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Green Building Thrives in Shaky Economy

November 30, 2010

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By Tudor Van Hampton
This article originally appeared on Engineering News-Record

Like a runaway recycling truck, green building’s momentum hasn’t been stopped by the economic recession and will keep speeding through the recovery, according to a report released just prior to the construction industry’s annual green-building conference. At the same time, experts say building owners are looking to go green more for economic reasons than environmental ones.

“Green building is the silver lining creating opportunity in the down economy,” says Harvey M. Bernstein, vice president of McGraw-Hill Construction (ENR is a unit of McGraw-Hill Construction). “And with this growth comes increasing attention on the value and performance of these buildings.”

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Green building has grown 50% in the past two years; total construction starts have shrunk 26% over the same time period, according to McGraw-Hill Construction, whose new report, “Green Outlook 2011,” forecasts the dollar value of the green-building sector growing to an estimated $55 to $71 billion this year. That number is expected to nearly triple by 2015, representing as much as $145 billion in new construction activity.

While more building owners are seeking green credentials for their projects, companies are looking at green building more as a profit center, not just as an environmental good deed. Owners of green buildings report a 5% increase in property value, a 4% return on investment and a 1% rise in rental revenue as well as an 8% reduction in operating costs compared with conventional designs, according to a study that McGraw-Hill Construction, property management firm C.B. Richard Ellis and the University of San Diego unveiled at the year’s annual Greenbuild conference and expo, held on Nov. 17-19 in Chicago.

The optimism was palpable at this year’s conference, sponsored by the U.S. Green Building Council, Washington, D.C. While roughly 30,000 people came to the event—show organizers expected about 10,000 more—it was still the largest-ever Greenbuild in terms of attendance. About 28,300 professionals were present on the second day, and more than 1,000 exhibitors displayed green products at McCormick Place. USGBC is still tallying the final numbers.

When asked if Greenbuild, traditionally seen as a cozy industry show, is getting too big for its own good, USGBC Vice President Kimberly L. Lewis, the show’s manager, responded with a rhetorical question, saying, “Could you feel the energy?” Greenbuild’s growing visitors, features and formats likely will be revisited in detail next year, she added, as the show kicks off its 10th year on October 4-7 in Toronto.

‘LEEDigation’ Arrives

Much chatter heard around the show centered on the prospect of lawsuits as green-building standards work their way deeper into building specifications and codes.

As one example of this growing trend of green requirements, the International Code Council unveiled an update to its International Green Construction Code, a national standard that jurisdictions can adopt to require buildings to conserve energy and water. It references as a compliance option ANSI Standard 189.1, developed jointly by the USGBC, the American Society of Heating, Refrigerating and Air-Conditioning Engineers and the Illuminating Engineering Society.

Adding fuel to the fire, Henry Gifford, a New York City-based building consultant, filed a class-action suit in early October against USGBC, alleging the non-profit falsely advertises its Leadership in Energy and Environmental Design rating system as an energy saver when certain LEED buildings actually consume 29% more energy than was expected. He also claims USGBC uses its LEED marketing machine to monopolize the buildings sector.

Doug Farr, a Chicago-based architect who exhibited at Greenbuild, recently read a copy of the lawsuit. “I thought it was really sort of lame,” he says, adding, “I couldn’t contemplate what the harm was [to the litigant].”

A legal panelist at the conference, Chris Cheatham, a Washington, D.C.-based lawyer and blogger, says the lawsuit has served as a wake-up call to green builders that the LEED rating system has limitations.

“To be honest, I think [the lawsuit] has served its purpose,” says Cheatham, adding that both sides are in talks to settle the matter. Gifford is seeking to recover up to $100 million from USGBC and other parties. Lewis says USGBC has no comment.

During the Chicago conference, talk about the lawsuit widened an ongoing debate into the merits of LEED. Green-building supporters and detractors alike have long acknowledged that LEED checklists are designed to be flexible; therefore, a green building may consume more energy than a conventional one but still be considered eco-friendly.

“Green buildings are designed and built in ways that are sustainable, but for them to be high-performing buildings requires participation from the people occupying and maintaining them,” explains Michele A. Russo, director for green content at McGraw-Hill Construction. “It’s like hybrid cars. They are built to get the best mileage, but if you drive one inefficiently … you gain little advantage.”

Although USGBC is tracking the energy data of some newer LEED buildings, it does not have plans to pull certifications for energy hogs. However, USGBC has a process by which anyone can challenge a LEED building’s certification, experts say.

Cheatham, who is credited for coining the term “LEEDigation” in his blog, “Green Building Law Update,” has predicted a rise in these lawsuits. He says he will be watching out for them over the next two years for three reasons: First, owners rushed to get projects registered prior to a 2009 LEED update that required them to report energy data to USGBC. Second, more owners are now expecting LEED to help generate revenue. Third, projects mired in financial troubles may decide not to pursue certification even though it was promised.

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