When sustainable buildings first came on the scene, many developers, tenants and managers saw LEED as more of a marketing tool than something with a real business case. A LEED certified building, they reasoned, would attract tenants in an otherwise crowded and competitive market. And it would support higher rents – partly for prestige reasons and partly because the operating costs for a LEED building are much lower than for a conventional building. Indeed, the intangible benefits materialized as expected: In a recent study by Deloitte, 69 percent of respondents who launched green building projects said that their goodwill and brand equity “increased significantly” as a result. But these factors are hard to quantify, and no one will lend you money on this basis.
Once LEED buildings starting going up in large numbers, however, it became possible to measure the actual dollar payback. The business case rapidly got more tangible and more positive. The first pleasant surprise is that the spread between erecting a conventional building and erecting a green building narrowed. A 2007 survey showed that about half of building planners thought the so-called “green premium” would be at least 5 percent. More recent studies show that a well-planned new green building can be done with a premium of 1-3 percent or less in many cases, while retrofits run higher, typically in the 1-10 percent range.