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GBlist: Economic viability of environmentally responsible building
I thought the following article might be of interest as it gives a good short summary explanation of the possible positive economic benefits of environmentally responsible building which would apply to residential as well as commercial building.
The author of this July 1997 article from New York Construction News, Barry Dimson, is president of EcoSmart Healthy Properties, LLC.. This company is renovating the whole 23rd floor(23,000SF) of 40 Wall Street(a 72 story landmark building in lower Manhattan)as a hi tech environmental showcase of healthy and environmentally responsible office building techniques and materials. If you have further questions they can be reached at 40 Wall Street, New York, NY 10005, ph: 212.430.4000, fax: 212.430.4029, e-mail: healthyp@ix.netcom.com.
"A lot of owners and developers fear that an environmentally responsible building might cost them a great deal more than a conventional building perhaps up to 10 percent more. They're wary of this up-front cost even though they know that they'll recoup that differential in less than five years through energy savings. But I believe that up-front costs are comparable. So, those energy savings, as well as other factors discussed below, are pure profit for as long as the building stands.
Twenty percent of the cost of a typical office building or apartment house will be that of acquiring the land. About 55 percent is the "hard" cost of construction, and another 25 percent goes to "soft" costs such as carrying charges and design fees. Now, if you assume that at least half of the hard cost (i.e., 27.5 percent of the total cost) goes for excavation, foundations and superstructure, then you're left with only another 27.5 percent going into the building's "skin:' mechanical equipment and other building materials.
Therefore, even if the systems and material cost 10 percent more up front, that only translates to a premium of 2.75 percent over the total cost!
Contrast this with the potential savings in "soft" costs. Typically, more than 50 percent of the total soft costs comes from carrying the building while it's being rented Fifty percent of the 25 percent of the total outlay that soft costs £~ resent comes to 12.5 percent of the total cost. But suppose the building rents up six months faster than expected because it's environmentally responsible! In that case, savings in soft costs will immediately more than exceed any increase in hard costs.
We're convinced that environmentally responsible buildings will not only rent up faster, but will rent for a higher amount if the benefits are properly marketed to tenants. The first obvious savings to a tenant is in energy consumption, which can be cut in half through the use of energy efficient technology. Electricity usually costs from $2 to $3 per square foot - but with modern technology, we can cut that to $1.50 or even as low as a dollar!
Tenants will realize even greater savings through the increased productivity of their work forces. In the New York City area the average employee receives about $40,000 per year, including all benefits. That same employee occupies approximately 200 square feet of space, so the cost of the employee is approximately $200 per square foot). If better air quality and better lighting increase that worker's productivity by 10 percent that translates to again of $20per square foot in saved labor cost to the employer.
Recent studies of environmentally responsible buildings show productivity increases of 15 percent, as well as reductions in absenteeism and health claims, so a 10 percent productivity increase is a reasonable assumption. It makes sense for tenants to pay $2 to $5 more per square foot in rent to achieve such efficiencies.
Here you have the basic economic principles of environmentally responsible buildings. Certainly, tenants must be educated in order to appreciate the savings, and owners and developers must be educated to see that the total project cost is not always much higher....
Owners, developers and tenants will inevitably realize significant economic benefits from environmentally responsible buildings; what's more, these buildings will benefit their occupants' health and quality of life, as well as the environment as a whole."
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ENDURA HARDWOODS AND WOODWORKS
Fine Hardwoods and Products that are Soft on the Environment
2401 NW Marken St. Ph: 541-383-5003 Fax: 541-317-8391
Bend, OR 97701 e-mail: endura@teleport.com
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