Recently, I attended a guest lecture by a seasoned real estate developer, and he was talking about the profitability of his projects. This speaker has major experience will all types of investments including retail, single family, industrial, condo, etc. I put him on the spot and asked him about the numbers he’s seen on sustainable developments. His answer: "They’re expensive, a break-even proposition at best. Development is going that direction, but not now. They’re not cheap, at all. We’re talking 20, 30, 40% more expensive. I won’t do them." I was blown away.
In stark contrast, on Monday, January 22, Rick Fedrizzi, CEO of the U.S. Green Building Council, said to the Miami Herald, "We are now at the point where you can build to LEED standards and it is not one penny more than conventional buildings. We are more experienced now. We have a proliferation of green building products and services." From this perspective, it’s profitable and financially responsible to be environmental and build green.
Someone’s wrong, who is it?
When I hear Fedrizzi’s statement, I’m led to believe that he’s accounting for construction on a first costs basis (not including the operational savings). And I think he is. He’s saying it costs the same to build green as non-green, on a first costs basis. I mentioned the obstacles to building green recently, so is this a case where the developer was unaware? What’s the deal? I’m interested in hearing some real world discussion here.