ABSTRACT
Due to the deterioration of the earth’s health and the uncertainty in terms of climate changes, economy, food, water and energy supplies, the above terms have become worldwide phenomena. Buildings have a huge role to play in addressing the environmental concerns as they play a contributing role in gas emissions, waste disposal and energy use.
The literature review and results of the quantitative research amongst experts like facility and building managers, leasing agents, finance managers and project managers in the property sector formed the basis of the study. Although green buildings are regarded as the future, the study revealed that there is a perception, even amongst experts in the property sector that the upfront costs of building green is substantially higher when compared to building conventional, which limits the construction of green buildings.
This research is aimed at investigating whether building green leads to financial benefits which will ultimately provide the differentiator when it comes down to a final decision whether to invest in green buildings or not. An overview is also provided on the fundamental principles of green buildings which are important to be implemented in the construction of green buildings in order to maximise the financial benefits provided by green buildings. The study showed that experts agreed that the concepts applied in green buildings lead to long-term financial savings which justifies the statement that a realistic comparison between the total costs of building green versus building conventional can only be achieved over the lifecycle of a building.
The main finding of this study is that there is awareness and understanding of the financial benefits associated with green buildings which implies that green buildings have a good growth potential.
ACKNOWLEDGEMENTS
I would like to thank my creator and saviour God for giving me the strength to
complete this MBA study.
It is also with great and sincere appreciation that I express thanks towards the
following individuals for their role in making this mini dissertation possible:
My wife Conette and daughter Charissa for their love, continuous support and belief in me through what has been a long and difficult journey in completing
the MBA programme.
The executive and management of Liberty Group Properties for the opportunity to study towards an MBA.
The Potchefstroom Business School of the North-West University for the opportunity to participate in the Masters of Business Administration (MBA)
programme.
Professor Anet Smit, for your special contribution in assisting me with my research.
Antoinette Bisschoff, for the technical and final language editing of the mini-dissertation.
My friends and colleagues, Brian Unsted and Linda Macfie, for their
assistance.
The respondents employed in the property sector who helped to complete the
TABLE OF CONTENTS
ABSTRACT ... ii
ACKNOWLEDGEMENTS ... iii
LIST OF FIGURES ... viii
LIST OF TABLES ... ix
LIST OF ABBREVIATIONS ... X
CHAPTER 1 ... 1
INTRODUCTION TO THE STUDY ... 1
1.1 INTRODUCTION ... 1 1.2 PROBLEM STATEMENT ... 2 1.3 RESEARCH OBJECTIVES ... 3 1.3.1 Primary objective ... 3 1.3.2 Secondary objectives ... 3 1.3.2.1 Literature study ... 3 1.3.2.2 Empirical study ... 4 1.4 RESEARCH METHOD ... 4
1.4.1 Phase 1: Literature study ... 4
1.4.2 Phase 2: Empirical study ... 4
1.4.2.1 Questionnaire design... 4
1.4.2.3 Statistical data analysis ... 5 1.4.2.4 Ethical considerations... 5 1.5 LIMITATIONS ... 5 1.6 CHAPTER DIVISION ... 6 1.7 CHAPTER SUMMARY ... 6
CHAPTER 2 ... 7
LITERATURE STUDY ... 7
2.1 INTRODUCTION ... 72.2 DEFINITION OF A GREEN BUILDING ... 8
2.3 FUNDAMENTAL PRINCIPLES OF GREEN BUILDINGS... 10
2.3.1 Sustainable site design... 11
2.3.2 Water quality and conservation ... 11
2.3.3 Energy and environment ... 12
2.3.4 Indoor environmental quality ... 12
2.3.5 Materials and resources ... 13
2.3.6 Optimize operational and maintenance practices ... 13
2.4 THE COST PERCEPTION OF GREEN BUILDINGS ... 14
2.5 THE FINANCIAL BENEFITS OF GREEN BUILDINGS ... 18
2.5.1 Lower operating costs ... 20
2.5.1.1 Electricity ... 20
2.5.1.2 Water ... 22
2.5.2 Green buildings lead to higher return on investments ... 24
2.5.3 Marketability of green buildings ... 27
2.5.4 Green buildings and productivity ... 29
government tenants ... 32
2.5.5.1 Corporate tenants ... 32
2.5.5.2 Government tenants ... 33
2.5.6 Green buildings reduce liability and risk ... 33
2.6 CHAPTER SUMMARY ... 35
CHAPTER 3 ... 37
EMPIRICAL STUDY ... 37
3.1 INTRODUCTION ... 37 3.2 STUDY POPULATION ... 37 3.3 RESPONSES ... 37 3.4 DEMOGRAPHIC DATA ... 383.5 RESULTS OF THE SURVEY ... 42
3.5.1 General ... 43 3.5.2 Operating costs ... 45 3.5.3 Return on investments... 46 3.5.4 Marketability ... 48 3.5.5 Productivity ... 49 3.5.6 Tenants ... 50
3.5.7 Liability and risk ... 51
3.6 DEMOGRAPHIC DIFFERENCES IN THE EXPERIENCE OF THE VARIABLES ... 52
3.6.1 T-test for gender ... 53
3.6.2 Anova Test: Difference between the construct and the area of work .. 54
3.6.3 Reliability tests – Cronbach’s Alphas ... 61
CHAPTER 4 ... 63
CONCLUSIONS AND RECOMMENDATIONS ... 63
4.1 INTRODUCTION ... 63
4.2 CONCLUSIONS ... 63
4.3 RECOMMENDATIONS ... 65
4.3.1 Recommendations relating to the outcome of the study ... 65
4.3.2 Recommendations for future research ... 66
4.4 CHAPTER SUMMARY ... 67
REFERENCE LIST ... 68
APPENDIX 1: QUESTIONNAIRE ... 75
LIST OF FIGURES
Figure 2.1: The perception gap – estimated vs. actual cost premiums for green
buildings. ... 17
Figure 2.2: Green building vs. traditional design and construction. ... 18
Figure 2.3: Financial benefits of green building ... 20
Figure 2.4: Stock performance of world’s most ethical companies’ versus S&P 500 index ... 26
Figure 2.5: Green star: Returns for office market ... 27
Figure 3.1: Response rate ... 38
Figure 3.2: Gender ... 40
Figure 3.3: Total value of properties ... 40
LIST OF TABLES
Table 2.1: Eskom’s average tariff adjustment for the last 10 years 21
Table 2.2: Water efficiency and treatment impacts 24
Table 3.1: Area of work 39
Table 3.2: Age of respondents 41
Table 3.3: Years of service 42
Table 3.4: Number of buildings 42
Table 3.5: General 44
Table 3.6: Operating costs 46
Table 3.7: Return on investments 47
Table 3.8: Marketability 48
Table 3.9: Productivity 49
Table 3.10: Tenants 50
Table 3.11: Liability and risk 51
Table 3.12: Independent t-test for gender 53
Table 3.13: Anovas for area of work 55
LIST OF ABBREVIATIONS
BREAAM Building Research establishment Environmental Assessment Method
CIDB Construction Industry Development Board DPW Department of Public Works
EISA Energy Independence and Security Act EPA Environmental Protection Agency GGGC Governor’s Green Government Council
HSBC Hong Kong and Shangai Banking Corporation LEED Leadership in Energy and Environmental Design NCR Greenspace National Capital Region Incorporation ROI Return on Investments
SA South Africa
S & P Standard & Poor
UK United Kingdom
USA United States of America
US United States
WBDG Whole Building Design Guide WGBC World Green Building Council
CHAPTER 1
INTRODUCTION TO THE STUDY
1.1 INTRODUCTION
The 21st century will be defined as the urban age due to the fact that the increasing global population seeks prosperity in towns and cities across the world. This growth unfortunately is set against a backdrop of a lot of uncertainty in terms of climate, economy, politics, food, and water and energy security. The question is whether the environment can sustain society’s expectations and still maintain its economic competitiveness.
