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Value Beyond Cost Savings in Green Office Space

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Last week I went to a seminar on making the business case for sustainable and energy-efficient buildings: value beyond cost savings. The program was sponsored by the Building Owners and Managers Association (BOMA) of Seattle and was well attended by not only building managers and real estate agents but architects as well. The program presented numerous ways to evaluate why it building owner would and should go green. 

In many office buildings there are many opportunities to take advantage of low hanging fruit related to cost savings that to pencil out. These would include simple activities such as changing out the lighting to lower wattage or compact fluorescent bulbs, turning off computers and other equipment when not in use as well as turning the lights out. More of these simple methods can be found on OfficeFinder's green office page.

Unfortunately many of the other more significant means of going green can get very costly and may never pencil out in a discounted cash flow analysis. If you are evaluating whether or not to implement major green initiative retro fits strictly due to cost savings, in most cases they just won't make sense.

What does make sense in implementing green technology into an office building is related to tenant demand and tenant retention. As I have discussed in previous blog posts related to workplace trends, employees are happier and more productive in workplaces that promote sustainability. This means businesses will make their decision on where to lease space or purchase office space based at least partially on whether or not the property promotes sustainability. This doesn't mean that it will be the sole factor in deciding where to locate, but it will help those buildings that are LEED and energy Star rated at the top of the list of office space alternatives to consider.

For building owner this can add up to some significant monetary savings, although it is a difficult one to measure accurately. If an office building owner is able to retain an office tenant rather than have to go out and find new ones, they will save not only the time space would have been empty, but also save related to tenant improvements, commissions and their time that they would have to spend on releasing.

Another benefit to building owners in improving the sustainability of the buildings is that government regulations related to sustainability is continuing to get stricter. By making improvements now, rather than waiting for government regulation to require those improvements, building owners can "proof" against future regulation.

When deciding on whether or not to retrofit equipment the landlord will be take into consideration their occupancy, market position, and equipment cycle. Related to equipment cycle, it may not make any sense to replace a new piece of major equipment, but when making the decision on replacing equipment that needs to be replaced, it only makes sense to look into sustainable products.

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