A study says a link is emerging between the market value of a building and its environmental qualities. Frank McDonald, Environment Editor, reports.
Green buildings can command higher rents or prices, be quicker to secure tenants, enjoy lower tenant turnover, improve business efficiency, cost less to operate and maintain, and attract grants, subsidies and other inducements for energy efficiency and environmental stewardship.
That's what environmentalists have been saying for years, but it has now been endorsed by the Royal Institution of Chartered Surveyors (RICS) in a recently published report, Green Value, which found that buildings designed to use resources efficiently, reduce waste and provide a better environment are "good for business".
Buildings - the houses we live in, the places where we work, shop, eat out, worship or spend our leisure time - consume around 40 per cent of our energy resources.
As a result, they are a significant source of air pollution as well as carbon dioxide (CO2), one of the main greenhouse gases implicated in climate change.
In his introduction to Green Value, British Columbia's environment minister Barry Penner describes the report as "part of the journey towards sustainability". He also expresses the hope that it will "spur discussion on what our future sustainable communities should look like, and how we can get there".
The authors of the RICS report looked at a range of recently completed "green buildings" in Britain, Canada and the US. Though the results of their audit are preliminary, they concluded that "a clear link is beginning to emerge" between the market value of a building and its environmental qualities.
Comparisons were made between developments of conventional housing and "eco-homes" in Milton Keynes, Warrington and Wolverhampton, as well as a variety of office buildings in British Columbia, Ontario and California, a retail outlet in Montreal and educational buildings in Ohio and Vancouver.
Eco-buildings have also had some well-publicised outings in Ireland.
The most hyped was the Green Building in Dublin's Temple Bar, completed in 1994. For years, however, the three wind turbines on its roof have been tethered and rusting because their vibrations were creating problems for penthouse residents.
Last November, architect and broadcaster Duncan Stewart launched an innovative solar and wood pellet heating system at Inchydoney Island Lodge and Spa, in Clonakilty, Co Cork.
It is estimated that switching over from gas will reduce the resort hotel's energy bill by €50,000 a year, cutting CO2 emissions by 500 tonnes.
Proprietor Des O'Dowd said the hotel had invested €300,000 in the new system, which was developed by Bandon-based Renewable Energy Management Systems. "We will no longer be held to ransom by rising oil and energy prices, and with our heating costs now essentially fixed, the new system will pay for itself within five years."
However, although a lot of attention has been focused on energy, the RICS report notes that this usually accounts for less than 1 per cent of operating costs, compared to 10 per cent for rent and rates. By comparison, staff costs can be as high as 85 per cent - so the biggest return on investment in green buildings is better productivity.
The report identifies occupants as the main beneficiaries, but says proponents of green buildings may be failing to get across this message.
"Instances were found of green features improving productivity, but neither owners, developers, appraisers nor the green building sector fully value or communicate this advantage".
The scale of productivity and health benefit is "potentially enormous", and may exceed the value of all other expenditure associated with a building.
"If developers, owners and valuers can understand how to tap this benefit, the commercial advantage that they would gain would become the most significant aspect of 'green value'." As the RICS report concedes, early exponents of green buildings piloted new concepts that sometimes proved expensive, while others lacked the financial background to show the value of going green.
But if green buildings are to become mainstream, it says they have to be financially viable rather than just technically innovative.
The prime motivation of developers "is usually profit and they tend to view buildings as financial ventures which have to provide a return" on borrowed money.
"However, although they may generate greater value in the longer run, green buildings can cost more up front, pressuring perceived viability," the report says.
"In this context, appraisers, developers and owners are sceptical and reluctant to change habits . . . However, if 'green value' exists, then this will eventually force market change, as competition will gradually make traditional buildings uncompetitive. The stakes are high because this will impact on existing assets that aren't green."
Thus, the key focus of the study was value, expressed in a way the real estate and financial sectors would understand it.
For the green buildings examined, benefits included extra loan security, additional income, higher rent, lower tenant turnover, better rental stability, higher occupancy rates and lower tenant inducements.
"In time, these advantages can be expected to enhance investment returns," the report said, adding that most of the claims of the green building movement "seem to be valid, including longer life cycles, reduced non-renewable materials use, reduced energy consumption, and smaller 'environmental footprint'."
One of the report's most important recommendations is that chartered surveyors and estate agents need to acquaint themselves with evidence of the value generated by "green" features - so that, for example, natural ventilation wins out over air-conditioning. This would "accelerate adoption of green buildings".
It certainly would. DeBlacam and Meagher's Esat building on Grand Canal Quay was meant to be naturally ventilated, but ended up being air-conditioned at the insistence of chartered surveyors.
Yet Bucholz McEvoy's naturally-ventilated Fingal County Hall worked out cheaper to build than conventional office buildings.
It also provides a much better working environment than hermetically sealed office blocks.
We can all remember the "sick building" syndrome, with staff complaining about headaches, runny noses and other ailments - and the cost of putting this right by replacing panes of glass with windows that can actually be opened.
The RICS report advocates a more integrated, team-based approach to design aimed at achieving green benefits without high cost.
This should include valuers/appraisers "to help ensure that value is a consideration in building design, and that appraisals properly reflect the attributes of green buildings".
Communication of "green value" also needs to improve. "This should focus on personalising the benefit of green buildings to occupiers, tenants, real estate agents, valuers and appraisers," the report says.
It also calls for building regulations that are "holding back" greener buildings to be reviewed and changed.
It says the real estate and green sectors would benefit from reviewing their focus and working more closely together. "While the benefits to asset value are compelling, they are minor compared with the benefit to business. This benefit needs to be properly valued and communicated. Then all can benefit from building green."
