7 Real Estate Benefits of Green Building Certification

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October 15, 2019

In the last decade, green building certifications have grown popular with developers, architects, designers, property managers, and building occupants alike. Below, we’ve compiled seven reasons why going green can be a worthwhile investment.

1. Lower Operating Costs

Energy efficiency is one of the key principles behind many green building certifications. In addition to implementing energy-efficient heating, cooling, and ventilation systems, many green building projects are designed to harness natural resources like light and air. By being more strategic about window placement, mindful about energy sources and appliances, and by creating natural ventilation options, developers save on utility bills down the road. In fact, a study done by the General Services Administration (GSA) found that operational costs for green buildings were 19 percent lower than the industry average.

2. Tax Incentives and Funding Opportunities

Many towns and cities offer tax benefits and funding opportunities to encourage developers to create more energy-efficient and sustainable buildings. These benefits can include temporary property tax exemptions on green renovations, tax rebates, permitting fee reductions, zoning allowances, EPA Grants, and special mortgage programs. As you budget for your next project, it’s worth researching the financial incentives that are offered in your project’s zip code.

3. Structural Benefits

In addition to financial incentives, some municipalities offer structural incentives to projects that support statewide sustainability goals. These can include an expedited permitting process, or floor area ratio, height, and density bonuses that are awarded based on green building credentials.

4. Better Occupancy Rates

Green building certifications such as LEED, WELL, Fitwel, and LBC are performance-driven certifications. In other words, buildings must be monitored after certification to ensure that green initiatives are having the intended impact. Although this continuous monitoring requires a long-term commitment, green properties tend to earn higher occupant ratings for air quality, cleanliness, maintenance, indoor lighting, natural light, acoustics, and general workplace/building satisfaction. These higher than average ratings help to reduce occupant turnover and inspire more organic referrals — both things which lead to higher occupancy rates.

5. Higher Rental Rates

Due to their abundance of natural light and commitment to occupant health, green buildings tend to be more desirable than traditional properties. This high demand means that property owners can charge higher rental premiums which can offset project costs. A study of over 7,000 commercial buildings in prime metropolitan areas found that LEED certified properties earned an average of 2.9 percent more rent than non-certified buildings. 

6. Streamlined Compliance

In the last two decades, many U.S. states have adopted energy efficiency standards for newly constructed buildings (both residential and nonresidential) and building alterations. For instance, more stringent Building Energy Efficiency Standards are due to take effect in California in January 2020 which will affect permitting. If you’re not prepared to meet these standards or don’t have the right documentation prepared, it’s easy to become delayed and incur unforeseen expenses. With most construction and renovation projects, project timelines directly impact cost. The more you can plan ahead, the more likely you'll be to finish on time and on budget. 

If you’re pursuing a green building certification, meeting state mandates for energy usage should be a given. By documenting building/renovation plans and performance data for your green certification, you’ll also help to expedite state/local approval by providing proof of compliance and a roadmap for continuous improvement.

7. Lower Emissions

This list wouldn’t be complete without mentioning the most far-reaching benefit of greener building practices: lower carbon emissions. In addition to benefiting your company’s bottom line and protecting building occupants, greener building practices help to lower local emission totals, thereby benefiting community and environmental health. According to a GSA report, LEED certified buildings emitted 36 percent less CO2 compared to national building emission averages. The building sector is responsible for 43 percent of all CO2 emissions in the U.S. (more than transportation or  industry), so committing to green building initiatives can have a profound impact. Championing such initiatives can also generate positive brand perception, reinforce brand values, and inspire closer ties with the surrounding community.

Choosing the Right Certification for Your Project

Today, there are a variety of green building certifications and specialty programs to choose from. Before you commit, take some time to compare different programs and evaluate which option best aligns with your project goals and restraints.

To aid your research, we’ve created a high-level comparison of four top building certification programs: LEED, WELL, Fitwel, and Living Building Challenge. Download a free copy of our Green Building Certification Cheat Sheet by clicking the link below.