May 17, 2018

How water sustainability makes property more valuable

Sloan is dedicated to water sustainability for two main reasons. The first reason is that fresh water is our planet’s most important natural resource. Earth has only so much drinkable water, and every living being depends on it, so water conservation is essential.

The second reason is that a sustainable commercial building is, quite simply, a strong business proposition.

Designing (or retrofitting) a building with water savings in mind saves money in the long run, of course, because owners and tenants will use less water. (They will also use less energy, because water and energy consumption are closely linked.) That’s a mathematical advantage you can demonstrate with a basic spreadsheet and a knowledge of local utility costs.

Another, perhaps larger advantage to sustainable commercial building is that green practices make properties more marketable and more valuable. Let’s take a closer look at that idea.

Sustainability has marketing appeal                              

The next time you’re out shopping, notice how many items tout their “green” credibility. Organic, locally grown foods. Ethically sourced clothing. Cruelty-free cosmetics. People like to buy products they believe make a positive impact on other people and the environment—and they will pay a premium for them.

Why should their preferences be any different when it comes to selecting office space, building an entertainment venue,[MSOffice1]  or commissioning healthcare or education facilities for their communities?

Of course, you would expect startup founders to prefer green facilities—San Francisco was the first city in the nation to incorporate green labels into official land records. But “green appeal” isn’t confined to the young and hip. A recent Wall Street Journal article claims, “More 55-plus developments are promoting their energy efficiency—and they say retirees are willing to pay the price.”

Research proves the added value of sustainability

Several studies in the last few years have established strong links between sustainability measures and factors that positively impact property values. Here’s a sampling of the findings:

  • Sustainability lowers default risk. Researchers at San Diego State and the University of Arizona examined more than 22,000 loans—many including LEED and Energy Star properties—and concluded, “Several sustainability features are strongly associated with lower default risk after controlling for standard risk factors.”
     
  • Sustainable buildings depreciate less quickly. A 2014 study from Deloitte stated, “There is increasingly clear evidence that buildings (re)designed with green features will depreciate less quickly than others and will be more likely to meet the growing demand of a more discerning occupier and investor market, as various studies suggest that green buildings have higher tenant attraction, rents,[SJ2]  and sale prices.”
     
  • Green infrastructure creates real estate value. A 2017 report from the Urban Land Institute states,Water management mechanisms using green infrastructure can create value for real estate projects by improving operational efficiency as well as serving as an attractive amenity.”

The ULI report goes on to say, “Real estate developers, designers, and building operators interviewed for this report emphasized the multiple benefits that green infrastructure and stormwater management mechanisms have brought to their properties, often leading to increased real estate value.”

Building owners and architects don’t have to read dense academic studies, however, to understand the basic idea: Sustainability is a selling point.

Specifying water-saving flushometers, toilets, faucets and urinals for new construction or renovation isn’t just good for the planet. It’s good for the bottom line.

Want to know more about Sloan innovations that save building owners billions of gallons of water every year? Talk to Sloan!

 

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