost Savings: How to Underwrite Sustainable Properties1. “Do Green Buildings Make Dollars and Sense?” Norm Miller and Dave PogueUSD-BMC Working Paper 09-11, Draft: November 6 th , 20092. “High Performance Green Building: What’s It Worth? Investigating the MarketValue of High Performance Green Buildings,” Theddi Wright Chappell, ChrisCorps, May 2009.3. “Green Value: Green Buildings, Growing Assets,” Royal Institute of CharteredSurveyors, Canada, 2005, Oct. 2005. 564. “Valuing Green: How Green Buildings Affect Property Values and Getting theValuation Method Right,” Richard Bowman, John Wills, Green Building Councilof Australia, 2008.5. “Financial Analysis of LEED EB Implementations,” Craig Sheehy, EnvisionRealty, 2008.6. “Energy Efficiency Improvements: Do They Pay?”, Brian A. Ciochetti and MarkD. McGowan, MIT Center for Real Estate, February 2009.7. “Towards a Green Building Infrastructure Investment Fund,” Trent Berry,Compass Resource Management, February 2007.Summary Conclusions From Expert-Based AnalysesThese types of studies and research provide the best evidence of sustainable propertymarket and financial performance. These studies are typically conducted by experts inreal estate valuation or market analysis, and follow in form, if not always in depth, theprocess used by valuers and market researchers to generate rents, cost, and related realestate property financial assumptions.In summary, the Expert-Based Financial Analyses support the following conclusions:• Faster absorption of tenants—improved pre-leasing;• Achieve competitive rents—in some cases higher then competitors;• Reduced tenant turnover;• Higher equilibrium occupancies;• Competitive lease terms;• Reduced operating and maintenance costs;• Attract superior grants, subsidies and other inducements; and,• Achieve high or moderately high tenant satisfaction scores.The expression of increased occupant demand was not consistent across properties orstudies, with some projects experiencing faster absorption and higher occupancy, but notsignificantly higher rents or better lease terms. Investor and tenant interviews on specific56 This study is also sponsored by BC Hydro, the British Columbia government, English Partnerships, GreaterVancouver Regional District, Green Buildings BC, the Canada Green Building Council, Natural Resources Canada,Resources naturelles Canada, and Realpac.81