The following is written by guest contributor Ted W. Rollins, a seasoned real estate entrepreneur with more than 30 years of experience in real estate investment banking, development, structured finance, start-up businesses and construction.
Investing in sustainable properties that conserve energy isn’t just a practice reserved for ‘philanthropic’ investing anymore.
The returns now achievable from building efficiency programs and alternative energy sources shouldn’t be ignored. The corporate case for sustainability is no longer about public relations; it’s about the growing profitability of renewables and green building across the entire international construction market.
Because of increasing demands from both consumers and the market, it’s now clear that those who refuse to invest in such assets stand to lose a lot of money. The five main reasons you should invest upfront in green building are as follows:
1) Rapid Return on Investment (RROI)
Compared to past idealistic desires to simply do the right thing, the business value that green projects can offer is now driving the market. Green building makes properties more valuable and because of both lowered maintenance and energy costs, ROI on green initiatives are generally expected to pay for themselves in just seven years.
In addition, day-over-day costs are reduced year-over-year. Green-building owners reported that, on average, their ROI improved by 19.2 percent for existing building green projects and 9.9 percent on average for new projects. It’s becoming increasingly evident the market is being motivated by the bottom line.
2) Expansion in the Market
As the UN Secretary General Ban Ki-Moon stated, “The once unthinkable has now become unstoppable.” The falling prices of renewable energies and the global clean energy investment are now a game-changer for global investors and corporations alike.
In addition, the green building sector is now outpacing overall construction growth in the U.S. and will continue to break records—contributing 1.1 million jobs by 2018. LEED (Leadership in Energy and Environmental Design)-certification is now being reported as a top sustainable goal for both public and private organizations.
3) Improved Performance
Companies can no longer afford to underinvest in energy-efficient programs because improving performance minimizes overhead, thus increasing the bottom line. For existing properties, whole-building audits can calculate energy measurements and then suggest improvements and upgrades to help systems run more efficiently.
For some companies, financing options, rebates and tax incentives are available. New ideas and innovative breakthroughs will continue to improve performance for companies who are willing to adapt.
4) Reduces Your Footprint
Buildings are responsible for an enormous amount of greenhouse gas emissions, global energy usage and resource consumption—even out-consuming the industrial and transportation sectors. Standard buildings account for 41 percent of total energy consumption in the U.S.
Green buildings however, are lowering utility bills and using natural resources efficiently, thus reducing impact on the environment and climate change. Such projects also use less water and minimize the waste of millions of materials each year.
5) Keeps You Competitive
Thriving, sustainable companies that work to have a positive impact on the environment are becoming more mainstream in 2016; think BMW, Coca-Cola, Intel, etc. Consumer behavior has shifted in recent years, as natural resources continue to dwindle and climate change becomes a major threat.
Sustainable efforts are actually impacting purchasing decisions, and from a consumer standpoint, a brand’s social image now differentiates competitors. Investing in these efforts now is important because in the next few years, company leaders that have society and people at their core purpose will be the most prosperous.
Join The WealthForge Network
The Network represents more than 175 organizations including RIAs and broker-dealers that are interested in pre-vetted deals representing a wide variety of industries including agriculture, energy, real estate, and more:
Disclaimer: WealthForge provides this information to our clients and other friends for educational purposes only. It should not be construed or relied upon as legal advice.