Friday, July 6, 2007

Today's topic is money. One of my collegues recently told me that until developers see profit in building green, they will not be interested. It appears that day has come, and that REITs and developers are beginning to respond.

The New York Observer published an article on June 26, 2007 about the new Bank of America tower in New York City, which is striving for LEED Platinum. The interesting thing about the article is the dramatic premium developer Douglas Durst is getting for his office space. The Observer article states "Asking rents for each [remaining] floor will start at $185 per square foot annually, a source said, which are among the highest asking rents in any American office building ever. Average asking rent in Class A office space in midtown is $70 per square foot, according to the brokerage Cushman & Wakefield." The possibility of getting a 38% premium will certainly attract the attention of developers considering embarking on new projects.

A study made available today entitled "Responsible Property Investing: A Survey of American Executives" (available at explores the interest of REITs, developers, pension plans and other institutional investors in socially responsible property investing.

The study revealed that about 57% of survey respondents were implementing management strategies around conservation (promoting energy conservation, water conservation or recycling in your assets), and 36% were investing in Green Buildings. The sample size was small, only 189 respondents, but it reflects a growing interest among real estate investors in sustainable development.

1 comment:

matt green said...

It is clear that more and more people and companies see the green in building green. According to a friend of mine at the PIDC, there has been a rapid increase in requests for funding of start up alternative energy sources. As prices for green materials such as solar panels go down, the more profitable these companies will become.