Lawson (2008:1) states that there has been a fundamental growth in environmental awareness in a wide variety of industries. Green technology, green products and green buildings have entered the minds of professionals world-wide and are also the topic of discussion between them.
Buildings have a huge role to play in addressing environmental concerns as they contribute around 40% of global greenhouse gas emissions and the same proportion of waste (Williams, 2008:1). The solution to this problem is building green, which is the practice of creating structures and using processes that are environmentally responsible and resource-efficient throughout a building’s life-cycle from citing to design, construction, operation, maintenance, renovation and deconstruction (Williams, 2008:1).
The advantages to cities where green buildings are situated go well beyond reducing energy, water consumption and cutting emissions and waste, as a city’s properties can also make a huge difference to its appeal and competitiveness. As energy prices continue to climb and an increasing number of people become aware of their personal impact on the environment, green buildings have moved from the fringe to the mainstream of the construction industry. It has become a trend that will affect builders, property owners and insurers for years to come (Fulton & Caron, 2010:1).
Buildings that perform better have a higher market value; produce lower running costs and there is a major social value to healthy buildings where most people work and socialise. Malarthamil (2012:2) states that green buildings will certainly create delight when entered, serenity and health when occupied and repentance when departed. Working in an environment with access to daylight, fresh and healthy air and views undoubtedly provides a connection to the exterior environment.
1.2 PROBLEM STATEMENT
One of the hottest issues in the green building world is whether there is a significant premium to building “green” as opposed to the use of standard building products and practices. It is not uncommon for some members such as architects, engineers, interior designers and general contractors of the construction industry to say that the cost of building “green” can add 10% or more to the cost of construction even though there are studies that indicate that it is not the case. Although these studies reflect that significant higher costs associated with green buildings are perceptions, it still discourages green sustainable building design which is regarded as the future (Berman, 2010:1).
Research such as the Rands and Sense of Green Buildings report indicated that the perceived cost premium on green buildings was 17%, but reality showed that premiums were far less. Green building sceptics sometimes argue that it is difficult or even impossible to build green without paying a big cost premium. Real world examples prove that you can complete a building project which adheres to the standards set by the Leadership in Energy and Environmental Design (LEED) certification for green buildings, at an average of 2% more in upfront costs, and sometime even below when compared to the standard market construction costs for a normal conventional building (McKenzie, 2012:1).
Results from the numerous studies referred to in the Rand and Sense report have shown that there is no significant cost difference between the construction of green buildings compared with conventional buildings, and green buildings achieve better investment returns and higher valuations (Milne, 2012:2). The reason most cited for
not incorporating green elements into building designs, namely the increased capital outlay is unfounded. The majority of reported premiums in the United States are between 0% and 4%. In Australia, the latest studies show that a 4-star green building is actually cheaper to build on average; while a 6-star green star building, signifying world leadership usually has a relatively small premium of about 6%.
A common misperception is that building green can add as much as 17% capital cost to a project. The Rand and Sense report on green buildings shows that all of this is simply not the case (Milne, 2012:2).
Berman (2010:1) concurs by stating that a study conducted by the Northeast Ohio Chapter of the United States Green Building Council and Sustainable Rhythm revealed that those who have analysed the market have found that in reality, there is a negligible premium or as low as a 1-2% premium dependent on the level of green building design solutions and/or the LEED certification level pursued.
1.3 RESEARCH OBJECTIVES
The objectives of the study are divided into primary and secondary objectives.
1.3.1 Primary objective
The primary objective of this study is to investigate the financial benefits of green buildings.
1.3.2 Secondary objectives
The secondary objectives of this study were as follows:
1.3.2.1 Literature study
Introduction to green buildings;
Definition of a green building;
Fundamental principles of green buildings;
The cost perception of green buildings;
1.3.2.2 Empirical study
To investigate whether experts such as facility-, building-, leasing-, finance- and project managers employed in the property sector are familiar with the cost of green buildings compared to those of normal buildings and whether they are aware of the financial benefits associated with a green building.
1.4 RESEARCH METHODOLOGY
This study consists of two phases, namely a literature study and an empirical study.
1.4.1 Phase 1: Literature study
By using a literature study, the researcher endeavours to focus on the financial benefits derived from green buildings. Relevant international and national literature will form the base of the literature study. The sources that will be used include internet searches, publications such as textbooks, newsletters, company booklets and scientific journals.
1.4.2 Phase 2: Empirical study
The empirical study comprises the questionnaire design, participants, statistical data analysis and ethical considerations.
1.4.2.1 Questionnaire design
The aim of the questionnaire design is to establish whether the cost of greening is substantially more or that it is a mere perception amongst experts in the property sector and whether those experts are aware of the financial benefits derived from green buildings.
The research can be classified as descriptive and explorative, seeing that the study undertaken must be descriptive of the perception and explorative in the sense that solutions need to be identified in order to address the perception of higher greening costs.
