ROI of High Performance Design
Buildings designed with high-performance elements reduce negative impacts to the environment and improve the health and well-being of occupants. As awareness of the benefits of high-performance design grows, demand has also grown in this sector. For example, since 2012, nonresidential net-zero buildings have increased by more than 700% (New Buildings Institute). Not only do high-performance buildings have environmental and health benefits, growing evidence demonstrates economic benefits as well.
Historically, the economics of high performance design have often been seen as a barrier to implementation. A report by Darko on the barriers of green building adoption indicates that cost is the second most reported barrier in the adoption of green buildings second to lack of information and awareness (Darko 2016). While there is a perception that high performance buildings are not cost effective, many studies have found that high performance buildings actually have many economic benefits such as an increased market value, lower operating and whole lifecycle costs, as well as indirect financial savings through improved health, lower absenteeism, higher productivity, and increased attraction and retention of employees (WGBC 2013).
How to use these talking points
Each of us needs to seek out opportunities to engage with multiple audiences, and these talking points are intended for use in your conversations with clients, potential clients, civic leaders, vendors, contractors and other architects. This helps demonstrate that architects are trusted partners in strengthening society, designing solutions, and transforming communities.
Steps for engaging with the talking points
- Identify your audience: client, community stakeholder, civic leader, vendor, contractor, etc.
- Choose one of several “Talking Points” to view the research conducted to support your argument
- Investigate the cited reports for more information
- Use this talking point in your communications to enhance your argument and strengthen your message
ROI: Increasing asset values
Owners and developers are interested in the financial upsides to high-performance design. One key measure is “asset value.” Asset value is commonly perceived as market value, meaning what a property would sell for based on the local real estate market and specific features of a property (WGBC 2013). Both green labeling and operational cost reductions boost a property’s marketability and asset value.
ROI: Reducing operational costs
Operational expenses are the out-of-pocket costs for maintaining and running a space, including cleaning, utilities, fixed costs, parking, roads and grounds, repair and maintenance, and real estate taxes. These costs add up fast. Operational costs typically account for 6% to 15% of a company’s total business expenses, creating a huge incentive for owners, tenants, and society to drive down costs via high-performance design and other strategies (Attema 2018).
ROI: Reducing up-front costs
When considering whether to implement sustainable building practices, building owners and developers are often concerned that the initial first costs will be too high and will not outweigh other cost benefits. Decades of research and case studies provide compelling counterarguments, demonstrating that integrated design, smart tradeoffs, and various grants and incentives can reduce initial first costs.
ROI: Attracting and retaining talent
Building design choices can have major effects on health (Frumkin 2002). The World Health Organization constitution from 1946 defined health as “a state of complete physical, mental, and social well-being and not merely the absence of disease or infirmity.” Losing a good employee can cost a business between $50,000 to $150,000. With turnover typically averaging 10%–20% per year, even a 5% reduction could justify the cost of green building features (Yudelson 2010). Green labels and high-performance design features help attract and retain staff. Green labels signal a company’s values, while high-performance design delivers compelling, safe places to show up for work each day.
ROI: Healthier, more productive occupants
At the heart of our built environment—whether homes, offices, schools, or other building types—are the occupants. According to the U.S. Environmental Protection Agency (EPA), Americans spend 87% of their time inside buildings, making the built environment they inhabit critical. Businesses, individuals, and society benefit from better working environments. Key health benefits include improved air quality, thermal comfort, and access to daylight. A study found that high-performance design elements that address these key benefits produced a total net value of $55.47/sf for increased productivity and $9.03/sf for improved health and wellness, through reduced absenteeism and missed work time, [GB1] [DM2] over 10 years (Attema 2018).