The article in the url below tracks the rise of the industry around the certification of buildings. One area of particular interest has been sustainability (environmental efficiency), the argument for which seems clear:
"Developers and landlords have for decades sought green certification to help them attain a level of sustainability that can make their buildings more efficient, and cheaper, to maintain in the long run. In turn, the buildings can fetch premium rents and achieve higher occupancy rates."
The most prominent of such certifications is the Leadership in Energy and Environmental Design (LEED) certification:
"One of the best-known certification programs is run by the United States Green Building Council, which began rating the sustainability of buildings in the 1990s through its Leadership in Energy and Environmental Design program, or LEED. The program rates buildings on how their design and systems affect energy and water efficiency, carbon dioxide emissions and other 'green' performance measures. Some 100,000 commercial properties worldwide are either LEED certified or going through the process, according to the council."
But, the success of LEED has led to a proliferation of alternative third-party certifications and a growing industry that is expected "to reach $254 billion by 2020." This growth has left landlords struggling to keep up with which certifications will help differentiate their building in the marketplace:
"But as the industry for independent review grows, some organizations have started to offer verification in other areas, like digital infrastructure, landscaping and human wellness. The crowded field has left some wondering which ones are necessary and which ones are just marketing gimmicks."
One certification that has done particularly well is WiredScore:
"The company, based in New York, grades the digital infrastructure in buildings in several categories, including its ability to provide uninterrupted internet connectivity throughout the building and its capacity to integrate future technologies. … In less than six years, the company has certified more than 1,800 properties totaling some 500 million square feet in the United States, Canada and Europe. Its four levels of digital capability mirror LEED's."
And, these certifications are not cheap:
"A typical WiredScore certification contract, which lasts two years, costs $12,000 to $15,000 and includes a digital assessment and road map for improvements. WiredScore also provides marketing support for the property once it achieves certification. … By comparison, the cost for LEED certification averages around $3,500 to $5,000."
As such, the key is to know the real return on these certification investments, as opposed to their perceived returns:
"So far, the decision to pursue a wired rating appears to be paying off. Rental rates for WiredScore office buildings in Manhattan, for example, increase an average of nearly 7 percent with each level of certification, according to a study by CoStar, a commercial property research firm. … [In contrast, for LEED the] average premium for rent was found to be around 3 percent over buildings without the certification, according to a study published in The Journal of Portfolio Management in 2015."
This makes sense because, in terms of sustainability certifications, there is research out there that suggests the perceived benefits are exaggerated:
"John Scofield, a professor of physics at Oberlin College in Ohio, has over the last decade challenged claims that LEED buildings typically used 25 percent to 30 percent less energy. He has conducted subsequent studies, including one in which he has compared the electricity consumption of properties in New York and Chicago, and has concluded that little or no real difference exists in LEED and non-LEED office buildings."
There is also evidence to suggest it is unclear that consumers ultimately care:
"Few people think green buildings help the environment, the organization found in a survey."
Take care
David
David Chandler
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If Your Building is Certified Green, Does it Matter?
By Joe Gose
April 24, 2019
The New York Times
Late Edition – Final
B5
