New Financial Study: Living Buildings Are Cost Effective


Today the Cascadia Green Building Council published their findings of a financial study of Living Buildings.  The study — officially named The Living Building Financial Study: The Effects of Climate, Building Type and Incentives on Creating the Buildings of Tomorrow — is extensive and we're still going through all the details.  But there's one major takeaway that I noticed: investing in Living Buildings is the financially smart thing to do, especially for institutions, corporations, and homeowners looking to hold on to their real property assets for more than a few years.  The study was put together by Cascadia, SERA Architects, Skanska USA Building, Gerding Edlen Development, Interface Engineers, and the New Buildings Institute (referred to below as "contributors").  Let's look a little deeper. 

What is a Living Building?

A Living Building is a LEED Platinum building on legal steriods.  A Living Building goes beyond Platinum certification and into the realm of true sustainability.  There is a Living Building Challenge rating system, which comprises six performance areas: Site, Energy, Materials, Water, Indoor Quality, and Beauty + Inspiration.  In short, a Living Building is one that is elegant and efficient — it generates all of its own energy and captures and treats all of its water.  In North America, there are 60 proposed Living Buildings at some stage of design or actual construction.

LEED Gold to Living Building:

This study examines actual construction documentation for nine different building types, all of which have been certified at the LEED Gold level.  There's single-family residential, multi-family residential, high-rise mixed use with residential, low-rise office, mid-rise office, mixed-use renovation, elementary school, university classroom, and hospital.  Each of the nine buildings was also studied in four cities representing each of the four climate zones in North America: cool, temperate, hot humid, and hot arid. 

Next, the construction documents were modified to meet the stringent goals of the Living Building Challenge, and the contributors then estimated the costs of such modifications.  The contributors normalized the construction and development costs of all of the buildings to January 2009.  Using these numbers, the contributors did a simple lifecycle cost analysis by comparing the baseline LEED Gold building costs to the Living Building modification costs on a net present value basis. 

What the Study Actually Found:

The contributors found that Living Buildings can be built cost effectively in today's market economy given the rising costs of energy and water.  More specifically, 24 of the 36 buildings had a payback of less than twenty years.  Twenty years is quite long for most developers, but for project owners, such a time period may be perfectly in line with their financial goals.  The actual degree of cost effectiveness, as determined by the study, depends on some of the following factors:

  • Client Type – Living Buildings are more likely to be built in market sectors that consider operational costs.  Public buildings and schools will be more inclined to invest in Living Buildings, as opposed to speculative buildings. 
  • Climate Intensity – Climate puts pressure on the demand for energy and availability of water.  For instance, Boston's extreme temperatures demand higher heating and cooling costs, and Phoenix's low water availability makes it more expensive to collect and treat water. 
  • Building Scale – For larger buildings, the cost premium for Living Building features relative to the total project cost is much less than with small projects. 
  • Building Use Intensity – The primary and second uses of a building affect energy and water usage, which in turn affects the cost premium to build a Living Building. 
  • Existence of Incentives – Various incentives for green building projects can dramatically reduce the first costs of a project, making them financially more viable. 
  • Resource costs – Cities with high energy and water costs also have faster paybacks because the benefits of net zero energy and net zero water kick in. 

Take these findings, and apply them to your locality.  Lisa Petterson, SERA Architect's Manager of of Sustainability Resources, said: "The combined impact of Portland ’s mild climate, plus existing and upcoming incentives for green building and net zero energy projects, make the incremental costs [of a Living Building] almost zero."  Portland's a go, but what about your city and project?

[=] The Living Building Financial Study – Executive Summary [PDF]
[=] Download the Cost Comparison Matrix and Full Report

Learn More About Living Buildings?

If you're interested in learning more about Living Buildings, make sure to sign up for Living Future 09, which is scheduled for May 6-8 in Portland, Oregon.  Living Future is kind of like TED for the green building world.  The conference is limited to 600 people, and as of this writing, only about 170 seats remain. 

Photo note: The building pictured above is Eco-Laboratory, a concept Living Building that won the 2008 Natural Talent Design Competition at Greenbuild. 

  • Sean Keller

    Great article, a must read. Do you think that all new construction should have to put even more effort into maximizing the level of their LEED status?


    • Preston

      Sean, tough question. I tend to believe that projects should start from the very beginning and design to become resource positive. I like Platinum certification and Living Buildings as guidelines for getting to that point. I really like how the LBC encourages net zero energy and net zero water while promoting beautiful design. Green buildings should perform, look good, and pay for themselves.

  • Portland Real Estate

    “Living Building’, I love it! This is more of my idea when it comes to sustainability. Not a building that has “less impact on the planet” but a building that actually contributes back to the planet without harming it, while keeping the people inside happy and healthy.

  • metrohippie

    Great article indeed! Be sure to keep us posted on some of the 60 registered projects… I hear it is virtually impossible to reach the certification, so it will be interesting to hear some of the trials and tribulations of the initial efforts.

    • Preston

      Will do, Josh. We’re keeping a close eye on things and staying in regular contact with Cascadia. Expect more information on Living Buildings, biomimicry, and related concepts over the next few months.

  • elaine hsieh

    We’re finding it tough to meet ALL of the “petal” requirements in Living Building Challenge (LBC) on Sonoma Mountain Village (also a “One Planet Community”), but in general, I really like the system. LBC has no points, just requirements, and they are tough. In CA, we are finding LEED Gold certification fairly easy to achieve, but the commercial LEED system breaks down in that it is mostly based on performance reduction and not “absolute” consumption. With LBC, the goal is net zero impact – which is what all designers, owners, engineers, and builders should strive for as our industry evolves.

  • Sabra Waldfogel

    Great idea and good for pushing architects and builders towards a new level of sustainability. Have the Living Building folks applied their ideas to existing buildings yet? As with LEED, the guidelines can be a way to move in the right direction, even if you can’t meet the highest standards yet.

  • Katie

    This is a long-awaited concept – one I can imagine many businesses eager to immerse themselves in, whether via design, construction, real estate specialization, or office space.

    Do you know if there is a current list of proposed projects? I would like to feature this concept on our company’s website.

Popular Topics on Jetson Green