Commercial real estate executives are increasingly seeking greener office space -- and are less inclined to pay premiums for it, according to a recent survey by
CoreNet Global and
Jones Lang LaSalle.
"They are less willing to pay a premium for sustainable space because they understand that is doesn't cost the owner more to make that space efficient," said JLL Senior Vice President Michael Jordan.
Jordan and CoreNet Global Vice President Eric Bowles detailed the findings of the survey in a teleconference Monday, the same day the study was presented at a CoreNet summit in Orlando, Fla.
More than 400 commercial real estate executives were surveyed in September and October in the study for commercial real estate services giant JLL and CoreNet, the leading international trade group for corporate real estate and workplace executives. Results were compared with those obtained a year earlier in a similar study.
The survey this fall found that more commercial real estate executives than ever — some 69 percent compared with 47 percent in 2007 — have "embraced sustainability" and view it as a critical issue, said Bowles.
In addition, 40 percent identified sustainability and energy as major factors in their companies' location decisions, and another 36 percent said those attributes are "tie-breakers" when considering competitive sites.
While the importance placed on green office space has increased, so have expectations of obtaining high performance work environments without paying high prices.
Forty-two percent of the executives surveyed this year said they are willing to pay a premium — typically of 1 to 5 percent — to lease green work space, and 53 percent said they would pay a premium to retrofit property they own to increase efficiency. In the 2007, 77 percent of those surveyed said they were willing to pay a premium for environmentally friendly space.
Jordan and Bowles attributed the change to execs becoming more savvy about the costs and benefits of building sustainability, rather than a reflection of tough economic times.
More executives now approach location decisions with the expectation that "sustainable buildings should be cheaper to use and (therefore) cheaper to rent," Jordan said.
And for owners of commercial real estate, the internal dialogue about green office space goes something like this, "I don't have to pay extra. If I design it better up front, I can deliver it cheaper," Bowles said.
Decision-makers about locations also strongly consider employee satisfaction and productivity in evaluating worksites, the survey showed.
And looking ahead, Bowles and Jordan said they expect companies' workplace strategies to further drive the demands for green office space and "the flight to quality" in commercial real estate.
The survey showed that 40 percent of the firms queried are charting "sustainability data" — chiefly the costs and benefits associated with energy efficiency — and 30 percent are collecting data in some form related to green workspace.
The top three measurements involve energy, employee health and productivity, and employee satisfaction, Jordan said.
With such measurements becoming more prevalent, the commercial real estate industry should expect greater demands for eco-friendly building services as the desire for green work environments goes beyond the basics of bricks-and-mortar issues — and extends to support services and maintenance for office space, Bowles and Jordan said.
