Hi Report: Green Buildings Market Grows to $260 Billion; Driven by Higher Rents, Values!.

Hi Report: Green Buildings Market Grows to $260 Billion; Driven by Higher Rents, Values!.

Construction of green buildings rose to 325 million m² of new floor space in 2013, representing a $260 billion market, according to Lux Research, with growth driven by economic benefits rather than environmental motivations.

Growth has exceeded expectations as green construction marches toward a significant share of the mainstream market. In the United States, for example, green buildings command an estimated 20 percent of new construction.

“Green buildings are driven not by utility savings, but by upticks in rental income or resale value,” said Alex Herceg, Lux Research analyst and the lead author of the report titled, “Cash Is King: Assessing the Financial Performance of Green Buildings.”

“Those factors, along with government incentives, can make the financial case for green buildings, delivering predictable internal rates of return (IRRs) north of 5 percent,” he added.

Lux Research analysts studied utility savings, rental rates, resale value and government incentives in green buildings and their impact on IRRs.

Among their findings:

• Green certification fuels growth. Lux Research’s analysis found that buildings with LEED Gold certification outperform their baseline peers. For instance, higher rental income added $4.1 million in value to a model 80,000 ft² commercial building in Los Angeles.

• IRRs get a boost from subsidies. Incentives like Germany's subsidized interest rates for energy-efficient homes, or government cash rebates in India, can lead to an IRR of 5 to 6 percent over 15 years.

• Energy efficiency codes offer market opportunity. While green building standards like LEED helped build market demand for green buildings, building energy efficiency codes such as ASHAE 90.1, IECC and ECBC India can create a much larger market opportunity. In Germany, Lux Research estimates that new floor space compliant with the EnEv 2009 code was 50 million m², or about 36 percent of overall new construction, in 2013.

The report, titled “Cash Is King: Assessing the Financial Performance of Green Buildings,” is part of the Lux Research Efficient Building Systems Intelligence service.

Hi Energy Department Announces $9 Million to Improve Energy Efficiency of Hotels, Hospitals, Offices and More!.

Hi Energy Department Announces $9 Million to Improve Energy Efficiency of Hotels, Hospitals, Offices and More!.

As part of the effort to double energy productivity by 2030 and reduce carbon emissions in commercial buildings, the Energy Department announced $9 million to encourage investments in energy-saving technologies that can be tested and deployed in offices, shops, restaurants, hospitals, hotels and other types of commercial buildings. The funding will facilitate the implementation of market-ready solutions across the U.S. to improve commercial building energy efficiency, with a goal of demonstrating 20 percent savings or more across a variety of approaches.

Last year, commercial buildings accounted for approximately 20 percent of total U.S. energy use, equivalent to about 18 quadrillion British thermal units of energy. Owners and occupants could cut energy waste, saving an estimated tens of billions of dollars annually, if they operated their buildings more efficiently and invested in energy-saving technologies. Additionally, accelerating investment in efficiency upgrades could also lead to greater demand for new building products and technologies, many of which are produced and developed in the U.S.

This funding opportunity encourages building owners and occupants to demonstrate widely-applicable and self-sustaining approaches that address key challenges and make building efficiency improvements easier. Examples include:

•Green leases that help building owners and lessees save money: Equitably align the costs and benefits of efficiency investments between building owners and tenants.

•Better information for better decisions: Use Department-developed energy modeling software to better identify and predict a building’s energy performance. The goal is to show how energy efficiency can result in lower energy bills and reduce overhead.

•Low-risk nature of financing energy efficiency projects: Assist lenders in obtaining better access to data and information resources that demonstrate the cost-effectiveness of investing in energy efficiency projects.

This funding opportunity seeks to support 5-10 projects that will increase energy savings in commercial buildings by advancing the use of tools, solutions and resources the Department has developed to help commercial building owners, managers and professionals overcome barriers to efficiency.

Organizations are encouraged to partner on applications to enhance the overall deployment impact by leveraging current deployment channels, market orientation and strategic relationships. The Department is interested in proposals that will impact a significant geographic and commercial buildings market sector, affect a minimum of 100 buildings, achieve at least 20 percent energy savings over 10 years, train workers, create jobs, and result in programs that will be self-sustaining after the funding period expires.