1.4.2.2 Participants
Participants will be experts and in particular facility managers, building managers, finance managers, leasing agents and project managers of property letting businesses involved in the construction of new buildings, extensions to current buildings and management of the daily operations of buildings. The participants will be representatives of properties situated in all nine provinces of South Africa.
1.4.2.3 Statistical data analysis
The first phase of the study consisted of an analysis of the demographical information. For this purpose, frequency analyses with valid percentages were done on the area of work. The mean and standard deviations were calculated on the age of respondents, years of service and number of buildings. Charts were used to reflect the gender of participants, total value of properties and age groups of participants. The second phase of the data analysis was the analysis of the different financial benefits. Descriptive statistics were used in order to analyse the financial benefits of green buildings. Independent i-tests were used to determine if there were significant differences between gender on the understanding, views and knowledge of general factors and financial benefits pertaining to green buildings. Analysis of Variance (Anovas) were also performed to determine the significant difference between the constructs as reflected on the questionnaire and the area of work. The second phase was concluded with the calculation of the Cronbach Alpha coefficient to determine whether the results per the questionnaire can be regarded as reliable.
1.4.2.4 Ethical considerations
The recipient of this study agrees to interpret the information provided and will not include or restate the information as being different or contrary to what has been provided.
1.5 LIMITATIONS
Additional research will be needed on the financial benefits of green buildings as this study is not a representative sample of all companies in the property letting business.
The questionnaire was limited to experts working in shopping centres, office buildings and industrial buildings only.
Not all financial benefits associated with green buildings were investigated.
There is limited control over the completion of the questionnaires. 1.6 CHAPTER DIVISION
The chapters in this mini-dissertation are presented as follows: Chapter 1: Introduction to the study.
Chapter 2: Literature study. Chapter 3: Empirical study.
Chapter 4: Conclusions and recommendations.
1.7 CHAPTER SUMMARY
Green buildings become increasingly important seeing that it can impact a company’s net income. Chapter 1 provided the background and an introduction on green buildings, and the problem statement which refers to the perception that occurs around the initial cost of green buildings. Information to proof or disapprove the perception that greening cost substantially more needs to be gathered in property letting businesses and this information must be verified and analysed. The result will then indicate the validity of the perception and will guide role players into actions that can be undertaken to enhance the construction of green buildings.
CHAPTER 2
LITERATURE STUDY
2.1 INTRODUCTION
Buys and Hurbissoon (2010:81) state that the earth’s health is continuously deteriorating and is expected to decline at a much quicker rate unless human beings adopt and embrace eco-friendly policies such as green buildings. Green buildings have long been a concept but failing to apply it universally remains a huge problem. Freed (2008:10) confirms this by stating that real green buildings dated from A.D. 1. These buildings were stone dwellings constructed by the Anasazi Indians and were regarded as green because the only materials used were stone, mud and wood which were completely free of toxins.
According to Hoffman and Henn (2009:391) towards the end of the 20th century, the building environment became a focus of observation within the environmental movement. Research disclosed that buildings utilize 55% of the wood cut for non-fuel use, 12, 2% of total water consumed, 40% of the world’s energy and 71% of the United States of America’s (USA) electricity. Buildings in the USA furthermore produced 40% non-industrial waste, and 36% of carbon dioxide emissions which inevitably give rise to global warming (Hoffman & Henn, 2009:231).
Research by Hoffman & Henn (2009:392) indicated that when the inside of buildings are examined one can conclude that Americans spend 90% of their time indoors – the United States Environmental Protection Agency (EPA) reports that indoor air regularly contains pollutant levels 2 to 5 times higher than outdoor air. Urbanized land further consumes natural space and agricultural land at a rate of 2.6 times the population growth in the USA. The search to reduce this growing environmental impact resulted in the birth of the green building movement .
This has also led to the United Kingdom’s (UK) establishment of the Building Research Establishment Environmental Assessment Method (BREAAM) in 1993. Through this voluntary design- and construction-stage, assessment tools have
sought to stimulate commercial property markets for “green”- environmentally good-natured and natural resource efficient buildings around the world (Gabe 2010:1). Nalewaik and Venters (2008:1) state that green development has been most active and global topic in the construction industry for more than a decade. It has increasingly become the topic of discussion worldwide as the construction of buildings have a direct impact on the economic, social and environmental aspects of businesses which are mostly referred to as the triple bottom line.
According to Piperato (2013:1) the commercial real estate construction and investment philosophy that places a premium on location and quality is giving way to interest in sustainable green design as confirmed by market analysts.
2.2 DEFINITION OF A GREEN BUILDING
According to the Governor’s Green Government Council (GGGC, 2011:1) there are various definitions of what a green building entails or what it means.
Definitions may vary from a building that is “not as bad” or as a medium building with reference to its impact on the environment or one that is noticeable better than a medium building, to one that may even go as far as representing a transformative process where there is in reality an improvement and renewal of the site and its surrounding environment. Against the background of the entire green concept the ideal green sustainable building maintains and restores the habitat which is important for sustainable life and develops into a net producer and exporter of resources, materials, energy and water rather than being a net consumer.
Scheulen and Wells (2008:1) define a green building as a compilation of advanced building principles and methods that exceed all existing building codes in creating a better interior environment and at the same time reducing the negative impact on the planet. The primary motivations arise from concerns around energy efficiency, excessive consumption of raw materials, and the amount of construction debris in landfills as well as health concerns. Although regarded as a fair definition it still leaves an enormous spectrum of possibilities which ranges from minor changes from standard practices to radically different approaches to buildings.
The industry and research often uses the following terms to describe green buildings:
high performance buildings;
intelligent building, and
sustainable building (Lewis et al., 2010:2).
According to Lewis et al. (2010:2) you have to look at the definitions of each term as they are all interrelated. The United States Energy Independence and Security Act (EISA) of 2007 defines a high performance building as a building that combines and optimises on a lifecycle basis all major high performance characteristics, including energy and water, conservation, environment, safety, security, durability, accessibility, productivity, sustainability, cost-benefits and functionality (US Environmental Protection Agency, 2012:1).
An intelligent building is defined as a building that integrates people, processes and technology in an effective and sustainable way through the application of advanced levels of integrated technology, including but not limited to plumbing, electrical, renewable energy systems and sources, information technology, control systems and management of software to provide a safe, healthy and productive environment for building inhabitants that conforms rapidly to changes at the lowest possible lifecycle cost.
A green building is defined as a building that is designed, constructed and operated to reduce environmental impacts and at the same time maximise resource efficiency while also balance cultural and community sensitivity.
