"Green," and LEED-certified buildings. What's the benefit?

NittanyBLUE2002 said:

Chicago seems to be a national leader with its commitment to constructing environmentally friendly buildings.
Popular buzzwords like "green," and "LEED-certified," seem to be getting more and more mainstream.

I guess my question is this.
What incentives would a developer have to build a green, LEED-certified building? I would imagine the "greener" it is, the more is costs to make, so what's the benefit to the investors?

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One incentive is that the approval process is accelerated when a developer seeks LEED certification. The higher the level of certification sought, the more expeditious the process. For example, Chicago Spire is aiming for Gold certification, which is why the most recent iteration has been rocketed through the Chicago Plan Commission, the zoning committee, and, on May 9th, City Council.

I can't say for sure whether it's necessarily more expensive to build a LEED certified building, but the idea is that you will save money in the long run on through lowered energy consumption costs.

The Green Permit Program's administrator says this about one recent office tower on his blog:

"this project demonstrates that the highest-qualiity commercial office buildings can easily earn LEED certification. The developer has made a point of stating that they did not go to any great ends, or significant added expense, to earn the certification."

The Green Permit Program really kicks in for building permits, which is quite different from the zoning approvals that hydrogen cited.

Actually, this is an interesting question. Adopting environmental building practices, even at the LEED Gold level, requires little to no cost increase over conventional construction. Here's a California report, for starters, but if you poke around you can find more.

Developers tend to believe that green buildings cost 5-20% more to build than conventional buildings. The literature has found that the actual premium is more like 0-2%, and is especially low (even negative) when environmental practices are incorporated from the beginning of the planning stages rather than tacked on in the middle.

More important, though, is that any initial cost increases are more than repaid within a few years in the form of energy and water savings alone. Different building practices have met varying levels of success, but there are green buildings that have cut their electricity consumption over a comparable conventional building by almost 50%. When you add in lower costs of maintenance and operation, the private benefit is even higher.

The other reason a lot of businesses are choosing environmental buildings now, aside from positive image, is that there's substantial evidence that they improve worker productivity, morale, and health. People tend to be more productive in buildings with more daylight and fresh air and fewer toxic chemicals. Since person-hours are a lot more expensive than electricity, those savings can dwarf the energy savings.

Of course, the problem is that all these costs and benefits are accruing to various parties. The developer pays the green building premium and the tenants enjoy the savings. Naturally, markets should be smart enough to deal with this, and in fact some developers are finding that tenants will pay a premium for green building space because it will save them money in the medium run. If I were a real estate developer or lender, I think it would be pretty clear what direction I'd want to go in.