People Payback Green Builders

When determining the return on investment of building green, Jerry Yudelson says factoring the impact on worker productivity makes the decision a no-brainer.

Yudelson, a green building consultant and author of the new book "Green Building A to Z," says the financial benefits of improved productivity far outweigh the energy savings and tax incentives and can more than make up for any additional green building cost. Employees cost about 10 times more per square foot per year (assuming a $60,000 salary) than rent and 100 times the energy cost, he says.

Therefore, even a one percent improvement in employee productivity through better daylighting with energy efficient windows, and better quality indoor air can offset an up to five percent increase in green building costs, Yudelson says, citing studies from Carnegie Mellon University and others. These studies quantify that people working in green buildings are healthier, happier and more productive.

Builders of green commercial properties may not be able to recover the higher costs in rent, but other factors can make the enhancements justifiable, according to Yudelson. "You can attract higher quality tenants who are willing to sign longer leases and reduce your carrying costs by leasing properties quicker," he says. Green buildings also have higher resale values, Yudelson says.

For residential builders, green buildings allow properties to stand out in today's current tough housing market. Yudelson says 12 percent of all new housing units were Energy Star certified in 2006, a figure that he expects to rise to 20 percent this year. Builders can also find better access to money as "pension funds are looking for green investments."

Lenders have not offered many incentives for buyers to go green, Yudelson says. Some finance companies will reduce the closing costs for green property buyers, but they are resistant to lower interest rates given the current low rates. Property owners who buy green buildings may have a better chance of getting approved for larger loans if they show that the utility bills will be lower, he says.