A sustainable building is defined as a building that meets the requirements of the present without compromising the competency of future generations to meet their own needs (Lewis et al., 2010:2).
An all-encompassing definition which includes all the above is the definition as per the United States Environmental Protection Agency (EPA, 2012:1) which defines a green building as the practice of creating structures and using processes that are environmentally responsible and resource-efficient throughout the entire life-cycle of the building from citing to design, construction, operation, maintenance, renovation and deconstruction. This practice further expands and compliments the classical building design concerns of economy, utility, durability and convenience.
Within all these definitions of a green building there is a common thread of designing the building to take advantage of the environment which benefits all stakeholders rather than just fighting it (Scheulen & Wells, 2008:1).
2.3 FUNDAMENTAL PRINCIPLES OF GREEN BUILDINGS
According to the sustainable committee of the Whole Building Design Guide (WBDG, 2012:1) building constructions and operations have vast direct and indirect impacts on the environment. Buildings use resources such as energy, water and raw materials and in the process generate waste and extract harmful atmospheric emissions.
Building owners, designers, and builders face unprecedented challenges to meet demands for new and renovated facilities that are accessible, secure, healthy and productive. The construction team must adhere to a set of best practices which are offered by green buildings in order to design and construct efficient, healthy buildings that benefit the community, environment and the owners’ bottom line (NCR, 2011:1).
While the definition of sustainable building design is continuously changing, six fundamental principles of green buildings persist, namely:
2.3.1 Sustainable site design
According to the Sustainable Committee of the WBDG (2012:2) the creation of a sustainable green building starts with thorough site selection which entails the reuse or rehabilitation of current buildings. The location, orientation and landscaping of a building has a direct impact on ecosystems, energy and transportation methods.
Walker (2009:1) states that the following suggestion should be considered when looking at site design:
Only select a new site when there is no alternative;
When a new site is the only option, do not select one which is critical to the local eco-system;
Select a site with easy access to mass transportation;
Minimise the building’s footprint by using current surfaces, natural shading and lightening roof colours.
2.3.2 Water quality and conservation
The GGGC (2011:4) states that it is imperative to restore the existing natural water cycle and to design site and building improvements in such a manner that they closely emulate the site’s natural pre-development hydrological systems. Emphasis should be placed on the recycling and re-use of water as opposed to the unnecessary use of potable water.
According to Walker (2009:1) the following guidelines should be kept in mind when using water:
Make provision for the use of low-impact storm water reservation;
Improve water conservation by making use of indigenous trees, plants and turf that do not need irrigation, fertilization and pesticides;
Assure yourself that the site assessment captures the natural hydrological characteristics.
2.3.3 Energy and environment
According to Kubba (2012:1) in order to achieve maximum energy performance and energy efficiency, a number of passive strategies like utilising a building’s size, shape, orientation and the environment’s natural lighting are very important. Energy efficiency is one of the very important aspects in making your building a finely tuned, lean, green machine.
Walker (2009:1) suggests the following guidelines for consideration when looking at the energy and environment principles applicable in the construction of a green building:
Use of maximum solar orientation;
Concentrate on exterior insulation in order to ensure maximum performance of the exterior envelope;
Research and keep up to date with all energy technologies;
Use only appliances with green building approvals and new age lighting and settings.
2.3.4 Indoor environmental quality
Kubba (2012:1) states that studies indicate that buildings with good overall indoor quality can minimise the rate of respiratory disease, the occurrence of allergies, asthma and sick building symptoms which as a result will lead to an increase in the productivity of workers.
Walker (2009:1) places emphasis on the following points when considering the quality of the indoor environment:
Protect the interior of a current building while busy with construction and ensure that the building will be smoke-free;
Ensure all interior finishes are user and environmentally friendly;
2.3.5 Materials and resources
WBDG (2012:2) states that a green sustainable building is constructed out of materials that reduce negative life-cycle environmental impacts such as global warming, resource depletion and human toxicity.
Walker (2009:1) provides the following guidelines in terms of materials to be used in green buildings:
Always use recycled materials where possible;
Use materials that can be re-cycled at the end of its functional life;
Use engineered high stress material which limits the quantity of used materials; and
Make use of local providers of local products. This will support the local economy and a reduction in the transportation of goods.
2.3.6 Optimize operational and maintenance practices
According to the Sustainable Committee of the WBDG (2012:2) building operators should be encouraged to participate in the design and development stage of a green building to ensure optimal operations and maintenance of the building. Commissioning of green buildings on completion guarantees performance in line with the design goals.
Kubba (2012:1) states that the commissioning of buildings includes the following:
The testing and adjustments of mechanical, electrical and plumbing systems to certify that all equipment adheres to the design criteria;
The instruction by staff members on how to operate and maintain equipment, as this will allow buildings to continue to perform at optimum levels as originally envisaged at the design stage; and
It is important to note that the construction team of a green building must know the climate of the region in which it is constructed, as this will avoid
inappropriate techniques on a project which can have a negative impact on the final cost and viability of the green project.
From the above it is evident that in a green building the team must engage early and in a more collaborative and integrated manner which requires a new way of thinking. This integrative approach represents a new process which ensures a tight integration of systems (Hoffman & Henn, 2009:401).
Bartlett (2010:1) sums it up effectively and states that a green smart building does not end at the four surrounding walls but that developers must think and ponder on how green buildings interact with the externalities and how it is ultimately affected by its surroundings.
2.4 THE COST PERCEPTION OF GREEN BUILDINGS
According to Nalewaik and Venters (2008:5) when the concept of green sustainable buildings started to infiltrate the mainstream consciousness, there was a general perception that green was much more expensive. In the beginning of green construction green buildings did cost more, but for the following valid reasons:
Technologies around green were new, not readily available and not mass manufactured;
Architects who specialized in green sustainable design were scarce and as a result in a position to charge a premium for their services;
Contractors who were unfamiliar with the changes in construction and management processes experienced inefficiencies and unforeseen productivity losses and as a result charged premiums to make up for these losses; and
The add-on of soft costs like commissioning in order to obtain green certification in addition to the total initial costs could result in higher costs than those of traditional buildings.
Kapelina (2010:4) states that although the economics of building green or green retrofits are compelling, there are several building owners which are not taking full
advantage of energy efficient technology nor are they enforcing sustainable operating practices. Building owners reject the concept of building green when presented with higher first cost numbers before costing analyses are completed and scrutinised.
