Does Green Matter in Corporate Real Estate?

Everyone is going Green, or are they?  These days, most everyone wants to have a positive effect on the environment.  With wide spread recycling, the availability of alternative fuels, hybrid cars, and reclaimed and sustainable building products, people are joining the Green movement everywhere.  In fact, it has almost become politically incorrect for a person or company to suggest that being Green doesn’t matter. 

But, how about corporate America?  When considering office, industrial and technology real estate alternatives, exactly how interested are corporate executives in going Green?  Do they place a higher value on Green buildings and spaces?  Are commercial landlords building a lot of Green buildings?

In the current economic environment, are public and private companies willing to pay extra, if necessary, to go Green?  Experts tell me that with so many Green products now available, going Green no longer costs any more than traditional non-Green alternatives. 

So, why aren’t more executives seeking Green alternatives when contemplating real estate transactions? 

What’s been your experience?

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7 Responses to “Does Green Matter in Corporate Real Estate?”


  1. 1 Bob Greenfest April 2, 2010 at 12:53 pm

    Although everyone talks a “Green Story”, I tend to think this is more about political correctness than reality. Why would major law firms, for example, pay additional rent to be in a Green Building if they represent a tobacco company, for example. The real benefits of Green vs. Cost of Green have not been fully vetted. Maximize shareholder wealth is a corporation’s responsibility – does going Green really accomplish that?

    • 2 realstrat April 5, 2010 at 1:08 am

      While I would certainly like to see the entire world go Green for obvious reasons, you may have something there. Business is about profit and many other things, but it is about profit, afterall. Thanks for writing in.

  2. 3 Jonathan Funke April 2, 2010 at 3:21 pm

    Regulation is already requiring more environmentally sustainable management of commercial real estate assets in global CBDs such as London, New York and San Francisco. In addition, cost savings from retrofitting lighting systems, recommissioning or upgrading HVAC and reducing water consumption provide strong incentives: in many cases, such projects quickly pay for themselves. Finally, multinational tenants are increasingly building specific sustainability criteria into their real estate selection mandates.

    For all these reasons, “sustainability” in commercial real estate is gaining traction. Although headlines may come and go, the drive to meet higher standards for environmental performance — whether from clients or government — will be with us for a long time to come.

  3. 4 Paul Lam April 3, 2010 at 3:15 pm

    Companies seem to want LEED and Green initiatives in their real estate. The question is… are they willing to pay for it? And if so, how much? At the end of the day, does LEED translate into higher building values? Some studies suggest a premium on lease rates of $2 – 4.75 PSF for Energy Star Certified properties.

  4. 6 Chris Hogan April 27, 2010 at 9:52 pm

    Andrew,

    I think we share the same sentiment. Namely, that, while going green is laudable and should be pursued, the market will be the driving force. I ran across an interesting article along similar lines from owner’s perspective in The Philadelphia Inquirer.

    Keep up the interesting posts from tenant’s perspective.

    Thanks,

    Chris Hogan


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