For example, Opus recently completed an 820,000 sq. ft. office complex for Medtronic Inc. in Mounds View, Minn., that incorporates highly energy efficient mechanical systems, water efficient landscaping techniques and low-emitting construction materials.

“What our company is staging for over the next five to 10 years is that sustainable design will just become a best practice,” says Dixon. Opus has more than 12 million sq. ft. of sustainable buildings complete or under development, including more than a dozen LEED-certified or registered facilities.

Corporations embrace value
The desire to cut energy costs is the main force pushing green building into the mainstream. Four in five respondents indicate energy efficiency is important to their company when selecting, acquiring or developing a green building.

When asked what are the most important factors when choosing green buildings to buy or lease, corporate users most frequently cite energy efficiency (81%) followed by water savings (53%) and indoor environmental quality (50%) [Fig. 5].

Other issues that register high among corporate users when selecting space to buy or lease include selection of green building materials (38%) and sustainable site development (34%).

Energy efficiency likely generates the most attention because it also produces the biggest payback on green design. Adobe is a case in point. The firm spent $1.4 million over the past five years to retrofit all three of the office buildings at its corporate headquarters in San Jose. That investment is paying off big on Adobe’s bottom line with roughly $1.2 million in energy savings each year.

Corporate users believe the most significant benefits of green building design are lower energy costs (78%) and that it has a low impact on the environment (75%) [Fig. 6].

Most developers also believe lower operating costs are the greatest benefit of green building design (79%), while being environmentally friendly also rated high at 74%. The ability to differentiate in marketing followed at 46% [Fig. 7].

Green building elements added about 2% to the overall building cost of the $500 million Hearst Tower in New York. The 46-story office tower opened in October 2006 and is home to about 2,000 employees.

“In the scheme of things, it was more expensive,” says Brian Schwagerl, vice president of real estate and facilities planning at Hearst Corp. “But why would we want to build anything less than what was going to make it a better building? I didn’t buy lesser-quality flat screen TVs, so why would I buy a lesser-quality air handling system?”

Indeed, most corporate users say they would be willing to pay more for LEED-certified buildings, with more than one-third (39%) willing to pay 1% to 2% more; 27% would pay 3% to 4% more; and 23% would pay 5% to 9% more. Another 8% say they would even be willing to pay 10% or higher [Fig. 8].

Developers question ROI
The most heated debate in the commercial real estate industry surrounding green building is whether the added upfront cost will translate to higher building values and higher rents. Although some industry estimates indicate that green building typically adds about 1% to 2% to the overall project cost, one in four developers — both those who owned or managed green properties and those who had none — indicated that building green adds 10% or more to construction costs [Fig. 9].

The added expense of building green is typically recouped through operational savings in the first three years of operation, according to the U.S. Green Building Council. However, since most landlords pass those energy costs — and savings — through to their tenants, the main focus for developers is on how green building can directly impact the bottom line through higher sale prices and rents.

Developers were split on whether they would charge the same or higher rents for green buildings, with 42% reporting that they would charge the same rents for green and non-green buildings, while 40% say they would charge higher rents for green buildings. Among those that would charge higher rents if they were able, 15% say they would charge between 3% and 4% additional [Fig. 10].

The U.S. Green Building Council contends that green buildings have higher lease rates and occupants are healthier and more productive. “The average return on investment in a green building is 20% — and that’s a number that’s relevant to any building owner,” says Rick Fedrizzi, president, CEO and founding chair of the council. NAIOP’s Bisacquino agrees that green buildings will have a direct correlation on building values and rents in the near future. “I personally feel that within the next three to five years, the definition of Class-A office space will be green,” Bisacquino says. “If a building is not green, it won’t be classified as Class-A.”

Green lending programs
Most developers and corporate users are not taking advantage of insurance or lending programs that offer favorable rates for green buildings. Only 20% of corporate users and 18% of developers say they found favorable financing terms for green developments.

Likewise, 24% of corporate users and 18% of developers have found favorable insurance terms for green developments. However, such programs could become more prevalent in the future, producing added savings for developers and corporations [Fig. 11].

“Developers are looking at green buildings as the new standard,” says Jamie Woodwell, senior director of commercial and multifamily research at the Mortgage Bankers Association. Lenders recognize that market shift and are searching for ways to participate in that green building trend.

Lenders have been active in financing environmentally friendly projects for years, and now a growing number of lenders are promoting green lending with specific programs that target Energy Star or LEED-certified buildings, Woodwell adds.

Bank of America Corp., for example, announced a 10-year, $20 billion initiative last March to support the growth of environmentally sustainable business activity through lending, investing, philanthropy and the creation of new products and services.