On top of higher cost premiums many real estate specialists fear that building green will raise construction, operating and maintenance costs relative to competitors. To compound the effect many owner decision makers respond to the initial capital cost shock, without taking into account the lower lifecycle cost of the green sustainable designed building, which in the majority if not all cases offset the initial increased cost in part or in total.
According to Lewis et al. (2010:1), the operational stage of a commercial building is substantially longer than the design and construction stage. The lifecycle cost of the operational life of a building equates to between 60 to 85% of the total lifecycle cost when compared to the design and construction cycle which only amounts to between 5 and 10%. The design and construction costs decrease even further to 1% of the total lifecycle cost when employee salaries and benefits are included. It is evident that the operational stage of a building is substantially longer and more cost intensive.
Friend (2009:1) sums it up by comparing two similar office buildings:
The one a conventional building constructed in the traditional way, where the developer hired an architect to draw up the plans, a construction company to build the offices according to specifications, and an engineering company to install lighting, temperature control and the necessary water systems. This building serves the purpose for which it is build, but are occupied by workers which complain that the air inside is stuffy, the air conditioner is too cold and that the lighting inside feels artificial;
The second building was constructed in a green sustainable manner by an integrated design-build-engineering team which was meticulously planned. It uses 30% less water and energy than the first building. The building is full of
fresh air and natural light which results in employees missing fewer days due to illness.
The market usually asks which of the two buildings will cost more to build. The majority of the people assume that the second building (a superior product) cost a lot more and will actually ask how much extra will the green cost.
Friend (2009:2) states that a more sophisticated question should be to ask how soon that extra cost will get paid back, but leading developers are now constructing high performance green buildings at construction costs equal or even lower than those of conventional buildings resulting in making the question even more sophisticated namely by asking how they can design a building that delivers better performance, lower operating costs and lower initial costs.
According to the World Green Building Council (WGBC, 2013:26) an interesting study compared the perception of cost increase by professionals with experience in constructing green buildings with the perception of professionals with little or no experience. Those with experience think the initial cost uplift to be 13% compared to those with no experience to be up to 18%. This is indicative that while the lack of experience does enhance the perceived cost of green buildings, even professionals with experience tend to estimate the initial cost as substantial. A number of studies have reported that the cost premium of green buildings is nowhere near as high as these numbers and that a green building can even cost the same and in some cases even less.
These perceptions may be due to:
An incompetence to forget historical data;
Lack of knowledge that costs are actually coming down;
Showpiece or demonstration buildings for green sustainability that may have additional costly finishes which are not directly linked to green cost; and
Demonstration buildings sometimes also feature highly visible green technologies such as photovoltaic’s and wind turbines which are used to
reinforce a green image but are not financially feasible especially when not linked with the overall environmental strategy (WGBC, 2013:26).
Usually it is the inclusion of these non-integrated sustainable green features and improvements that result in green projects exceeding their original budgets. A more integrated design approach combined with smart passive design provides a cost effective alternative.
According to the WGBC (2013:26) various surveys from 2000 to 2012 on the distribution of actual design and construction costs in various countries results in a perception gap as evident by figure 2.1 and needs to be addressed.
Figure 2.1: The perception gap – estimated vs. actual cost premiums for green buildings.
(Source: WGBC, 2013:26)
Qualk and McCown (2009:1) concur by stating that in the building design and construction industry “green” strategies and techniques are perceived to add substantial extra cost to the budget, which is reflected in figure 2.2.
Figure 2.2: Green building vs. traditional design and construction.
(Source: Qualk & McCown, 2009:1)
2.5 THE FINANCIAL BENEFITS OF GREEN BUILDINGS
Kapelina (2010:3) states that although buildings are the largest consumers of global energy as well as natural resources which ultimately have a negative environmental impact , the business case for green sustainable buildings can be built on the direct economic benefits that can be applied by developers, building owners, organisations and tenants.
Hartenberger (2013:1) further confirms the importance of the financial benefits of green buildings by stating that it ultimately provides the differentiator when it comes down to a final decision whether to invest in green buildings or not.
According to Buys and Hurbissoon (2010:87) both tangible and intangible benefits offered by a green building must be taken into account when the costs of green buildings are considered. The tangible economic benefits are not directly visible but the lifetime payback is substantially higher when compared to those of conventional buildings. The benefits of a green building accrue from savings generated by lower operating costs and potential higher capital values and rent income. The positive impact of green buildings on the environment leads to intangible benefits like higher productivity, decrease in occupants health problems, creation of a green image and higher marketability.
The financial benefits are not just applicable to new buildings which are evident from a study by Lockwood (2007:1) which states that an increased number of companies apply green retrofits at a relatively unobtrusive cost to their buildings in order to:
save money;
improve productivity coupled with lower absenteeism;
lower healthcare costs;
invigorate employee appeal and retention, and
to improve corporate sustainability reports and brand equity.
Choi (2009:109) states that green building developments have the potential to evolve in an engine for green revival when looked upon on a greater scale. Green development practices provide an avenue to a formidable green economy which will minimise unnecessary spending on energy and other operating costs when compared to those of a conventional building.
The Colliers International Sustainability Advisory Services Report (2013:1) states that green BREEM or LEED which is a set of rating systems used for green certified buildings implies that on average a green building produces the following savings:
25% to 50% less energy;
40% less water usage;
70% less production of solid waste; and
35% less greenhouse gasses.
All of the above leads to financial benefits for both owners and tenants of buildings as evident by figure 2.3.
Figure 2.3: Financial benefits of green building
(Source: Colliers International Sustainability Advisory Service Report, 2013:1)
2.5.1 Lower operating costs
According to Milne (2012:60) direct operating costs entails all expenses incurred in the daily operations and management of a building throughout its entire lifecycle. Electricity and water are the main contributors to a building’s operating costs and represents at least 30% of total operating costs and as a result have a major impact on the bottom line of a business.
2.5.1.1 Electricity
Kats (2003:1) states that the calculation of the present financial value of future electricity consumption is complicated by the swift changing tariff structures of this utility, which increased sharply over the past couple of years. The WGBC (2013:52) confirms this by stating that as energy prices worldwide continue to escalate, the relative benefits of energy efficiency will become progressively important and it will result in an increasing stronger business case for green buildings.
According to the Savills Research Report (2009:1) energy in the UK is seen as the number one cost reducing initiative and receives priority when compared to recruitment, salary freezes and redundancies as potential cost saving measures.
