Approximately 40% of the energy we use in the U.S. goes toward buildings. The importance of energy-efficient buildings is gaining more and more attention, however we have to recognize that builders and developers will not risk significant capital on green upgrades without at least feeling confident that it is not going down the drain. As a former real estate developer, I have seen firsthand that the commercial real estate industry will continue to be slow to adopt green building standards until developers can see how it will increase their rates of return. There are two forces that I believe could help speed up this process: First, Consider “Pull-Effect”: Some retailers are beginning to look at the bigger picture (or respond to customer pressure) by adopting green building practices. Starbucks, for example, says that it is looking for ways of “Designing, building and operating our stores in ways that reduce our impact on the planet. We’re incorporating everything from responsible building materials and furnishings to energy- and water-efficient measures into our store designs. To guide our efforts, we’re using the U.S. Green Building Council’s LEED® certification program as a benchmark for success.” (LEED® is short for Leadership in Energy and Environmental Design.)  The point here is that retailers are effectively a real estate developers’ customers, hence they have the power to affect change more than anyone.
The second option is what I call “Push-Effect” and is essentially the creation of an incentive structure, either in private markets or at the government level, to encourage developers to adopt green building practices. This is already beginning to happen in two ways: First, entrepreneurial-minded entities such as Pro-Tech Energy Solutions (http://pro-techenergy.com/) are now adopting a new model whereby they use a “Value-In-Use” approach to demonstrating the value-add to end users. What this company does is it evaluates a given property’s energy use, installs (AND PAYS FOR!) green building components (i.e. solar panels, for example), and monitors the cost savings to the developer/owner. In this way, the developer does not bear the upfront cost of installing green components, but pays for the improvements in an amount proportionate to the cost savings.
Another example of “push-driven” adoption is the bill introduced March 4 by Sen. Jeff Merkley (D-Ore.) and Sen. Mark Pryor (D-Ark.) which introduces a new program called “Building Star.” According to EnvironmentalLeader.com, “Building Star would promote energy efficient installations in commercial and multi-family residential buildings. The program is expected to save building owners more than $3 billion on their energy bills annually by reducing peak electricity demand by an equivalent amount of power as that supplied by 33 300-megawatt power plants.”
Together, push and pull-effect promotion of green building will help encourage the decision makers – real estate owners and developers – to look toward the future and spend the capital necessary to improve the energy efficiency of our buildings, helping the country move toward energy independence.