March 27, 2007

Challenges of evaluating sustainable buildings

JEAN SORENSEN

correspondent

VANCOUVER

Evaluators are just beginning to learn how to put a value on sustainability — in economic as well as social terms — when looking at pricing green structures, said Chris Corps, principal of Asset Strategics Ltd.

The triple bottom line — financial, social and environmental — in green structures is challenging appraisers to consider new views when evaluating the worth or cost of a building.

Corps is a past chair of the Royal Institute of Chartered Surveyors (RICS), a high-profile international organization providing information in land, property, construction and environmental issues.

When determining the value of a structure, the “most important features” are treated like relics, he told delegates attending a summit on valuation.

“We have to stop doing this,” he said. “We are behind the eight-ball, and we either change or get out of the way” for those who want to effect the change that’s needed to provide structures for the world’s growing population.

The conventional way of valuating is the direct return on investment, yet there may be indirect returns to buyers, the community and government that don’t even enter into the equation, he added.

Corps gave an example of turning a ditch around a farm area into a healthy free flowing stream. There is no apparent direct impact to the farmland’s value by doing this. But the farmer was able to reduce his pesticide costs, and the water had some irrigation potential.

He described another examine of a sustainable building with a 20 per cent faster lease-up than a conventional structure. Tenants stayed longer and reported increased productivity.

When valuing a structure, those intangibles are often difficult to qualify in downstream dollar terms. But, they do make such buildings more valuable.

The market, he said, is recognizing the value of green buildings as they come forward with lower operating costs.

He pointed to the Oregon Health & Science University bioscience centre which opened last year.

It is the largest platinum rated LEED structure in the U.S. The 400,000 square foot facility features natural ventilation, and is the first building to use chilled water in pipes running through beams which cools the air without the use of fans or blowers.

While medical buildings are not easy to green up, this 16-storey centre produces a third of its own electricity and treats its own water, and also uses solar heat for water.

The reduced footprint (or consumption of resources and discharge of elements that harm the environment) has a larger social value.

The challenge facing evaluators is how to put a monetary value on those issues when appraising the value of a building or determining whether the cost of a new building is profitable.

One of the difficulties in determining values, he said, was that there is just beginning to be a good historical base of data on existing green buildings.

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