Seventy-three percent of respondents to green real estate consultant Charles Lockwood and Deloitte’s survey conducted in 2007 reported that they achieved cost reductions as a result of green retrofits. Sixteen organizations that underwent a LEED-certified green building retrofit participated in the survey. Most of the survey respondents paid a cost premium of 10 percent or less for their green retrofits.
Survey respondents reported other benefits. Eighty-seven percent reported that workforce productivity improved. One hundred percent reported that goodwill/brand equity increased. Seventy-five percent reported their employees’ health improved. Eighty-one percent experienced greater employee retention.
“The value of green retrofitting helps demonstrate that sustainability is rapidly becoming a critical business strategy,” said Chris Park, leader of Deloitte’s Enterprise Sustainability service line. “This survey shows that green is more than just a reputational issue. It is clear to us that it is necessary for companies to implement a wide variety of sustainable practices in order to attract and retain talent and increase worker productivity.”
“Somewhat surprisingly, benefits related to corporate image and employee relations were at least as important considerations as operational cost savings,” said David Jacobstein, senior advisor to Deloitte’s Real Estate industry group.
Sixty-three percent of the respondents reported that they overspent by five or more percent. One of the respondents said, “If there was a 30 or 40 percent price differential between green and conventional, it would have been a tough decision. When you’re in the 6 to 10 percent range, it becomes a pretty easy decision.”
Another respondent said that if you only look at the capital costs, “there is a cost premium for green.” However, when you look at the value the green retrofitting adds, “such as productivity increases and better retention, you’ll find that it’s actually cheaper to go green.”
Much of the cost difference between traditional retrofitting and green retrofitting “revolved around the fact that we had a lot of education to do,” according to a respondent. “We spent an awful lot of time educating our general contractor and our architect, and the waste management folks.”
Tackling a buildings mechanical and electrical systems “will cost a premium,” but “you don’t tackle those elements, you can get away with a lower cost premium, but you won’t reap the operational cost savings,” a respondent said.
Most of the survey respondents were very satisfied with their green retrofits. Eighty-three percent of the respondents stated that they were “very likely” to do another green retrofit in the future, and the remaining 17 percent stated that they were “somewhat likely.”
Respondents reported savings on their utility bills. One respondent said they saved “approximately 17 percent on our utility bill over the existing structure that we were leasing.”
Other studies found similar results. The Co-Star Group did a study of 1,300 buildings in April and discovered that LEED-certified buildings have rent premiums of $11.24 over conventional buildings. They also have a 3.8 percent higher occupancy rate, and sale an average of $171 more per square foot.
Davis Langdon’s “Cost of Green Revisited” 2007 study found “no significant difference in average costs for green buildings as compared to non-green buildings.” Recent studies by the IFMA Foundation and Turner Construction found that most new green buildings cost less than one percent more, and some even cost less.
The Deloitte survey highlighted Adobe Systems, who green retrofitted its headquarters. The retrofit saves Adobe $1.2 million annually. After the retrofit, Adobe’s electricity use dropped 35 percent, its natural gas use by 41 percent, potable water consumption by 22 percent, and its use of landscape irrigation water by 76 percent. Between 2001 and 2007 Adobe’s staff grew by 35 percent.