October 28, 2005 4:00 AM PDT
Selling green buildings with people power
In studies, so-called green or high-performance buildings have shown to have positive effects on people, compared to traditional buildings, all while saving money on energy, according to experts who spoke on a panel at the Clean Tech Venture Forum conference on Wednesday.
Green buildings incorporate technologies, materials and designs to improve such things as air quality and lighting for inhabitants. They also use so-called clean technologies, such as computer operated climate control systems, to cut down on the energy and natural resources required to operate the physical structure.
Builders and designers are counting the beneficial effects on people, including worker productivity and student performance, to sell so-called green, or high-performance, buildings.
Although energy efficiency and worker productivity can offset higher upfront construction and design costs, more research data is needed. And awareness of the LEED green building certification system is still relatively low, according to a study.
Better health of building occupants, among other benefits, is prompting more designers from all industries and government agencies to construct green buildings, panel members said. Sixty percent of U.S. property owners involved in construction used energy-efficient designs in the past year, according to construction consulting firm PinnacleOne.
Toyota Motor Sales campus in Torrance, Calif., for example, has one of the largest commercial solar panel systems in North America and conserves 11 million gallons of drinking water. Bank of America, meanwhile, is constructing a 54-story skyscraper as its headquarters in midtown Manhattan using a state-of-the-art ventilation system, floor-to-ceiling windows, and waterless urinals.
Green or energy-efficient buildings dovetail with the notion of sustainable business, where corporations seek to minimize the environmental impact of doing business. But some designers and architects are using a purely economic argument to justify the higher building costs of green buildings, namely office worker productivity.
"I believe the smoking gun of green buildings and the reason you're going to see more of them?is productivity," said S. Richard Fedrizzi, president and CEO of the Green Building Council. He said office worker productivity on average increases two to 16 percent in green buildings.
"Most CFOs (chief financial officers) in the U.S. will not buy that--they think it's absurd--but it's playing out in many industries," Fedrizzi said, adding that $8 billion was spent on green buildings last year.
Liberty Property Trust is one company that has bought into the economic value of productive people. The $6 billion real estate investment trust will only build "green" office buildings from now on, said company Senior Vice President John Gattuso.
Liberty Property Trust will do that by seeking Leadership in Energy and Environmental Design (LEED) certification, a rating system which awards points based on criteria such as water efficiency, materials used, the indoor environmental quality and the design.
The company is marketing its green building projects by showing that an environment with good air and light increases worker productivity, Gattuso said. Eighty-five percent of a building's ongoing costs are the people inside it, he noted.
"We're seeing at the top-end companies focused on how buildings, which are 15 percent of the cost, can be leveraged to get more out of the other 85 percent, which is the human resources," Gattuso said.
Not using modern building technologies, such as computer-controlled systems that maximize daylight, energy use, and improve air quality, is the equivalent of an obsolete product--like building a 1985 car today, he added.
The beneficial effects on people of green construction and design apply to all sorts of buildings, panelists said.
Citing research commissioned by the Green Building Council, Fedrizzi said that children in green schools have 20 percent better test scores, and patients at hospitals using green technologies are discharged two and a half days earlier than patients at traditional hospitals. Retail store owners have found that consumers linger longer and spend more money in green buildings as well, he added
Up-front building costs are typically slightly higher for green buildings, on the order of two percent, said Greg Kats, a principal at clean energy consulting firm Capital E. But the payback can be demonstrated over time, panelists said.
For example, the energy-efficient measures of LEED-certified buildings result in lower heating, cooling and electricity costs. Energy efficiency can improve by 30 percent, while emissions of pollutants and greenhouse gases are 45 to 50 percent lower, Kats said, citing his company's research.
Other benefits of high-performance buildings include higher resale value and lower operating costs, panel members said.
Fedrizzi conceded that more data linking health and productivity of green buildings is needed.
"I can't say that the science is absolutely there, but it is definitely moving in that direction," he said.
Kats noted that there have already been a number of studies on productivity and buildings.
Carnegie Mellon University has created a cost benefit tool called Building Investment Decision Support ( BIDS), which provides a method for measuring costs, including productivity. Consulting company Heschong Mahone Group has done studies of the impact of daylight and ventilation on worker productivity and student performance.
Liberty Property Trust faces skepticism from financiers when it figures office worker productivity into its cost analyses, Gattuso said. But a conservative calculation that incorporates a three percent increase in worker productivity--which totals only 10 or 15 minutes per day--translated into saving nine dollars per square foot per year, he said.
"That's extremely compelling. This is an argument and sales pitch that is increasingly being backed up with data," Gattuso said.
Despite the benefits, there is still not a great deal of familiarity with the LEED certification system in the industry, according to PinnacleOne, which found that less than a third of building owners plan to use the LEED certification system in the coming year.
Also, a Wall Street Journal article earlier this month called into question the efficacy of the LEED certification system, which is done by the Green Building Council, in making buildings energy efficient.
Kats said that companies such as the New York Times, Reuters and Bank of America are choosing to make their corporate headquarters green buildings for more than just energy savings or worker productivity. In some countries, corporations need to consider the amount of carbon their buildings create in order to comply with regulations, he noted.
Green buildings can also improve a company's image. "It says something about who you are when you want a high-quality building," Kats said. "It shows you care about employees and the larger social issues."
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