The demand for green buildings and green communities is growing worldwide. According to Roger Platt, president of the U.S. Green Building Council (USGBC), real estate industry experts confirm that LEED-certified buildings cost less to operate, have higher lease-up rates and retain higher property values.
Can real estate investors and lenders afford not to have a green property? For one thing, there is a growing investor preference for certified building projects. Cities around the world are the marketplace for many international investors attempting to set a benchmark for their portfolios of certified green buildings. Investors are increasingly attracted to the high performance and green certifications of their buildings, which have inviting short-term benefits, including the ability to lease quickly when on the market. These investors invariably want a third-party partner to certify their construction.
Lenders also value green. Most private sector money used to construct green buildings comes from mortgage lenders. While equity investors are looking to enhance their property’s long-term value, mortgage investors? biggest concern is the borrower’s ability to repay. Part of the risk taken by these lenders is ?certified green collateral.? In today’s market, certified green buildings are high quality collateral. A study from the University of Arizona states that buildings certified as Energy Star and LEED-certified have a significantly lower default rate than buildings without these certifications.
It has also been announced recently that multifamily properties certified by third-party standards (including LEED) will receive a discount on mortgage rates of 10 basis points. With multifamily properties, this is a generous amount. For example, on a $10 million loan, this would be a savings of almost $100, 000 with an interest rate of 4.9 percent rather than 5 percent.
Roger Platt is right: “It’s a good time to be in the green building industry.”
To start your journey in the booming green building industry, consider a LEED credential. LEED is a building certification program that provides third-party sustainability assessment valued by international building owners, investors, and lenders. A LEED credential, either a LEED Green Associate or a LEED AP, will position you for success as demand for green building and green building certifications grows among real estate professionals.