Electricity tariffs in South Africa have increased significantly since 2008, as Eskom (the state power utility) sources funds in order to construct new power stations (Milne, 2012:61). These increases are illustrated in Table 2.1 below.
Table 2.1: Eskom’s average tariff adjustment for the last 10 years
YEAR AVERAGE PRICE ADJUSTMENT CPI
1 January 2001 5.20% 5.70% 1 January 2002 6.20% 9.20% 1 January 2003 8.43% 5.80% 1 January 2004 2.50% 1.40% 1 January 2005 4.10% 3.42% 1 January 2006/7 5.10% 4.70% 1 January 2008/9* 27.50% 10.30% 1 January 2009/10 31.30% 6.16% 1 January 2010/11 24.80% 5.40% 1 January 2011/12 25.80% 4.50%
Comprises two increases in 2008/9; average of 14.2% on 1 April 2008 and 34.2% on 1 July 2008.
(Source: Milne, 2012:61)
From the above it is evident that electricity charges in South Africa increased significantly over the last couple of years. Mattson-Teig (2008:4) concurs by stating that energy costs worldwide are much higher than a few years ago which establish a powerful financial reason for green building practices.
According to the formula, total energy costs (Rand) = cost of energy (Rand x kWh) x energy consumption (kWh), it indicates that reduced energy consumption will reduce your total energy costs. Milne (2012:60) states that green buildings on average are 25% to 30% more efficient when it comes to energy consumption.
Stucky (2013:1) states that the green retrofit to the State Empire Building is forecasted to reduce energy use by 38% that will result in annual savings of not less than $4.4 million. A building with more or less the same magnitude in South Africa will provide annual savings amounting to tens of millions of Rands.
According to the Green Building 101 (2009:1) the following are some of the strategies used in the United states of America to reduce energy consumption and ultimately operating costs:
New buildings are planned and orientated in such a way that it attracts maximum daylight which will reduce the use of artificial lightning which in turn will lead to less consumption and ultimately lower utility bills.
The placement of windows and natural ventilation goes hand in hand as windows should take the advantage of prevailing winds which results in less air-conditioning usage which positively impacts utility bills.
The use of lighter colour roof materials, as dark colours make the building warmer especially in summer and as a result the need for air conditioners will be reduced resulting in lower utility bills.
South faced windows are substituted with overhangs to provide natural cooling as it reduces heat by screening the sun during hot days in summer.
The installation of a combined hydronic heating which consumes hot water already stored in heaters to operate radiators installed in baseboards. This avoids the use of a separate furnace as energy is saved through hot water already produced and stored which reduces the use of energy resulting in lower utility bills.
The use of fluorescent lights with electronic ballast as it provides the same quality lighting with less energy used.
Energy star appliances are used as they are energy efficient and contribute to energy savings (Energy Star, 2010:1).
The placement of radiant barriers under the roof will marginally decrease heat gain through the roof which will extend the time during a year which an office will be comfortable without the use of mechanical air-conditioning resulting in lower electricity bills (Pfeiffer, 2008:1).
The above indicates that not all green building strategies are necessarily much more expensive.
2.5.1.2 Water
resource and to put it in perspective is less than 10% of accessible fresh water from underground and surface sources. The use of water in buildings constitutes to 80% of the world’s potable water. Businesses need to manage their water footprint, the risk of high direct usage at their own premises and indirect consumption at their supply chains.
Langdon (2013:6) further states that a waterless future will lead to increased cost, recycled water, desalination, grey water, black water and water tanks. Natural water falling from the sky is considerably cheaper than for example water falling from the sky into the sea and then at great costs being reaped and desalinated for whatever reason.
The strategies used in green buildings address the need for efficient and reduced water usage in buildings through conservation techniques. The LEED concept addresses this need and through green design effectively minimize a building’s demand for potable water and as a result contribute positively to a company’s net income (Watson, 2009:13). Green buildings are designed in such a manner that it serves as a reservoir through the use of cisterns and other rainwater capture methods.
According to the Green Building 101 (2009:2) the following are some of the strategies used to reduce water consumption and ultimately the operating costs of a building:
The use of low flow toilets in buildings which results in the use of only 1.6 USA gallon water when flushed comparing to 5 to 6 USA gallons used through full flushing. In showers the use of flow reducers cut water usage by 40%;
The application of low water landscape designs which positively affects water usage;
Efficient irrigation systems like drip or micro irrigation which effectively direct the water to the plant roots and as a result minimise the wastage of water through overwatering;
The use of permeable paving materials which enables storm water to filter into the soil, which will reduce the need for irrigation.
The above indicates that green building strategies are not necessary more expensive, but require more and better planning.
Table 2.2 reflects that in the US green buildings will contribute to trillions USA gallon water savings by the year 2030.
Table 2.2: Water efficiency and treatment impacts
(Source: Watson, 2009:14)
2.5.2 Green buildings lead to higher return on investments
Green buildings go beyond the moral and ethical considerations attached to it by proving that there is tangible economic reasons why sustainable green building practices are a good investment now and even more so for the future (O’Mara & Bates, 2012:10). The payback on green buildings improves as energy prices continuously increase with the result that energy improvements become a better and more attractive investment at all times.
The Green Outlook analysis indicated that Return on Investments (ROI) for green buildings is higher in new construction as well as existing building projects when compared to standard conventional construction as energy systems used in green buildings maximise ROI. In green buildings equipment is only used when required resulting in all operations being efficient and effective which ultimately result in a
Units Impact Projected Projected to Date Impact 2015 Impact 2020 Water Efficiency and Treatment Impacts
Total Water Savings Million Gallons 15,200 574,000 1,254,000 Plumbing Water Savings Million Gallons 2,350 106,800 237,200 Landscape Water Savings Million Gallons 8,420 255,700 561,100 Cooling Tower Water Savings Million Gallons 4,410 211,200 470,500
Annual Non-Residential Water Use Percent 0.5 15.5 29.8
Wastewater Reduction
Total Wastewater Reduction Million Gallons 18,100 852,000 1,890,000
higher return on investment.. ROI changed for the better in the US as reported by building owners and recorded 9,9% and 19,2% improvements for new construction and existing building projects respectively O’Mara & Bates (2012:10).
According to O’Mara and Bates (2012:10) the ROI of green buildings do not come as a surprise as green buildings positively impact capital expenses and operating expenses throughout the world. Examples are:
Operating costs in the United States of America is reduced by 13,6% for new buildings and 8,5% for existing projects respectively.
