Bringing greater energy efficiency to commercial buildings promises to be big business. Pike Research estimates the market will increase to $100 billion by 2017.
Companies doing retrofits — including Johnson Controls , Honeywell , United Technologies , and Ameresco — stand to reap the benefits from buildings going green. Property managers are also promoting the cost savings and other benefits of energy-efficient building.
Randy Harrell of CBRE said green buildings are more desirable, especially for high quality tenants.
“Most Fortune 500 [companies] filed corporate social responsibility mission statements with the SEC and real estate is a way to help them achieve that corporately,” Harrell said.
While there is anecdotal evidence that suggests going green boosts property values, it has yet to factor into the appraisal and lending process.
President Obama is making a renewed pitch for his green buildings initiative, with an additional $4 billion pledged for energy retrofits. The government has been a leader in making its buildings green, using its long time horizon to make the energy investments pay for themselves.
But what works for the feds often does not work for the private sector, which needs to see a return on investment in the two-year time frame, not the six to 20 years the government will wait.
Even though "going green" can pay dividends in lower energy costs, it has yet to prove its value in rents and resale.
Eric Bloom of Pike Research said, “This is one of those high-interest topics that hasn't really come to fruition just yet.”
While there is plenty of anecdotal evidence about the energy efficiency and desirability of green building “there still isn't enough data to factor the added value of green into appraisal and lending processes,” Bloom said.
Just 0.2 percent of the five million commercial buildings in the U.S. are certified green, making it hard to do an apples-to-apples comparison. What is true of Class A space in New York or San Francisco isn’t necessarily the case in the South and Midwest, where energy costs are lower and corporate environmental responsibility may be less a driver.
But there is a push to establish the value of green building. The Department of Energy and the Appraisal Foundation want energy performance to be considered and is training appraisers how to do it.
Update: An earlier version of this story misidentified Randy Harrell.