Real Estate is Going Green
Unheeding to the conflict surrounding debates currently about climate change, the market has made up its mind. The money will follow green energy. Commercial real estate, just like every other sector, has not and will not be exempt from these pressures. With breakthroughs in solar energy, wind energy, and green building designs, investors and managers in the commercial real estate business are primed to be able to take advantage of this market trend.
A great complement to the already lucrative financial incentives, many investors and owners are beginning to go green because of the massive amount of room that they have for improvement environmentally. Commercial real estate properties account for 30% of all greenhouse emissions in the world, and are projected to reach 50% if allowed to continue at its current levels. By switching to green practices, building owners and investors will now not only see profits coming in from their green properties, but they’ll also be able to invest with a cleaner conscious, knowing that they’re able to make money while helping the planet.
A Booming Industry
Solar jobs have received a lot of recent coverage in the news. Solar energy employs nearly 400,000 people, and is continuing to grow, rapidly adding jobs as the industry develops. Although solar energy receives the attention, it is not the only green aspect of construction that has been growing. Green construction spent $55 billion in 2015. They’re projected to spend $100.4 billion in 2018, almost doubling the numbers just three years prior. This includes areas such as eco-friendly insulation, passive design (architecture that utilizes the natural environment around it to heat and cool the house rather than relying exclusively on heating and air conditioning), and xeriscaping (landscaping so that the plants will require little to no irrigation). This boom shows no signs of slowing as millennials begin to enter their peak home-buying years.
The Demand for the Supply
There is a drastic, visible difference in the prices between green homes and normal homes. In California, a LEED certified home will go for on average $17,000 more than a normal home of about the same value. In Texas it was even more jarring, where a LEED certified house was valued at an average of $25,000 more than non-LEED certified homes within the state. A recent survey by the National Association of Realtors found that more than half of realtors surveyed said that buyers were interested in sustainability when it came to their properties. This demand only continues to grow as millennials age. With their documented tendencies to be willing to spend more for sustainable products and practices, millennials will continue to help transform the real estate market with their green energy preferences.