Cost Premiums

The cost premium generally varies with the building type, with a green industrial or institutional building usually at the lower end of the range. Also, it must be remembered that data is both historic and averaged, and may not apply to a particular project.

BREEAM UK

In an analysis for an air-conditioned office building [1] environmental performance was assessed using BREEAM 2004. The % increases in capital costs shown in this table were calculated by applying selections of the BREEAM requirements to the base case building. The cheapest way of reaching the required rating was favoured.

BEAM (Hong Kong)

The following table summarises the minimum premiums on construction cost (excluding fit-out) for the generic office building assessed under HK-BEAM version 1/96R ‘New Offices’ (1999) and version 4/04 ‘New Buildings’ (2004).

The following table summarises the minimum premiums on construction cost for the high-rise residential building assessed under HK-BEAM version 3/99 ‘Residential’ (1999) and version 4/04 ‘New Buildings’. The percentages for private sector buildings are about half of the values given for public sector (low-cost) buildings.

LEED US

The 2006 Davis Langdon study shows essentially the same results as 2004: there is no significant difference in average costs for green buildings as compared to non-green buildings. Many project teams are building green buildings with little or no added cost, and with budgets well within the cost range of non-green buildings with similar programs.

DLS also found that, in many areas of the country, the contracting community has embraced sustainable design, and no longer sees sustainable design requirements as additional burdens to be priced in their bids. Data from this study shows that many projects are achieving certification through pursuit of the same lower cost strategies, and that more advanced, or more expensive strategies are often avoided. Most notably, few projects attempt to reach higher levels of energy reduction beyond what is required by local ordinances, or beyond what can be achieved with a minimum of cost impact.

Green Star (Australia)

DLS research on Green Star certified buildings indicates that at present, the initial impact on construction costs (above comparable non Green projects) is likely to be in the order of 3 – 5% for a 5 Star solution, with an impact of a further 5% plus for a 6 Star non iconic design solution.

Green Mark (Singapore)

The Table below shows that the construction cost premium of Green Mark Certified buildings, ranging from between 0.3% and 1%, is marginal over code-compliant buildings. A Green Mark Gold Plus building (1% to 3%) only costs nominally more than a Green Mark Gold building (1% to 2%). The cost premium for a Green Mark Platinum building ranges from 2% to 8%.

Benefits

From the survey in the SmartMarket Report [2] building stakeholders in the US when asked to predict the impact of completed green building projects, repondents reported the following:

# Average expected decrease of operating costs between 8% and 9% across industry.
# Average increase in values expected around 7.5%.
# On average, ROI expected to improve 6.6%.
# Occupancy expected to increase by 3.5%.
# Rents expected to rise by 3% on average.

A recent report from CoStar provides evidence that some of these predictions are being acheived in practice, for example:

[1] BRE Centre for Sustainable Construction. Costing sustainability: How much does it cost to achieve BREEAM and EcoHomes ratings? IP 4/05, 2005
[2] McGraw Hill Construction. Green Building SmartMarket Report. 2006