Green, renewable, sustainable; they’re all big buzzwords in today’s real estate market. From our experience working with real estate owners, developers, and property managers, we’ve found that strategic investment in green energy products and services can provide opportunities to increase the profitability of both new and existing properties.
Many of the energy saving products and services available today allow for the reduction or even the elimination of equipment traditionally needed to complete new construction or restoration of an existing property. These products and services are designed to save substantial energy costs such that they pay for themselves over an increasingly short time frame, thereby reducing total capital costs for the project. In addition to cost savings and increased profitability, integrating green energy products and services into new construction or renovation projects can help to reduce the negative environmental impact of building while at the same time, improving the health and well-being of occupants.
It seems like a win-win scenario, but how do you determine which green building products and services are most appropriate for your project? To get the most out of your investment in green building products and services, focus on features that will help your project earn Leadership in Energy & Environmental Design (LEED) certification. Developers of new construction are focused on LEED certification because it is quickly becoming standard. Any developer not focused on LEED certification or incorporating green energy solutions risks falling behind the competition. Those developers working with existing properties are also managing their renovations with LEED certification in mind.
“To get the most out of your investment in green building products and services, focus on features that will help your project earn Leadership in Energy & Environmental Design (LEED) certification.”
LEED is a point based system where building projects earn LEED points by satisfying specific green building criteria within specified environmental and design LEED credit categories. Environmental categories include Sustainable Sites, Water Efficiency, Energy and Atmosphere, Materials and Resources, and Indoor Environmental Quality. The design category, Innovation in Design, addresses sustainable building expertise and design measures not covered under the five environmental categories.
LEED certification is available in four progressive levels:
- Certified (40-49 points)
- Silver (50-59 points)
- Gold (60-79 points)
- Platinum (80 points or more)
The number of points the project earns determines its level of LEED Certification.
Getting certified allows real estate owners, developers, and managers to take advantage of a number of state and local government incentives. As the number of tax incentives and credits continues to grow, LEED certification will also continue to build interest among prospective tenants in new or renovated properties. When aiming for LEED certification of a new or existing building, make sure you’re hiring experienced, LEED-accredited service providers who can help you get the highest rating. Their deep understanding of LEED requirements will help guide you through the different levels and various credit categories.
The right service provider should provide recommendations on how to earn LEED credits without incurring additional expenses and identify ways to offset certain costs by saving costs in other areas. Look for service providers who have a track record of helping properties become more efficient and save on utilities.
On the product side, the most effective ways to satisfy green building requirements include energy efficient lighting, solar panels, and HVAC improvements. Solar panels can offer huge savings. While the initial investment can be fairly significant, repayment on solar panels takes an average of only three to four years, depending on the size of the building. If the energy savings from solar panels means you can cover the cost within five years, then everything from that point forward is pure profit. Upgrading HVAC to modern standards will help to achieve the energy savings the owner demands and the efficiency that tenants expect.
In short: green is good. But being strategic about what makes the most sense for your property is key to taking advantage of the benefits of LEED certification and maximizing your return on investment in green products and services.