Occupancy in the United States of America increases 6,4% for new construction and 2,5% for existing building projects.
Rent income in the United States of America reflects a 6,1% increase in new construction and 1% increase in existing building projects.
In Australia the first ever Property Council of Australia/IPD Green Property Investment Index proves that office buildings with green environmental ratings do better in growth and rental yields than conventional buildings without ratings.
Energy costs in the United Kingdom account for not less than one fifth of business expenditures so investing in energy efficiency understandably leads to gains in competitive advantages.
Studies further revealed that companies which incorporate green sustainability as an integral part of the buildings occupied by them yielded much higher returns when compared to companies which neglected it. These companies applying green principles are ethical, “doing the right thing”, are corporate socially responsible, provide environmental stewardship, encourage community involvement, provide workplace well-being which all matters and ultimately result in profitability. These companies are regarded as ethical and perform consistently better on the S&P 500 Index, which is evident by figure 2.3 (O’Mara & Bates 2012:11).
Figure 2.4: Stock performance of world’s most ethical companies’ versus S&P 500 index
(Source: O’Mara & Bates 2012:11)
In the world of commercial real estate, according to LeBard (2010:1) real estate commercial properties are usually assessed as a multiple of the bottom line figure which is calculated by dividing the income by the capitalization rate of +/- 6%. (The capitalization rate is expressed as a percentage similar to corporate bonds). If the building reduces electricity and water costs with R150 000, then a capitalized rate of 6% will result in an incremental growth in the property value of R2, 5m (R150 000 divided by 6%).
O’Mara and Bates (2012:13) explain that the decrease in operating costs positively affects the net operating income in more ways than direct savings alone, as the increase in net operating income results in an increase in the building’s appraised value ten times the annual cost savings. Building green generally results in a 10, 9% and 6, 8% improvement in building values for new construction and existing projects
respectively. Figure 2.5 indicates that green rate buildings perform better than rated buildings, and that the return of a 4-starrated building outperforms the non-rated building by as much as 7.1%
Figure 2.5: Green star: Returns for office market
(Source: Milne, 2012:63)
2.5.3 Marketability of green buildings
Green buildings around the world are perceived as modern, ethical and proactive. As a result companies that are linked with green buildings benefit from these perceptions through enhanced brand equity supported by staff satisfaction.
Green buildings establish a differentiated product in the market which is regarded as technologically advanced coupled with being environmentally and socially
responsible (Milne, 2012:10).
According to the Colliers International Sustainability Advisory Service Report (2013:3) building owners or developers of green certified buildings benefit from free publicity and press. The free publicity favourably impacts a project’s marketing budget and at the same time increase tenant demand for space which ultimately results in greater occupancy and higher rental rates. Marketing benefits are very important and valuable in the current downturn of the economy and will provide owners of green buildings with a competitive advantage.
Milne (2012:68) states that owners of green star buildings mentioned in the Rand and Sense Report confirmed that they receive increased media coverage and as a result enjoy industry awareness. The managing executive of Nedbank Corporate Property Finance in Sandton South Africa (S.A.) admits that it is difficult to quantify the value of marketing they received as a result of their green extension, but confirmed that by valuing the publicity at the time and the on-going interest it must be very substantial.
The general manager of the Aurecon engineering firm’s offices in Cape Town S.A. which received the first 5-star Green Star S.A. rating in South Africa re-iterates the marketing benefits by stating that the green accomplishment provided them with a lot of reputational gain (Milne, 2012:68).
Kapelina (2010:13) concurs with the above and states green buildings improve image through more positive media attention and coverage. Kapelina concurs with the statement of Milne and mentions that when Ford Motor Company revitalized its Rouge Assembly Plant with green sustainable processes and an expansive green roof some ten years ago it received tremendous exposure in various magazines which included amongst other a five page cover in the Time magazine on its greening characteristics. The media coverage which is normally very costly and which the company would have had to pay for under normal circumstances was not only free, but also enhanced Ford’s image as a leader in green technology.
Large media corporations use the practice of establishing green rating systems with the purpose of highlighting and promoting the most sustainable companies,
businesses and buildings. These companies are placed under the brightest spotlight by for instance publications of the top climate companies for the decade in the Business Week and the top ten great giants in the Fortune magazine. Each of these publications extracts the best and greenest by bringing the relevant companies to the public domain which is the most powerful form of critics (Kapelina, 2010:13).
According to Lamb (2011:2) the marketing advantages of highly rated green buildings have also been empirically tested and although landlords will keep an eye on carbon tax the primary driver for investing in green building technology will be to ensure the future relevance of their buildings.
2.5.4 Green buildings and productivity
In the majority if not all commercial office buildings, payroll costs overshadows all other costs in running a business. Milne (2012:90) states that a business case for green buildings in Canada sets out annual commercial expenses (similar to the South African market) as follows:
Maintenance 1%;
Utilities1%;
Taxes 1%;
Rent 9%; and
Salaries & wages 88%.
According to Kats (2003:54) the cost in respect of state employees for the state of California is ten times more than the cost of property. There is an increasing recognition of the very large health and productivity costs because of poor indoor environmental quality in commercial buildings estimated to be hundreds of billions of dollars per year in the US.
The Colliers International Sustainability Advisory Service Report (2013:3) concurs with the statement of Milne and reports that human capital or employees’ costs are normally a company’s largest expense, as it counts for between 70% and 80% of a company’s expense in comparison with rent at 5% and energy costs anything between 1 and 2%.
From the above it is evident that enhanced productivity which is associated with green buildings has a huge impact on the profitability of a company and as a result can reflect rapid payback for green building retrofits and initiatives.
The working environment must be of such a nature that it positively impacts on the employee’s productivity. Green buildings with better day lighting, outdoor views and indoor quality for employees to enjoy significantly contributes to the working environment in order to attract and retain employees (O’Mara & Bates, 2012:12). The WGBC (2013:70) clearly states that they construct workplaces by approaching buildings as living systems and by doing so designing in daylight and clean air and at the same time designing by excluding harmful toxics and chemicals.
A healthy indoor environment provided by a green building relates to the following (WGBC, 2013:70):
Less illness;
Reduced absenteeism;
Lower employee turnover, and
Retracts top job talents.
