The cost... It's always about the cost

So, what's the biggest barrier to buildng green? The cost, you say?

But, is it the actual cost or the percieved cost?

Here's a good article from CoStar written by Andrew C. Burr that addresses this issue and how the commercial real estate industry sees it:

Rising Energy Concerns Buoy Green Building Industry

Ever-Increasing Energy Costs Boosting Demand for Sustainability in Corporate Real Estate, But is it Enough to Overcome Green Building Barriers?

There are a lot of reasons behind the green building industry's quick ascent into mainstream commercial real estate. At the center of the surge, global CRE giants like CB Richard Ellis, Transwestern and Jones Lang LaSalle are offering clients sustainability programs and pushing LEED and Energy Star certification. On the outskirts, retailers and tech firms like Wal-Mart, Google and IBM are retrofitting their real estate portfolios and pressing the issue with suppliers. Banks are starting to recognize the fiscal soundness of sustainable buildings, lawmakers are becoming braver on regulation, and global real estate-centric programs from former U.S. presidents (the Clinton Climate Initiative) haven't hurt, either.

But in perhaps the biggest boon for green building, the industry hasn't had to do a thing. Concern over spiraling energy prices in the U.S. have forced tenants and landlords, particularly among institutional owners and big corporate occupiers, to reevaluate their energy options, creating a market-based demand for solutions. "Energy is a pressure point that's causing people to focus on sustainability," says Eric Bowles, vice president and director of research for corporate real estate trade group CoreNet Global. "When companies look at what's busting their budget this year, it's rising energy costs. Essentially, the energy issue is creating the attention."

CoreNet, in conjunction with Jones Lang LaSalle (JLL), recently released the findings of a global survey conducted over the past year on sustainability perceptions and trends in corporate real estate. The survey found that energy concerns dominated corporate thinking on critical sustainability issues. "Energy, at least currently, is the most important factor to corporate occupiers for sustainability. That's a direct reflection on the extremely high energy costs and the fact that it's a little more of a directly approachable and actionable item," said Ben Breslau, vice president and director of JLL's occupier research. The market has flocked to find ways to cut energy consumption, in part because the business case is clear -- or what Breslau means when he says "approachable." Less energy means fewer dollars.

A survey earlier this year of North American business leaders by Johnson Controls, an automotive and real estate consulting firm, found a compelling business case for slashing energy consumption. More than half of respondents cited cost savings as the primary motivator behind their company's investments in energy-efficient technology, whereas just 13 percent cited environmental concern as the prime reason.

And energy utilization solutions -- some as simple as switching off workplace computers and lights at night -- can also be easier to implement than other sustainable items, such as installing a green-rooftop or rainwater harvesting system.

But while the industry didn't create demand for energy efficiency, it isn't sitting back. Big firms like JLL, CB Richard Ellis, Transwestern and USAA Real Estate have established energy management programs across their managed portfolios, pitching big energy savings to clients.

Other industries are making inroads into commercial real estate energy solutions too, from intriguing new solar power platforms (you don't actually have to buy the panels) to HVAC cooling systems that rely on melted ice rather than electricity.

The correlation between rising energy prices and green building hasn't been lost on The U.S. Green Building Council (USGBC) either. The organization -- which advertises an energy reduction of 20 to 50 percent in buildings certified under its LEED rating program -- pitched environmental consciousness in its early days before becoming much more effective by advertising the business case for sustainability. This summer, it added two new mandatory energy efficiency requirements to LEED.

Other drivers of sustainability in corporate real estate, according to the CoreNet/JLL survey, include energy and emissions regulations -- in other words, the threat of regulation -- and corporate social responsibility. Both trail energy concerns in the survey but are significant factors, according to Bowles and Breslau. "In North America, there is at the senior level an increasing expectation that there will ultimately be some sort of regulation around carbon and around sustainability," Bowles says, citing the fact that many global corporations are already partially regulated in other parts of the world. "Look at New York. Look at San Francisco. Look at Washington, D.C. You have a proliferation of municipalities, and in some cases states, that are adding their own mix to the regulation. You've got to be a bit ahead of that curve," he said.

According to Breslau, corporations are facing immense pressure to spend capital on sustainability initiatives, including greening their real estate portfolios. "[The pressure] is coming from shareholders, employees, clients and customers. In terms of the willingness to pay more, there's a recognition that this is going to be a positive thing and a necessary thing in the long run," he said. "Obviously, real estate plays a big part in that."

Overall, the survey found that most respondents (79 percent) considered sustainability to be a critical near-term business issue in corporate real estate, and that roughly the same number are willing to pay a premium for sustainability. That's the good news. But the survey also concluded that a number of misperceptions and barriers exist, hampering green building from rooting itself more firmly in corporate real estate culture.

Only 17 percent of respondents said that "good" or "widely available" sustainable real estate solutions exist where their companies need to relocate their offices, with most other respondents describing availability as patchy, limited or minimal. The survey also pegged the commercial real estate industry as decisively reactive rather than proactive in terms of sustainability, with just 8 percent of respondents describing landlords as proactive, and a mere 3 percent calling brokers proactive.

But the biggest concern remains sustainability cost misperceptions, a problem that doesn't seem to be going away. "It's not that the information isn't there, it's that a lot of the stakeholders are not being proactive in talking about [cost issues]," says Bowles. "In many cases, they're simply accepting the premise that it's more expensive." Increased construction costs under the LEED system are generally held to be between 1 and 5 percent, with some levels of certification achievable at no cost premium.

The survey, however, found that more than half of respondents expected green construction to add between 5 and 10 percent to construction costs, a figure that has been roundly disputed by organizations including USGBC, construction consulting firm Davis Langdon, institutional investor Prudential Real Estate Investors and publisher McGraw-Hill.

A recent white paper by CB Richard Ellis also found that cost misperceptions continue to present the most serious barrier to green building acceptance. "The perceived increased cost of green construction spurs fears for developers who are already concerned about the cost of short-term debt and conventional building materials," the report said.

"It's a big obstacle," USGBC Director of Communications Taryn Holowka says of the cost misperception, adding that USGBC works to educate the industry on the cost of LEED through local advocacy and outreach at its 72 chapters, and through hundreds of workshops it hosts in-person and online.

This article can be found here.

So, it's pretty clear that the cost of green building isn't the issue. The percieved cost of going green is the issue.

Education is, and will continue to be, the solution. Keep talking and spreading the word!