Much of the value of good design is difficult to quantify. There is incredible value to buildings that inspire, that challenge our perceptions, that create vibrant public space, that foster interaction or provide space for repose.

But some impacts of good design can be quantified. We know, for instance, that schools with daylight result in faster learning (by 20 to 26%) and improved test scores (by 5 to 14%). We know that offices with daylight can improve productivity by 18%, that hospitals with outdoor views can shorten stays by 8.5%, and that offices with views can improve mental function by 10 to 25%. (1) This type of value is significant, and is a key motivation for high performance design.

The traditional narrative around high performance design has been one of environmental protection: high performance design will save the planet. While this is a worthy (indeed, a critical) endeavor, this narrative implies that clients must spend more for little immediate benefit. But in fact the opposite is true: high-performance design costs less than most industry professionals assume and consistently delivers higher value for developers, owners, and tenants. In this view, high performance design is simply the best way for an architect to serve their clients — it is part of what constitutes “good design.”

Buildings are a huge investment (and potentially a huge ongoing liability). Owners are increasingly expecting that investment to deliver higher returns. Much of the recent growth in green building can be attributed to business motivations like reducing operating costs and improved public image. (2)

Thanks to decades of research, we now have hard numbers on many of these benefits. The results reveal a strong value proposition for high performance buildings.

the business value of high performance design

Tenants: Lower Operating Costs & Increased Productivity

As discussed above, high-performance buildings can have positive impacts on human health and well-being, resulting in myriad benefits from higher productivity to improved learning. In addition, tenants enjoy substantial reductions in operating costs. A summary of peer-reviewed studies by the World Green Building Council (WGBC) shows operating cost reductions of 25 to 50% for buildings with green certifications such as LEED, BREEAM and EnergyStar. (3)

Owners: Higher Occupancy & Rental Rates

The WGBC study found that high-performance buildings have increased rental rates of up to 17.3% and increased occupancy rates of up to 23.1%. These figures are supported by other sources, which have found 20% increase in lease-up rates (4) and an average 6.4% increase in occupancy (5).

Developers: Higher Asset Value with Low to No Cost Premium

As a result of higher rental rates, lower operating costs, and higher occupancy, high performance buildings tend to have higher asset value. The WGBC study found price premiums of up to 30%; McGraw Hill Construction reports an average increase in building value of 10.9% (6).

At the same time, the cost premium of high performance buildings is often over-estimated by industry professionals. A 2007 study by Davis Langdon found “no significant difference in cost” between green and conventional buildings (7). And recent experience shows that high-ambition projects can actually cost less than conventional buildings — often thanks to savings in the size of the mechanical systems (8).

Architects are particularly well-positioned to deliver the high value of high performance at low cost. As we’ve written previously, early-stage design decisions have a large impact on energy and mechanical system size — and yet decisions about shape, orientation, and glazing are “free” strategies with no cost premium. Delivering this value to clients is a core to good design — and central to building a strong architectural practice.

References:

  1. World Green Building Council (2013). The Business Case for Green Building. http://www.worldgbc.org/activities/business-case/
  2. According to McGraw Hill Construction, between 2008 and 2012, the percentage of firms that built green to achieve lower operating costs increased from 17% to 30%. McGraw Hill Construction (2013). World Green Buildings Trends. http://analyticsstore.construction.com/index.php/world-green-building-trends-smartmarket-report-2013.html
  3. WGBC 2013.
  4. Miller, N. (2010). Does Green Still Pay Off? http://www.usgbc.org/Docs/Archive/General/Docs5537.pdf
  5. McGraw Hill Construction (2010). Green Outlook 2011: Green Trends Driving Growth. http://aiacc.org/wp-content/uploads/2011/06/greenoutlook2011.pdf
  6. McGraw Hill Construction 2010.
  7. Matthiessen, L.F. & Morris, P. (2007). “Cost of Green Revisited: Reexamining the Feasibility and Cost Impact of Sustainable Design in the Light of Increased Market Adoption.” Davis Langdon.
  8. WGBC 2013.