In an interesting turn of events, the “greening” of America has slowed down in at least one sector; commercial real estate. Why does this matter? Because commercial properties account for a significant portion of our carbon footprint and the continued push toward building designs that minimize that footprint are vital to achieving a respectable decrease in greenhouse gas emissions.
Based on a recent survey by the Urban Land Institute, the importance of climate change and alternative energy sources has diminished, at least temporarily, as a factor in real estate investment decisions. Other findings include:
- Lenders tend to view energy efficiency as an important bottom-line issue, focusing on reducing energy costs not emissions
- Most respondents are adopting a “wait-and-see” attitude with regard to business strategies involving climate change
- Environmental issues play a factor only when they produce an immediate return or mitigate investment risks
The fact that the economic stimulus funds aimed at reducing the carbon footprint of both new and existing buildings seems to have failed to entice many investors to “get with the program” only further demonstrates an increased scrutiny of bottom line costs as a result of the recession. Many are waiting for legislative regulation to shake out at the federal, state and local levels first. With so much still unknown about the impact of government on policies related to climate change, the approach by the lending community is one of extreme caution (particularly after a period of loose lending followed by a government clamp down).
Industry expert Patrick Phillip, CEO of ULI, predicts that green investing will gain relevance and importance as the market rallies from the downturn. As more information is collected on the performance of green projects delivered prior to the commercial crash, it will be easier to determine the impact on value for lenders and investors.
Source: CoStar.com
