The business case of sustainable real estate – Part 2, Green Edge « Saint Consulting

In Part 1 of the business case of sustainable real estate, I wrote that it is hard to dispute it is less risky to take action to reduce green house gases than to do nothing. I would like to now explore the business case for green — market factors and regulatory factors.

The Business Case for Green – Market Factors
A good place to start is to understand the financial benefits of potential green features and how they could result in value creation. There are two types of factors to evaluate: market factors and regulatory factors.

Let’s start with just one of the market factors: lower operating costs. Given today’s technology, there should not be significant incremental cost involved in developing a high rise office or residential building that is 15% more energy efficient than a “traditional” building which meets minimum ASHRAE requirements. A 15% savings in energy costs can lead to millions of dollars in additional asset value. Here’s how: Assume that energy costs are $3 per s/f. A building which is 15% more energy efficient means saving 45¢ per square foot in energy costs. If the building is 500,000 square feet, total savings would equal $225,000 per year. Going one step further, assuming an 8% cap rate, saving 45¢ per foot in energy costs translates into a $2,812,500 increase in the value of the building. Spread that savings and increased asset value over a portfolio and the value creation proposition is hard to…

There's more good info in this linked article. Read the whole thing: The business case of sustainable real estate – Part 2, Green Edge « Saint Consulting.

If you are an investor in 1-4 unit properties in Arizona, California, Nevada, Oregon, Utah, or Washington, please do the financially responsible thing and make sure you have proper Landlord Insurance with PropertyPak™. We love focusing on real estate and the economy in general, but we are also here to serve your insurance needs.

Hill & Usher (PropertyPak™ is a division) has many insurance offerings. See our menu above for more info and links.

Did this post help you? Let us know by leaving your comment below.

Note: This blog does not provide legal, financial, or accounting advice. Seek professional counsel.

Furthermore, we, as insurance producers, are prohibited by law from disparaging the insurance industry, carriers, other producers, etc. With that in mind, we provide links without staking out positions that violate the law. We provide them solely from a public-policy standpoint wherein we encourage our industry to be sure our profits, etc., are fair and balanced.

We do not necessarily fact checked the contents of every linked article or page, etc.

If we were to conclude any part or parts of our industry are in violation of fundamental fairness and the legal standards of a state or states, we'd address the issue through proper, legal channels. We trust you understand.

The laws that tie our tongues, so to speak, are designed to keep the public from losing confidence in the industry and the regulatory system overseeing it. Insurance commissioners around the country work very hard to analyze rates and to not allow the industry to be damaged by bad rate-settings and changes in coverages. The proper way for people in the industry to deal with such matters is by adhering to the laws, rules, and regulations of the applicable states and within industry associations where such matters may be discussed in private without giving the industry unnecessary black eyes. Ethics is very high on the list in the insurance industry, and we don't want to lose the people's trust. That said, the industry is not perfect; but what industry is?

For our part, we believe in strong regulations and strong regulators.

We welcome your comments and ask you to keep in mind that we cannot and will not reply in any way or ways where any insurance commissioner could rightly say we've violated the law of the given state.

We are allowed to share rating-bureau data/reports and industry-consultant opinions but make clear here that those opinions are theirs and do not necessarily reflect our position.