Kats (2003:58) states that some of the attributes in green buildings which lead to healthier and more productive working environments are as follows:
Marginally better lighting quality which includes more day lighting to at least 75% of building space, improved daylight harvesting and use of shading and better human control over light levels and less glare;
Better thermal comfort and ventilation, which is more concentrated on in buildings that use under floor air for space conditioning;
CO2 monitoring to guarantee better performance of systems like air conditioners, ventilation- and heating systems;
Use of low toxic materials, low-emitting adhesives and sealants, low-emitting paints, low-emitting carpets, low-emitting composite woods and the control of indoor chemicals and pollutants.
The above practices lead to employees being happier, being more productive and sick leave is reduced by 5%. A significant number of employees reported their well-being and 72% of employees reported better alertness and increased productivity (O’Mara & Bates, 2012:12).
According to the general manager of Aurecon S.A. the additional cost required for the design and construction of their green star S.A. rated building will be repaid in the short to medium term through increased productivity and health of their motivated and vibrant staff. International experts with expertise in post occupancy and building use studies claimed through extensive surveys carried out in the UK that productivity gains of up to 20% can be achieved in green buildings which are characterised by improvement in heating, cooling, lighting, ventilation and noise levels (Milne, 2012:90).
According to Yudelson (2009:90) in the economy, productivity gains due to healthier indoor spaces equates to about 5% of employee costs or about $32 to $320 per square meter of leasable space. The estimate is calculated on an average employee cost of $330 to $500 per square foot per year, based on $50 000 average annual salary and 100 to 150 square foot per employee. With energy costs normally less than $2,50 per square foot per year it appears that productivity gained from green buildings could comfortably equal or exceed the entire energy cost of a building.
Consider it from another angle. If a building owner can gain a 10% improvement in productivity from a green building with exceptional day lighting and lighting quality or about $30 to $60 per square foot increase in output, it would be beneficial for that company to build a new building and locate its employees to work there. To sum it up it means that the productivity increase will pay for the entire building. Even a 5% upliftment in productivity would pay for half or more of the rent or cost of the building (Yudelson, 2009:90).
Fisk (2013:1) sums up the entire concept of productivity by stating that few investments yield greater returns than the ones designed to enhance labour productivity. Only a modest investment in soft features like the necessary access to pleasant views, increased daylight, fresh air and personal environment controls which are all attributes of a green building can rapidly translate into notable bottom
line savings for an employer.
2.5.5 The ability of green buildings to attract and retain corporate and government tenants
2.5.5.1 Corporate tenants
Sustainability or greening of buildings has become a front and centre issue for tenants on the lookout for office space, which is evident from higher rent premiums caused by high demand and greater value as government and major commercial tenants are continuously seeking spaces that offer high sustainable performance (Kapelina, 2010:10).
Mattson-Teig (2008:5) concurs by stating that a green title designated to a building could be a key and deciding factor in attracting tenants. Given two buildings and similar locations with more or less the same rental charge will undoubtedly result in the larger companies opting for the green building. If this trend continues, which is most likely, and developers whose buildings are not green might find it hard to attract tenants without offering discounts.
Blundell (2010:1) states that according to a Colliers International Office Tenant Survey the global financial crisis are no longer affecting leasing decisions as sustainability has increased considerably since 2008 and tenants put pressure on landlords to do the necessary in terms of improving the relevant buildings performance.
It is not only important to attract tenants, but also to retain them which were evident by a property company in Sydney, Australia, in which the lease with a major tenant, namely the Hong Kong and Shangai Banking Corporation (HSBC) which was coming to an end after a long period. The tenant tabled their requirements in terms of sustainability and after the company invested monies in a green retrofit they retained this very important tenant (Blundell, 2010:2).
also includes losses in respect of rental, but studies revealed that green buildings that have lower tenant turnover are more likely to retain current tenants which all lead to substantial benefits for property owners and managers of green buildings.
2.5.5.2 Government tenants
Worldwide many governments stipulate a green building rating or criteria for their own accommodation whether leased or owned. In SA the Department of Public Works (DPW) undertook to follow this course and committed through the launch of its “National Green Building Framework” to apply greening attributes to its buildings. The Construction Industry Development Board (CIDB) which operates as agency of the DPW has gazetted the green star rating in SA as a best practice and will propose that all government building will have to conform to the minimum level of Green Star S.A. certification (Milne 2012:71).
To sum it up it entails that should a building owner or manager strive to include a government tenant in its portfolio they should adhere to a number of green building requirements.
2.5.6 Green buildings reduce liability and risk
Recently, worldwide environmental issues are becoming increasingly risk factors in any industry, including the property and construction industry. Unstable and unpredictable weather patterns played a significant role in the volatility of energy prices and more specific electricity, natural gas and oil (O’Mara & Bates, 2012:8). O’Mara and Bates (2012:7) state that the ongoing instability in the Middle East and North Africa has an adverse effect on the world energy markets relating to both price and demand. The Fukushima Daiichi nuclear power plant calamity not only took approximately 30% of Japan’s power supply offline, but also resulted in a backlash of fear in several parts of the world. Japan amongst several other countries considers their own nuclear policies and potential risks associated with it. This is a clear indication that one incident can have significant and enduring ramification on energy supply, security and costs. The above is also distinct proof that the global insurance industry is struggling with threats imposed by resource scarcity and changing climates.
Milne (2012:69) states that a green building guarantees that a building will not become obsolete by incorporating sustainable features now and thereby ensure that building owners won’t be at a competitive disadvantage when faced with future changes in the business and regulatory environment.
According to Kats (2003:81) a green building assists with the following management risks:
Work, health and safety which includes benefits like lower workmen’s compensation costs which is as a direct result of improved indoor quality, reduced likelihood of moisture damage and other factors improving workplace safety;
A range of green building technologies that minimize the possibility of physical damages and accompanying losses in facilities;
The prevention of liability loss through facilities which generate energy from on-site resources or which entails energy-efficient features.
Natural disaster preparedness and recovery which is possible through a subset of energy efficient and renewable energy technologies. This will enable facilities to be less sensitive to natural disaster in particular heat disasters.
Milne (2012:69) further states by greening a building owners and managers are future proofing their assets against:
Increasing attention from policy-makers in the form of more inclusive green building regulations, mandatory energy efficient disclosures and planned carbon taxes;
Limiting the buildings dependency on water and energy through the establishment of conservation and efficiency measures;
Future steep utility price increases;
Reliance on external grids, as natural lighting and ventilation are part of a green building.
Building green and incorporate green initiatives now will guard owners against expensive retrofits in the future, and also avoid obsolescence as non-green buildings
