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Building Green 2002

May 2, 2002

Why green buildings fatten your bottom line

  • You can save on much more than your utility bill
    Carter & Burgess

    Bellevue Community College
    Photo courtesy of LMN Architects
    Bellevue Community College anecdotally reports significant improvements in student grades and attendance at its new LEED-certified R Building.

    A funny thing happened on the way to green buildings — energy efficiency improvements and other green measures not only reduced utility bills, they improved productivity of building occupants — in some cases dramatically.

    Astute members of the commercial building industry and sustainable design movement have recognized this powerful effect, and are forming teams to produce the next generation of “high-performance green buildings” — buildings which are green, sustainable and give occupants and owners a strong competitive advantage moving into the new century.

    Many longtime proponents of green building have always felt sustainably designed buildings would result in productivity improvements, but this has been a tough sell due to the difficulty in objectively measuring productivity on a very limited number of projects.

    Simpler to comprehend are easy-to-measure savings such as lower energy cost due to added insulation and double-glazed windows. New to the picture is a small but growing body of data proving productivity gains that were previously only theoretical.

    As one might expect, among the first to embrace the idea of high-performance green buildings are high-value companies with steep knowledge worker costs. Examples include research-and-development operations, software companies and professional-services firms. Also taking note are schools and certain retail businesses.

    Case studies

    Key to transforming the market place is case studies that prove high-performance green buildings improve occupant productivity significantly. Dozens of these studies are published by various organizations, including Seattle City Light, U.S. Green Building Council, Rocky Mountain Institute, and the American Society of Heating, Refrigeration and Air Conditioning Engineers. Here a just a few examples:

    • Boeing implemented the EPA’s “Green Lights” program, achieving an amazing 90 percent reduction in lighting energy cost, but more significantly, measured sharp drops in both work defects and accidents.

    • The Seattle School District, under a study commissioned by PG&E, found student grades increased about 10 percent following improvement in daylighting (use of more natural and less artificial lighting, also resulting in lower energy bills).

    • Wal-Mart’s new “Eco-mart” store sales increased significantly (other retailers report 20 percent to 30 percent) in areas where light-diffusing skylights are located above merchandise displays.

    • Knowledge worker office environments typically show 5 percent to 10 percent increases in productivity, and in the case of West Bend Mutual Insurance, 16 percent.

    • Nearly all green buildings with well engineered indoor air quality systems and modest daylighting report absenteeism drops of 15 percent, almost universally.

    Financial performance

    From historical and case study data of green and high-performance buildings several rules of thumb have been developed to place the economics of high-performance green buildings in perspective.

    • Typical commercial office building 30-year life cycle costs are broken down as follows: 92 percent staff, 6 percent operation and management, and just 2 percent initial building capital cost. Hence, small changes in staff productivity affect business profitability far greater than even major changes in building operation and management or initial capital cost.

    • Business and building costs are as follows on an annual per-square-foot basis: staff, $200; lease/mortgage, $20; utilities, $2; maintenance, $2. Hence, the widely used rule of thumb: a 2 percent improvement in staff productivity equals the entire building operation and management cost. Another rough rule of thumb is green measures that reduce operation and management costs will pay back 10 times faster when the measures also improve productivity, which is the case for nearly all green measures.

    Technology traits

    So, what are higher-performance green buildings? As a minimum, most are U.S. Green Building Council LEED (Leadership in Energy & Environmental Design)-certified, and possess some or all or following features: clean, fresh air; connection to nature; daylighting, views and vistas; interior design and artwork; human factors design to facilitate work process; personal control/customization of the workspace; wired for flexible low-cost, high-bandwidth digital services; comfort (thermal, olfactory, noise and vibration, and ergonomic); and creature comfort amenities (gyms, colorful break rooms, casual meeting nooks).

    Other considerations

    Business economics aside, green buildings are fundamentally easier on the environment and the occupants. Staff working in green buildings are healthier, happier, more productive and theoretically better off financially. This ultimate end-user driver alone is enough to transform the market over the midterm. In the long run, even greater returns are expected as businesses in green buildings enjoy increased employee longevity and health, and even greater customer loyalty.

    Issues and trends

    The single largest issue in the high-performance green building concept is demand development. Currently interest is largely from the high-end of the market and certain government sponsored programs, such as the city of Seattle’s groundbreaking Green Building program, which requires all city-funded projects over 5,000 square feet to be LEED silver-certified. It is hoped the market will accelerate as the body of knowledge grows based on the projects completed, under way or planned by industry leaders.

    Over the last decade, green buildings have been pushed from the top down through various incentive, awareness and government demonstration programs. The projects emphasized reduction of building life-cycle cost, without any credit for positive impact on building occupants. Now that substantial improvements in staff productivity are being well documented, the interest in high-performance green buildings is expected to accelerate rapidly over the next five to 10 years.

    Already progressive businesses are insisting on and paying premium rents for space in high-performance green buildings. In soft markets vacancy rates for these buildings run lower, and in strong markets they command significant lease rate premiums.

    Cutting-edge organizations and companies are developing, designing and occupying high-performance green buildings. These developments are based in part on a growing base of knowledge demonstrating very high returns on investment due to staff productivity increases that far exceed savings in operation and management costs.

    Doug Smith is a senior mechanical engineer at the Seattle office of Carter & Burgess.

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