Greener Buildings Not Pricier

Thu, 2009-09-24 02:06

From Crain's New York: Building green high-rise towers in New York City is not the higher cost option it has long been thought to be, according to a new study that will be released late Wednesday by the Urban Green Council.

In fact, the study finds that there is no significant difference in construction costs of residential towers and commercial interiors when comparing those that meet Leadership in Energy and Environmental Design (LEED) standards and those that do not. The elimination of the price gap is occurring because the cost for LEED-compliant materials is dropping as they enter the mainstream, and developers are saving money elsewhere by making different choices, such as opting for less expensive bamboo countertops instead of granite.

The average cost for constructing LEED high-rise residential towers was $440 per square foot, compared to $437 per square foot for non-LEED projects, according to the study, which was co-sponsored by the New York State Energy Research & Development Authority and Davis Langdon & Seah International, a consulting firm. For commercial interiors, the average cost for LEED is $191 per square foot, slightly lower than the $204 per square foot for non-LEED.

“The study confirmed more firmly that cost should not be a barrier,” said Russell Unger, executive director of Urban Green Council.

The study was based on an examination of the costs for 38 high-rise residences and 25 commercial interiors. Construction cost did not include acquisition fees, soft costs, site work and parking structure costs.

The study did not provide data on whether LEED buildings outperformed non-LEED buildings in the market. Mr. Unger noted that it was difficult to get developers to divulge construction costs let alone disclose information on returns. However, other studies, including a recent one conducted by CoStar Group and the University of San Diego, have found that green commercial buildings outperform non-green buildings in occupancy, sale price, and rental rates.

“Every project we're involved in has components designed to increase energy efficiency and to reduce emissions,” said Dan Tishman, chairman and chief executive of Tishman Construction, in a statement. “While the environmental impact is certainly a positive, clearly in this climate, value is also extremely important. The market is increasingly demanding these types of efficiencies."

This study was designed to mimic Davis Langdon's national study which also found that there is no statistical difference in cost per square foot for green. “That study translates to New York City,” Mr. Unger said. “Green does not need to be an economic burden.”