How Does the Bear Market Affect Sustainable Competition?

Wed, 2009-09-23 22:52

The down market has changed the tune of many builders and developers. Two years ago, the building industry motto was that people would buy anything “so who cares what I build as long as I build it as fast as I can.” We also heard, “People don’t buy energy efficiency.” And, “That’s nice, but people would rather have a granite counter top.” At the end of the day, these attitudes translated into home and buildings that shortchanged our future because we built relatively inferior structures as fast as we could. We’ll be paying those energy bills for many years to come. 

Nowadays, builders and developers are racing to differentiate themselves just as buyers (the ones with money left to buy) are both more sustainably aware and more discerning about what they buy. This convergence of factors has led to an impressive wave of green building across the country that should bode well for our future. 

However, there are a few notes of concern that will be hard for sustainable building (green building, if you must call it that):

1 - Many beneficial sustainable practices require a higher upfront cost with a payback over the building life-cycle. As long as credit remains tight, builders won’t have the fund to do solar energy, garden roofs, etc. The challenge will be creating the incentives to ensure that decisions are made incorporating the entire building lifecycle vs. just the initial build cost. Why does the builder care what the operating costs are if he plans to sell the building after construction anyhow? As a society, these items are as important as they are to the future’s owners and tenants.

2 - For sustainable building to really matter, we need to preserve large swaths of open space and curtail development in inappropriate places. This will mean that some current property owners will be on the losing end of that proposition. If I currently own wetlands and the state wants to say I can’t develop on them, then they are taking away my property values. How do we compensate for that loss of value?

3 - Right now, most local jurisdictions pursue a “Growth-at-all-costs strategy.” It doesn’t help that most local politicians are developers themselves. This is natural because developers are vested in the local level political decision-making process. How do we change that dynamic so that more towns and cities come to realize that smart growth is in their citizens' long-term interest vs. just worrying about next year’s tax revenues?

At the end of the day, the markets and consumer awareness are definitely helping green building while credit tightness, property laws, and zoning proclivities still present significant challenges.