Building Green Doesn’t Always Cost More, Says Report

October 8, 2009 Updated: October 1, 2015

GOING FOR GOLD: The building at 545 Madison Ave. is in line for a gold LEED certification. A new report finds that costs for LEED certification are 'insignificant' compared to other factors influencing construction costs. (Jasper Fakkert/The Epoch Times )
GOING FOR GOLD: The building at 545 Madison Ave. is in line for a gold LEED certification. A new report finds that costs for LEED certification are 'insignificant' compared to other factors influencing construction costs. (Jasper Fakkert/The Epoch Times )
NEW YORK—Building sustainably is a growing trend, but there is a prevailing perception that it costs more to go green. Not true, says a study conducted in New York City recently by global construction consultants Davis Langdon and the Urban Green Council.

“I think if you ask the average developer, they would say it [green building] costs more,” said Russell Unger, executive director of the Urban Green Council. The results from “The Cost of Green in NYC” study debunked the cost myth with a comparison of the average cost per square-foot for certified green and non-certified construction.

Throughout 2008, data were gathered on 107 projects throughout the five boroughs of New York, 63 of which were either pursuing or had achieved Leadership in Energy and Environmental Design (LEED) certification, the report said. Surveys were conducted for buildings with and without sustainability goals. Data points included construction costs, design fees, LEED design fees, LEED additional fees, and commissioning fees. The average square-foot construction cost for a high-rise residential building without LEED certification was $436; while the average cost with certification was $440.

Unger said he was “pleasantly surprised” with this result. Part of the study’s mission was to find out if the sluggish adoption of sustainable building practices in New York City was due to the perception that building green is expensive.

In New York City, nearly 5,000 permits for new construction projects were issued in 2007, said the report. But only around 200 of those projects registered for LEED certification.

Proving statistically that green is not more costly is significant in increasing the market share for green building, said Unger. “You’re not going to come out better off if you’re not LEED.”

He is expecting the uptake for green construction will snowball as a critical market mass drives material costs down, and clients demand more sustainable features. Many of the additional costs currently associated with LEED are dropping as LEED-compliant materials, systems, and processes become more common, said the report.

A McGraw-Hill research paper released earlier this year stated that green will likely reach the mainstream of the global marketplace and achieve critical mass.

“Seventy percent of consumers report they would be more inclined to purchase a green home in a down market,” the report said. The results also showed that 56 percent of construction industry firms foresee rapid sales and profit growth related to green projects over the next five years.

Lisa Matthiessen, associate principal and director of Sustainability Projects at Davis Langdon said she was interested to see the rise in green building, especially for higher-certified projects.

The LEED certification has levels of sustainability that include certified, silver, gold, and platinum at the top end.

“The things that we saw for New York that are new and different [include] the number of LEED projects that were beyond 'certified' level,” Matthiessen said. “Most the projects were silver, gold, and there were actually quite a few platinum. A few years ago that was not the case.”

Some of the projects in the study achieved a gold or platinum LEED rating for a lower cost than ones with a silver rating or no rating at all—an unexpected result that the experts say requires further study.

“We couldn’t say we had enough there statistically to make a statement,” Matthiessen said. “But there does seem to be an increasing number of high-level green projects that are really cutting the costs—so we think that needs to be looked at a little more carefully to see what’s going on there.”

She said planning was an integral factor in cost cutting, while the commitment of the team and local jurisdictions also play a large part. “You can do a lot more than you could a few years ago and that does help make things achievable,” Matthiessen said, referring to the ability to recycle gray water and other initiatives.

LEED project teams also make different choices about how to spend the monies available to them, suggested the report. They reallocate funding within the project budget to accommodate green measures. Although LEED certification has direct costs, LEED buildings often require the use of higher cost materials, systems, and construction processes.

Design fees and related soft costs (including LEED certification fees) in general only account for about 10 to 12 percent of construction costs for residential projects, so the additional fees have minimal impact on total construction cost, the report said.

“In other words, compared to other factors influencing construction costs, LEED is insignificant.”

Matthiessen said the findings about the paybacks from energy savings were also striking. “This was on an anecdotal level, but we talked to developers who were seeing a very strong reason to do green because they could get more money back for rent,” she said. “It’s become the game now—you have to do green.”

Of the 70 new construction projects included in the study, 39 were pursuing or had achieved LEED certification and 31 were not. These projects consisted of high- and low-rise residences, high- and low-rise office buildings, libraries, academic buildings, and cultural institutions.

President of Related Companies Jeff Blau is quoted in the report as saying, “Building green is no longer just an option that we consider, but as a leading developer, it is a responsibility that we embrace. In this difficult economic environment, we all need to be more vigilant than ever to reinforce our commitment to building green.”

LEED certification is now growing faster outside the United States than inside, said Matthiessen. “That will be an interesting thing to watch.”

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