Green Infrastructure Investments & Commercial Property Value

The Natural Resources Defense Council (NRDC) recently released a report on the impact of commercial property investment in green infrastructure, and how it has managed to create value for investors.
From: Alex Summers
January 15th, 2014 | 0 Comments

The Natural Resources Defense Council (NRDC) is one of the most important environmentally active groups within the U.S. At the very end of 2013, they released a report on the impact of commercial property investment in green infrastructure, and how it has managed to create value for investors.

The notion of green infrastructure has been underused within communities. The report manages to provide a first ever detailed tangible analysis on the infrastructure and how it can allow commercial property owners to make the most of their land assets.

High Value Green Infrastructure

Green Roofs

The report includes an infographic that sums up the basic improvement within commercial building leading to profit. As per the analysis, apartment buildings that have green roofs garner a 16% rental premium.

A relevant example in this regard is that of Minneapolis, where the Target Center Arena, with the usage of a green roof, has generated a savings worth $300,000.

Bioswales and landscaping

The next important green infrastructure is that of ‘bioswales’ and landscaping. Landscaping has been determined to increase rental rates for office buildings by nearly 7%.

The project has been used with considerable success in New York, where less sewage runoff is being maintained through bioswales.

Green remodeling

The impact of remodeling homes using a green approach is also profitable from a value creation point of view. Traditional remodeling discusses the usage of energy efficiency, but more profitable additions are long term trends.

From a green perspective, foundation repair and other smart upgrades by homeowners can translate into a trickledown effect, since the improved foundation facilitates water conservation and even bioswales. Weak foundation, on the other hand, can lead to both stair-step and interior cracking, which results in water leaks.

Evidence for this can be provided with the statistic that remodeling of such sort would lead to an annual reduction of $14,020 through storm water and reduced energy requirements.

Permeable pavements

Another important green infrastructure for value creation is that of a permeable pavement. This is created by using materials such as asphalt and concrete.

Such blocks help water flow into the gravel below. The benefit of this infrastructure is that it leads to lower maintenance costs.

Impact of eco-labels

Green infrastructure within U.S. is being incentivized through certifications such as LEED. They can increase the property value if the conditions are being met.

This is a clear ‘tangible’ indicative of how green infrastructure can maximize profit within real estate.

The approach for stakeholders

The NRDC report provides a good directive for the real estate industry, a major stakeholder in the discussion. It also gives them a holistic approach as to how the full range of green infrastructure should be used. Not only is it a wise investment move, it is a good blueprint for ongoing projects.

A case study was carried out in Washington, where a commercial office building has employed the listed green infrastructure. Also, there has been a strong focus on management of storm water run-off and the economic benefits that can be attained. The resulting building has the potential to save 70 tons of air conditioning capacity, a remarkable improvement.

By recognizing the true potential of green infrastructure, stakeholders within the real estate industry can maximize their ROIs while determining how to execute new projects or refurbish old ones. Green infrastructure is a win-win not only for the public sector, but also for the private sector.