interview colliers magazine
All real estate segments gain from the benefits of green building
Devin Saylor, LEED® AP, Director Regional Initiative for Sustainability & the Environment
D
evin Saylor has more than 15 years of real estate development and finance. She has been actively involved in the U.S Green Building Council Chapters in Los Angeles, New York City and Northern California. Ms.. Saylor began her career in real estate with Arthur Andersen where she helped start the Real Estate Services Group in Hong Kong. She holds a Masters degree from the University of Southern California in Real Estate Development and Urban Planning.
Ms Saylor, at a recent Green Building Conference, you presented the economic benefits of green buildings primarily from a US perspective. In your opinion, what are the differences in the European experience? In my opinion the drivers of green building are the same, regardless of geography, and can lead to the same benefits in any market. The main drivers of green building in the U.S are rising energy costs, growing concern over climate change, economic benefits achieved and tougher legislation. If world investors and tenants start valuing and demanding green space, Europe and the region will also feel these effects. In addition, we are all affected by rising oil prices and increased greenhouse gas emissions encouraging us to change our ways. What I do believe will be the major difference between the U.S and European green
building experience is time of market acceptance and adoption.
What are the key benefits of investing in Green Buildings? The economic and financial benefits of green buildings are many. For developers and building owners, studies show that green buildings command higher rents, transact at higher prices, enjoy higher occupancy rates, have lower operating expenses, attract free marketing and publicity and protect the building’s future value. For tenants, benefits include greater worker productivity, healthier building occupants, lower occupancy costs (reduced energy/ electricity, water and solid waste usage), improved corporate image, reduced costs in moving/relocating space. Studies are proving that there are significant economic savings attached to greater worker productivity, reduced absenteeism and decreased employee turnover. In fact, these benefits are likely to translate into the greatest savings for tenants and companies, as people, in the form of salaries, benefits and replacement costs, represent 70-80% of operating costs, much more substantial than energy (1%) and rent (7%) costs. Are there any real estate segments that benefit the most from sustainable development? All real estate segments gain from the
benefits of green building. However, who and which assets gain most can vary significantly. In a market where the tenant is responsible for operating expenses like utilities, a tenant gains by having a lower cost of occupancy, whereas the building owner will marginally benefit from reduced operating expenses associated with common areas. However, the building owner should be able to command higher rent for this space, for the very reason that a tenant’s overall occupancy costs, which include rent and utilities will be less. In most markets, office projects are the most common assets to undergo green certification. Tenants and building owners are more likely to both benefit from green. In addition, there is greater awareness of green building benefits in this sector.
So far in Bulgaria, Green Buildings are predominantly associated with the commercial real estate segment. What explains this, and what would it take to place ‘green’ on the residential real estate development agenda? Residential projects will definitely benefit from green. However, there are many issues surrounding energy, mainly relatively low costs and poor tracking or accountability. For this reason, homeowners and renters are largely unlikely to pay a premium for space in a green building which is a major disincentive for a developer to justify building green. Bulgarian consumers have recently experienced an increase in the cost of energy and electricity; a trend that is anticipated to continue into the future. This is good news for green building. Rising costs of energy and better and more accurate measurement of usage through meters and submeters will increase consumer demand for more energy efficient housing. Raising awareness and educating all sectors of the market is critical in advancing green building adaptation, especially among residential users.
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