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Casa Calma Hotel, Buenos Aires, Argentina. Courtesy of Caitlin Cunningham.

About Green or Sustainable Real Estate

Green or sustainable real estate is an exciting new way to make real estate healthy and energy efficient, with better indoor air quality, lighting and temperature controls. All types of commercial and residential real estate can be built or renovated with green features. Substantial new evidence suggests that green real estate often delivers superior financial returns and market performance. As well, going green helps property owners and investors 'future proof' their real estate to address new energy efficiency regulations being enacted in the U.S. and around the globe by national, state, provincial and local governments.

Green or sustainable real estate is global and timeless. From the ancient cliff dwellings of Mesa Verde  to such stunning examples of 21st century architecture as Pittsburgh's David Lawrence Convention Center and the Seattle Public Library, green or sustainable real estate is built to respect the surrounding environment.

In the developed world, green or sustainable real estate refers to a variety of construction techniques that render the completed structure energy efficient, with superior natural light and indoor air quality. The use of green or sustainable construction typically produces energy savings of 30% or more. This is an important result, because buildings are a substantial source of energy costs, electricity usage, and emissions that can harm air quality.

Green or Sustainable Features

Examples of green or sustainable construction, siting and landscaping features include:

  • The use of solar and other alternative energy systems.
  • The use of control systems and other energy management techniques to reduce energy consumption, especially during off-peak hours.
  • The use of effective ventilation and air filtration systems.
  • Recycling of water for irrigation and other non-potable uses.
  • The use of recycled building materials, sustainably harvested wood, and non-toxic interior paints, carpeting and other finishes.
  • Siting near public transportation.
  • The use of native plantings in landscape architecture.

Financial Performance

Construction Costs: Increasingly Affordable

Most green or sustainable real estate is typically an estimated 2% more expensive to construct than conventional real estate, but growing industry experience continues to drive down costs. Experienced developers can often build to green or sustainable standards for the same cost as conventional construction.

Superior Occupancies, Rents and Sales Prices

New evidence indicates that green or sustainable real estate frequently delivers better performance in the marketplace than conventional construction due to high appeal to tenants and homebuyers, faster permitting and government approvals, shorter lease-up times, lower operating costs and the attainment of top tier rents.

Recent studies based on datasets developed by CoStar Group, -- one of the leading commercial real estate information services-- verify that green certified properties frequently lead to superior occupancy levels, rental rates and sales prices. Working papers by a teams at the University of California at Berkeley, the Netherlands Maastricht University and the UK's University of Reading  indicate that green buildings, as a group, deliver higher direct rents, effective rents and sales prices. U.S. and global surveys also have found that majorities of commercial occupants and homebuyers are willing to pay premiums for green space.
As a result, many refer to green or sustainable real estate as 'high performance' real estate, capable of producing superior financial returns. Green real estate is also an effective vehicle for the production of affordable housing, because lower utility expenses help to control total housing costs.