Energy efficient buildings: An economical choice

April 2, 2012

Although the idea of "greening" buildings and homes was initially met with resistance from families and companies in the U.S., studies regarding the economic value of energy efficiency have led to a change in the perception of sustainable structures.

While work in the private sector has led to a number of new investments, the U.S. Department of Energy specifically designated an innovation HUB to influence the commercial building industry.

Dubbed the Greater Philadelphia Innovation Cluster for Energy Efficient Buildings (GPIC), the effort has done significant work in designing, developing and testing energy efficient buildings and technology.

The sector has blossomed in recent years because of private and public efforts, and is continuing to expand, as future growth is predicted.

According to Forbes, the commercial buildings sector boasts the most explosive growth in green construction. In 2010, a third of all new commercial projects were green, amounting to a $54 billion market for the specific sector.

The news source reported that by 2015, green buildings in the commercial sector are expected to triple. The new construction is projected to be valued at $120 billion to $145 billion, while major retrofit and renovation projects are estimated to reach $14 billion to $18 billion in this period.

Commercial buildings are placed into three classes for a practical categorization, as Class A buildings are the most desirable structures and Class C facilities are going to attract lower-paying tenants. According to Forbes, Class A is where the energy efficient building market has really taken off.

"Green building is fundamentally altering real estate market dynamics – the nature of the product demanded by tenants, constructed by developers, required by governments and favored by capital providers," according to RREEF Research. "The upshot will be a redefinition of what constitutes Class A properties and even institutional-quality real estate."

Many tenants are now willing to pay a premium for space in green buildings, according to the news source, as the lower operating costs, higher worker productivity and reputational benefits associated with superior environmental performance are seen as worth the investment.

Smart Business reported that the rising costs of energy, due to fuel prices and a dearth of domestic resources, has made energy efficient buildings a more attractive investment.

According to the news source, the type of company and the ideal Return on Investment (ROI) also play a factor in the adoption of energy efficient buildings.

"For example, a three-year simple payback period has around 33 percent ROI and a five-year payback has around 20 percent ROI, which are attractive ROI," Moh Heidari, director of the Energy Solutions Group for Alfa Tech, told Smart Business. "In addition, considering the investment security of energy efficiency projects makes them even more attractive investments."