Happy New Year! This year is unlike any in the history of our country. We’re seeing this crazy whirlwind of issues coming together. The economy is entering a slight lull and the average American is losing width in the real estate pocketbook. The next presidential election is on the cusp and we’re seeing indicators of a brewing culture war. And to add to that, the topic of climate change is everywhere. The sister topic of pollution pops up fairly frequently also. So with this backdrop, I’ve been thinking about the green movement and what’s in store for next year. Here’s what I think:
This one is pretty obvious, I think. With new house permits down and sales going slow, real estate transactions will involve already built structures. People with money will meet their needs with existing stock. And with a slew of green products in the market (or well on the way), green renovators will use (or have the option to use) eco-friendly materials in lieu of non-green materials. People will want to do this, too, what with all the attention the media gives to the environment. Let’s look for people to do more with what we have already. We may even see some cool examples of adaptive reuse.
Similar to the first trend is the notion that green needs to be affordable. Again, the economy will be a little slow and people won’t be able to tap the negative equity of their homes. Nevertheless, people are cognizant of the environment and will look for affordable ways to live/work comfortably. Everywhere you go, the conversation is the environment. Regardless of the economic demographic, rich or poor, everyone will make important changes. Executive jets can be expensive because rich people buy them (money is no object), but green stuff is different. Watch for people in the lower economic bracket to scream for more affordable, meaningful, eco-friendly products.
We’ve seen a lot of this with greenwashing talk in the second half of 2007, but watch for this to heat up. Consumers are getting tired of hearing their favorite celebrity say something like "if every person would change just one light bulb…" People are smarter now. They will force businesses to quit dumbing down the message. People want all the information. And businesses that are looking for a green angle should be wary. There is no green angle.
Everyone is doing it, as if it’s the new black. Look for this to elevate and continue. Higher profile, relevant individuals will start to call out the program. LEED is the standard for green building certification, and that’s good, but issues remain. Point mongering. Gaming. Monster Homes. Bicycle racks. Parking lots. Materials. Checklists. Sprawl. Administration. Etc. Projects that are LEED registered may not get certified (although they will be built green anyway). The money involved in certification may become an issue in the future, too. Third party certification is valuable, but it shouldn’t break the bank on a project. I’m hearing developers say they would rather invest the money they would spend for certification in more green amenities. Stated otherwise, certification itself, when a developer can build the project green anyway, is losing in the opportunity cost evaluation. If the USGBC can find a way to increase quality and diminish costs/administrative burdens, people will be happier. But, all said, it’s the best option available right now.
I’m seeing tons of green building products these days. Many of them are excellent. Businesses that are early to market will have pricing power, but that power will be subject to substitution by non-green products. With new green product competitors and product availability growing on both the east and west coasts, watch for some pricing competition. To the extent that products become popular, brands will be able to drop prices and sell more, too. The strong will survive in this economy, and this will be good for the consumer.
Some other trends I’ve been thinking about, but that I think may be early include the following: (1) clean tech on the micro level – at home, work, and for everyone in any geographic location, (2) LED lighting retrofits – it’s expensive, but it’s high quality and we’ll need to watch the real estate market for this one, and (3) the all important energy audit – subject to the future of the real estate market, experts will be able to use audits to arbitrage waste and save money for owners.