Would You Pay a Premium to Lease Green Space?

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Here’s the situation.  You have two new 15-story buildings in a good location near downtown.  Both buildings have received several inquiries from potential tenants.  Building #1 is a traditionally-built, modern facility.  Building #2 is similar, but it’s green (LEED-CS + LEED-CI).  A lease for 40,000 square feet of space at #1 is $35 and #2 is $36.50 per square feet.  Would you pay the extra $1.50 per square foot to lease space in the green building?  We’re talking about a serious premium.  I’m interested to hear what your perspective is on this. 

According to the U.S. Green Building Council, these rents are justifiable for a few reasons.  I’m going to clip out a few comments from their article, but feel free to read the entire thing

  • Organizations with business models reflecting sustainability will be more likely to pay the premium. 
  • Although green buildings are going up at an incredible rate, most of these are for use by the owners and most developers view speculative green developments as risky. 
  • There is a dearth of tenable green lease space and requests for green space are falling on deaf ears. 
  • The market is tenant driven right now and tenants have had success cooperating with owners to make green improvements or renovations. 

I think there will be a paradigm shift, but I don’t know how it will happen.  Somehow, the values of individuals and organizations need to shift towards an appreciation of sustainability, and that will create serious, mainstream adoption of green buildings.  Maybe the impetus will be regulatory?  Self-imposed?  Strategic?  I learned in Starting a Business 101, that some of the best opportunities in business become available due to a void or an absence in the market.  If it’s true that some customers and tenants are requesting green space, but the inventory isn’t available, there’s a void in the market that will be filled by the first innovators.  The rest will wake up some day and think, "I thought green buildings were for hippies?!  What’s going on?"  Which is partially an answer to my post the other day.  Via Appraisal Podcasts

Construction 2.0: Jeriko House + Luxury, Green Living

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Jeriko is Different… Design… Strength… Green… Flexibility… Living.  Jeriko House: It Lives in you.  Today, New Orleans-based CEO of Jeriko House, Shawn Burst, announced his company’s plans to enter the modular/prefab home building market with 5 different models (each with an infinite number of configurations).  Burst teamed up with a German engineer to use a patented, interlocking aluminum framing system–one that is strong enough to meet the strictest U.S. earthquake and hurricane building codes.  The plumbing, appliances, lighting, hardware, interior finishes, and exterior cladding are all integrated into an advanced structural system through the collaborative efforts of a team and network of design/construction professionals.  Starting at $175 per square foot, a Jeriko House will have such luxuries as Asian teak wood finishes, coconut skin walls, Indian rosewood door handles and stone, and marble + ceramics from around the globe.  Homes will also include "biometric systems and homeowner-friendly technology."  Bourne-style, I presume. 

The first home will be completed in New Orleans and the company anticipates orders of 100 more relatively soon.  Actually, they’re taking orders right now for May delivery.  Their website says a purchaser is responsible for permits, site work, foundation, plumbing, electrical, HVAC rough in, and landscaping.  Shipping is included in the cost of the home, and Jeriko will help you build it. 

Green Commitment:
Straight from the website: "We feel it is our duty at Jeriko House to take a leading role in the efforts to save our planet. Sustainability, energy efficiency and environmental friendliness are at the core of our beliefs. With a R&D team searching the globe for the latest and greatest green innovations and technology Jeriko will fulfill its roll as a socially responsible company at the forefront of the Green Revolution."  I like what Jeriko’s saying, but we can’t forget that acting locally, rather than globally, has its green benefits as well.  Also, take a look at today’s press release.  For every 10 houses sold, those 10 owners form a committee that votes to give a Jeriko House to a family in need somewhere in the U.S.  I think Jeriko is taking an innovative perspective to all facets of the business and can’t wait to see the first home!  Maybe I’ll just drive down and see it when they’re done. 

Owens Corning Headquarters Receives Silver LEED-EB Certification

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The Energy Star-rated Owens Corning (NYSE: OC) world headquarters building in Toledo, Ohio, has added another badge of honor with Silver LEED-EB certification.  Designed by Cesar Pelli (listed by the AIA as one of the 10 Most Influential American Architects) and built in 1996, Pelli spoke approvingly of the certification, "I am pleased this facility provided the solid foundation needed to earn the recognition that the LEED Existing Building certification provides."  For a couple other examples of LEED-EB buildings, feel free to click over to read about Adobe + Union Bank of California Center.  Owens Corning also runs The Pink Panther Energy Blog, which informs customers on insulation + energy conservation best practices. 

Green Features:
Here are just a few of the green features mentioned in the certification: under-floor ventilation for energy-efficient air delivery and specific control of thermal comfort; low maintenance, indigenous landscaping; easterly facing building allowing for natural lighting control via adjustable shading; and reusable, removable, non-adhesive carpet squares throughout almost the entire building.  See also CO + PRNewswire

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