There’s no question that the environment is changing daily. Many industries have seen this shift in the weather and opted to do their part to help the planet heal. Green building is an initiative that tries to reduce the carbon footprint of building and maintaining a home.
Despite it being such a primary, pressing concern for homeowners these days, it’s surprising how few real estate investors know about green building and the effect it has on the value of real estate properties. Being aware of what it offers clients can change how you approach buyers. Here, 10 members of Forbes Real Estate Council touch on the elements of green building that real estate investors should familiarize themselves with.
Forbes Real Estate Council members share what aspects of green building real estate investors should familiarize themselves with.
Photos courtesy of the individual members.
1. Connecting Benefits To Everyday Users Is Key
One miss when investing in green building is not connecting the benefits of the certification or various other investments with the everyday user. Far too often, investors rely heavily on the certification plaque to highlight their investment. Identify ways to communicate all of the positive benefits (seen and unseen) that connect with those occupying or using the spaces to maximize ROI. – Debra Wyatte, Cecilian Partners
2. It Needs To Make Financial Sense
The biggest thing that I see is the need to have a long-term perspective on matters like this because tenants do not typically pay a premium to be in an environmentally friendly building. It needs to make sense financially for the property owner because over the long term, your investments in green buildings will typically provide a pay back, but only if you have a longer-term perspective. – Jonathan Keyser, Keyser
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3. Green Buildings Are Healthier But Costlier
Green buildings are healthier as construction uses fewer chemical products, helping to mitigate many respiratory issues. The cons are many as they are costlier upfront, their cooling components use up natural resources and they don’t give homeowners full control of temperature. In terms of return on investment, they can be quite expensive as they will require long-term use cost planning. – Rodrigo Brandao Schiavo, Premier Capital Realty, LLC
4. The Entire Life Cycle Should Be Taken Into Account
Investors should take into account the property’s entire life cycle when green building. Conducting a feasibility study prior to making the decision will prove to be beneficial. A thorough analysis that goes beyond planning, design and construction is critical as the investor has to consider maintenance and operation as well. – Adrian Provost, LEVEL
5. Green Buildings Are Energy-Efficient
Green buildings are more energy-efficient, requiring less energy to operate and causing less of an impact on the environment. The LEED certification has different levels used to grade each commercial property with an impact on its value. Corporate social responsibility (CSR) and carbon reduction and sustainability consciousness have inspired many organizations to seek ways to provide work environments that adhere to the highest standards. – Tri Nguyen, Network Capital Funding Corporation
6. There Are Several Certifications To Leverage
Investors should know that LEED certification isn’t the only certification to leverage. There are also Wellness Certified buildings. Being WELL certified includes meeting standards for air, water, nourishment, light, fitness, comfort, sound, materials, mind and community. Covid-19 has upped interest in WELL-certified buildings, and meeting those standards can intersect with LEED standards. – Kristin Geenty, The Geenty Group, Realtors
7. Green Buildings Can Enhance Profits
Remember, it’s not solely about sustainability. These investments can triple your bottom line if done correctly. Profits can be enhanced with energy-efficient outfits and improvements, and energy consumption can be controlled. Healthier assets command rental premiums and warrant higher values. As a bonus, investor engagement can be fantastic, and the cost of capital can be improved through incentives. – Don Wenner, DLP Real Estate Capital
8. They Attract Users With Specific Green Requirements
Green buildings are attracting users which have government or self-mandated green initiatives. Expect large corporations and governmental users to require certain green construction aspects. This can include electric conservation measures, solar panels, water-saving measures, as well as the use of green materials such as carpets made from recycled materials. – Josh Gopan, Simone Development Companies
9. Utilizing Smart Home Tech In Green Buildings Is Key
It’s not just about being green; it’s about being connected and utilizing new smart technology as well. This can help you utilize the data from your property to make smart and informed decisions about the management of the property. – Blake Miller, Homebase
10. They Can Unlock Hidden Revenue
I think one particular way in which a green building becomes commercially sustainable is through an understanding of potential federal or state tax credits for various projects. While it may be bewildering upfront, a professional firm that specializes in this may seem expensive but may unlock hidden revenue or tax advantages that are worth every nickel. – Clark Twiddy, Twiddy & Company
