A new study indicates contractors consider the green building marketplace an accelerating business opportunity, rather than a niche market. Results of the study by McGraw-Hill Construction, in partnership with United Technologies, were presented at Greenbuild International in San Francisco November 13, 2012.
Overwhelmingly, firms report that their top reasons to do green work are client demand (35 percent) and market demand (33 percent)—two key business drivers of strategic planning. The next top reasons were also oriented toward the corporate bottom line—lower operating costs (30 percent) and branding advantage (30 percent).
In contrast, the top reason in 2008 motivating the green building market was doing the right thing (42 percent) and market transformation (35 percent), followed by client and market demand.
The study also revealed that approximately 48 percent of the work by U.S. respondents was green—with that share expected to increase to 58 percent by 2015. These results are consistent with McGraw-Hill Construction’s 2013 Dodge Green Construction Outlook that sized the green building share of new construction starts in the U.S. to be 44 percent by value, and up to 55 percent by 2015.
"This research confirms that green building advances environmental stewardship while providing value to the market," said Geraud Darnis, president and CEO, United Technologies Climate, Controls & Security. "It also confirms that we now see more pull than push for green buildings."
In the next three years, the sectors with the largest opportunity for green building around the world include new construction and renovation projects. Sixty three percent of firms have green work planned in new commercial projects and 45 percent in new institutional projects by 2015, and 50 percent have plans for green renovation work.
In the United Kingdom and Singapore, green renovation projects were planned by the greatest number of firms at 65 and 69 percent respectively. In Brazil and UAE, new projects pose the largest opportunity. In Brazil, 83 percent of firms are planning to work on new green commercial projects over the next three years, and in the UAE, 73 percent have new green institutional projects planned.
"It is notable that over the next three years, firms working in countries around the world have green work planned across all building types, incorporating both new construction and renovation," said Harvey M. Bernstein, vice president at McGraw-Hill Construction. "The existing building market is a ripe opportunity for green building, and we are seeing that play out in the market. It is clear that green is becoming an important part of the future landscape of the global construction marketplace, and firms will need to be prepared for that transition."
Green buildings are also expected to garner business benefits for building owners. For new green building projects, firms report median operating cost savings of 8 percent over one year and 15 percent over five years, as well as increased building values of 7 percent (according to design and construction firms) and higher asset valuation of 5 percent (according to building owners).
For green retrofits, operating savings are higher than for new buildings with operating costs reported to decrease by 9 percent over one year and 13 percent over five years. Asset valuation is also expected to increase, though at more moderate levels than for new green buildings—design and construction professionals expect 5 percent increased building value from green retrofits, and owners expect higher asset valuation of 4 percent. For green projects, payback on efforts is expected within 8 years for new projects and 7 years for retrofit/renovation work.