The value of green buildings

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Posted by:
Helene Brayer
Jones Lang LaSalle, UK

As I attended a conference on green buildings a few days ago, it struck me to see the panelists conclude on a paradox: ‘green buildings are more valuable, but they have no sale or rent premium’. The (non-evidenced) added value resided for them in better ‘lettability’ and lower obsolescence rates thanks to reduced energy charges.

This begs the question: why would there be no green building premiums in the UK when they have been demonstrated in the Netherlands, the US and Australia?

Firstly, there seems a lack of publicly available data to demonstrate this point. For the panellists, the measure of a green building in the UK is its BREEAM rating, but, as pointed out last year by UK Green Building Council, this data is regrettably not publicly disclosed, making market evaluations problematic.

Secondly, the energy saving argument for green buildings’ value is not convincing, because it is based on shaky grounds linked to a dilemma: operational v. design performance. Developers like “Low Carbon Workplace” have established that buildings rarely behaved as planned. Therefore, if savings cannot actually be predicted, prospective buyers/ occupiers can find it difficult paying a higher price for it. This is why for instance the Technology Strategy Board has dedicated £8m to fund studies evaluating the operational performance results of different design strategies.

This should encourage all of us in the real estate sector to think beyond the dialectic “value = energy savings”. Other impacts, already in current certification schemes, need to be added to the equation, like health & well-being (in particular the link with occupier productivity), transport or materials resourcing. We should also consider what makes a building truly sustainable over time: its resilience to flood risk, ground subsidence or overheating, and its connection with the local community.

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