Sustainable Buildings – How to calculate their ROI?
The green building industry is one of the fastest-growing sectors on the planet. The U.S. Green Building Council’s Leadership in Energy and Environmental Design (LEED) green building certification has grown from a mere 296 buildings in 2006 to pass the 100,000 milestones in 2019. Sustainable Buildings produce massive fiscal benefits that take many different forms, which aren’t necessarily typical financial figures, and green buildings also offer multiple quantifiable avenues that can be used to calculate ROI. The data points and information below is vital in calculating the ROI of green buildings. They also help to create a set of factors to include in an ROI monitoring plan.
Tracking and measuring the impact of sustainable buildings architecture has on brand reputation. Therefore, revenue is one crucial key metric that impacts ROI. Looking beyond construction costs and into how going green draws more external business. It also attracts new employees, decreases staff turnover, and lowers other operating costs should be part of the overall ROI monitoring plan. For example, employee turnover can cost employers about 33 percent of each employee’s salary that decides to leave. Reducing just this number by leveraging the wellness perks green architecture brings to the table is a financial benefit. The reason is that it adds to the amount of money that can be saved just by going green.
Legislation and government support are slowly beginning to flow to businesses. Also, multiple tax breaks are now available for green commercial buildings. Owners or designers that reduce half of their energy usage by way of ventilation, lighting, heating, cooling, or hot water systems are eligible to deduct up to $1.80 per square foot if they completed work after December 31, 2017. Solar investment tax credits may also be available and will provide a 30 percent tax credit to businesses that install solar energy property.
With sustainable buildings’ architecture comes tremendous opportunities to optimize energy usage. LED lighting, high-efficiency HVAC systems, weatherproofing, solar panels, reclaimed water, and much more are the main contributors. LEED building requirements help buildings save an average of 25% of energy and 11% of water costs than standard buildings. Electricity and water can easily eat away at operating costs. This means that investing in sustainable solutions can help companies increase their ROI.
End-to-end green properties have a higher property value, and increasingly urgent climate conditions are accelerating tenant appeal. Green buildings also impact health-conscious employees. They do this by offering cleaner air, more light, and spaces where employees can thrive in their place of work. Vacancy rates for green buildings are often at least 4 percent lower than traditionally constructed buildings. Also, charging peak rental rates is the norm for green buildings. Reporting reveals that while non-LEED certified buildings receive an average of $2.16/ft2, prospective tenants are willing to pay $2.91/ft2 for a LEED-certified space.
Businesses Are Seeing Positive Financial Results
Building owners often face delay by some of the more extensive upfront costs required to finance green building projects. However, investments, especially in sustainable heating, cooling, and building self-sustainment (water recycling, solar panels), will pay off in the long run. Green building owners have steadily reported positive outcomes, and the U.S. Green Building Council announced that green buildings reduce costs year-over-year and lower maintenance costs by an average of 20 percent when compared to typical commercial buildings. Achieving healthier buildings while impacting climate change and employee wellness, and tapping into the economic advantages of the green building simultaneously is a unique opportunity for businesses that ushers in success in more ways than one.
Abigail Baker is a writer for Happy Writers, Co. in partnership with Checkworks, retailer for business and personal checks