24 Nov 2023
Sustainable construction offers compelling economic benefits in both the short and long term.
Sustainable architecture focuses on environmentally conscious design and construction practices that minimize the negative impact buildings have on the planet. While adopting sustainable practices has clear environmental incentives, many wonder if it also makes financial sense. In fact, sustainable construction offers compelling economic benefits in both the short and long term.
Reduced Operating Costs
Sustainable buildings incorporate efficient systems and materials that consume fewer resources like energy and water. For example:
Energy-efficient HVAC, appliances, lighting, windows, and insulation lower electricity and gas bills by 10-30%.
Water efficient plumbing fixtures and native, drought-tolerant landscaping reduce water usage by 30-50%.
Automated controls and sensors eliminate waste by managing light, temperature, and ventilation based on occupancy.
By spending less on utilities over time, owners or tenants can achieve significant cost savings. For commercial buildings, reduced operating expenses also directly increase net operating income.
Increased Property Values
Sustainable buildings typically command higher rents and sale prices over traditional buildings. In fact, an analysis by the Department of Energy found:
Sustainable residential properties had a 9% price premium.
Energy certified commercial buildings showed rental rates over 7% higher per square foot.
These premiums highlight the desirability and long-term value inherent in green buildings. Features like energy efficiency and indoor air quality translate into higher occupancy rates and rents compared to outdated, inefficient buildings.
Improved Financing Terms
Lenders may offer better financing rates and terms for projects that meet sustainability benchmarks. Reasons include:
Lower default risk - energy cost savings increase cash flow available to service debt.
Future-proofing - sustainable buildings have lower exposure to rising utility expenses, climate change policies, etc.
Corporate mandates - many lenders have internal sustainability requirements.
Preferential financing leads to substantial interest savings over the entire loan term or allows buyers to qualify for a larger loan amount.
The Bottom Line
While sustainable construction requires more upfront coordination and design, it pays dividends through radically reduced operating costs and increased building valuation. Additionally, the above financial incentives bring green projects within reach for many owners. Over a building's lifetime, sustainability proves to be a wise investment that also protects the environment.
Implementing Cost Effective Sustainable Design
Sustainable design adds complexity to construction projects, leading many owners to assume it must cost far more. In reality, a holistic design process can deliver green buildings for little to no extra cost. The key is using integrated design and careful evaluation of options for maximum return on investment.
Conventional design involves individual experts separately optimizing isolated systems. By contrast, integrated design takes a whole building approach where architects, engineers, contractors, and other team members closely collaborate from day one.
This multidisciplinary perspective uncovers synergies between systems that optimize performance for lower capital costs. For example, highly efficient envelope construction may justify downsizing mechanical systems.
Integrated design also considers interactions between emissions, energy, and water use that influence lifecycle costs and environmental impacts. Making informed tradeoffs between these areas leads to a more balanced, cost effective sustainability plan.
Focusing on Key Strategies
With a holistic view of buildings, designers can concentrate resources on design strategies with the greatest environmental and financial impacts:
Passive design - Building orientation, window placement, external shading, cross ventilation, and other no-cost techniques that minimize heating/cooling loads.
High performance envelopes - Insulation, air sealing, and thermally efficient windows pay for themselves quickly through utility savings.
Energy efficient equipment - HVAC, appliances, lighting, and other systems consume the bulk of energy in buildings. Wise equipment selection balances efficiency and cost.
Water conservation - Low flow plumbing fixtures and native landscaping are inexpensive ways to dramatically reduce potable water usage.
Renewable energy - On-site solar panels, wind turbines, or other generation lowers grid energy consumption.
Smart controls - Sensors and building automation optimize equipment operation in response to conditions and occupancy.
Prioritizing sustainable strategies with clear economic benefits ensures green design is affordable and aligned with business objectives.
Life Cycle Cost Analysis
Comparing project alternatives requires evaluating costs over the entire building lifespan along with expected operating cost savings from energy efficiency and other sustainable design features.
Life cycle cost analysis sums:
Initial construction/implementation costs
Annual operating costs like energy and water
Maintenance and periodic replacement costs
Residual value at the end of the analysis period
The option with the lowest total life cycle cost is the best investment, even if the upfront cost is higher. Sustainable design alternatives often prove financially superior despite capital cost premiums.
The Bottom Line
Integrated design, focus on key impact areas, and life cycle analysis allow sustainable projects to achieve environmental goals cost effectively. The most green aspects of buildings also directly benefit the bottom line through energy savings and increased building valuation.
While sustainable materials and systems were once expensive niche offerings, competition and rising demand make many solutions mainstream and affordable today. By taking a data driven approach, owners can confidently invest in both sustainability and their fiscal future.
Sustainable Architecture's Role in a Circular Economy
The take, make, and dispose linear economy depends on extracting virgin resources, manufacturing products, and eventually throwing them away. This wasteful model has clear downsides for both businesses and the environment. Sustainable architecture shows buildings can play a pivotal role in transitioning to a regenerative circular economy.
What is a Circular Economy?
A circular economy aims to gradually decouple growth from finite resource consumption by using products and materials at their highest value for as long as possible. Core principles include:
Eliminating waste - Dramatically improve resource efficiency and recapture value from by-products and end-of-life materials.
Circulating products and materials - Extend useful life through durable design, maintenance, repair, reuse, and refurbishment.
Regenerating natural systems - Source materials responsibly and actively enrich ecosystems.
Ultimately, a circular economy shifts society towards renewable flows of energy and materials. Economic activity builds capital, both financial and natural.
Buildings in a Linear Economy
Buildings historically operate in a linear fashion that squanders resources:
Resource intensive materials like steel, concrete, bricks, and glass make up most project volume. Extraction harms ecosystems.
Inefficient design wastes energy, water, and materials throughout operation.
Useful life cut short - Buildings are often demolished prematurely due to flaws in original construction or inability to adapt.
Waste - Over 160 million tons of building construction and demolition debris enters US landfills yearly. Valuable metals, masonry, glass, plastic, and wood are discarded rather than repurposed.
While necessary, buildings made this way exacerbate climate change and pollution challenges.
Sustainable design and construction provide a framework for converting buildings from liabilities to assets within a circular economy:
Flexible design anticipates changing usage, allowing longer useful lifetimes. Buildings adapt rather than get replaced.
Design for deconstruction at end of life, facilitating reuse of components.
Environmental product declarations provide transparency into material sources and chemical makeup to understand circularity opportunities.
Renewable materials like mass timber and bamboo displace emissions-intensive conventional materials.
Waste prevention - Precise design and lean construction techniques eliminate over-purchasing materials.
Responsible sourcing considers ecosystems and communities when procuring goods.
Ultimately buildings can nourish their surroundings across lifecycles instead of merely extracting value.
The Bottom Line
Sustainable architecture aligns perfectly with circular economic principles by holistically addressing the way buildings use resources and energy while interacting with natural systems. As more companies recognize their stakeholders demand participations in a circular economy, sustainable design helps the built environment play an integral role.