Monday, April 19, 2010

Green Building Grows from Infant to Toddler

When green home building standards and practices were first introduced to the residential development industry, there seemed to be that nagging question of, “Is this just another short-lived trend?” Undoubtedly plagued by bad memories of well-meaning technologies of the early 1990s that didn’t perform as planned and disrupted production schedules, it’s easy to see why many of the nation’s builders wanted to see just how serious their buyers were about green building before re-engineering their designs – and their companies – to compete.

Now that green building is leaving its infancy and becoming a full-fledged (and often cranky) toddler, although its support among both the public and the industry remains high, some solid pros and cons are beginning to emerge. According to the 4th Annual Green Building Survey by the law firm Allen Matkins, Construction Technologies Group (CTG) and Green Building Insider, support among over 1,600 design and construction professionals for green building remains extremely high at 92%. Not surprisingly, the growth of the global green building sector is on a tear, totaling over $500 billion in 2009 and expected to continue growing at a compound annual growth rate of nearly 110% between now and 2015.

And yet as these same professionals now have a few projects completed, they’ve come to realize that accompanying the greater complexity of green building is the perception of more construction risk. To counteract that risk, some important strategies have emerged, including retaining specialized consultants (including those certified by groups such as the U.S. Green Building Counsel’s Leadership in Energy and Environmental Design, or LEED), measuring and re-commissioning existing systems to maximize energy savings, regular testing and, to tie it all together, shifting the risks through insurance contracts.

Interestingly, support for LEED continues to fall, dropping by nearly 5% to just 62% in 2009 as builders push back against the costs for certification while other programs such as the Green Point Rated program from Built it Green manage to better target residential projects -- especially those in the multi-family arena. But while the specific certification programs evolve, the reasons for building green remain the same, with nearly 98% of respondents seeking to save on energy given that such costs are expected to continue rising. In addition, 88% of respondents also report that they’re more likely to include energy savings and sustainable building elements in future projects – an impressive 14-point bump from the previous year.

One new wrinkle from the green building evolution is the green lease, in which tenants are also held responsible to ensure savings from the original investment by the builder. Such leases could include everything from environmentally sensitive paints and cleaning supplies to waste recycling and ensuring that all repairs and maintenance are completed to adhere to the original plans. Finally, although just over 40% of respondents view the issue of carbon offsets as an important strategy, until a national program is instituted the purchase of offsets will likely remain stuck at about 7%.

From the point of view of McGraw-Hills Construction’s Smart Market Reports from 2006 and 2008, green homes have become a crucial market differentiator and continued to grow in number even as the overall new home market declined. By 2013, the reports predicted the residential green building market to range from $40 to $70 billion as interest among potential homebuyers now spans all income levels.

For younger generations such as the Echo Boomers, building green is now an expectation strongly related to both better health and saving on energy and other operating costs. And even when remodeling existing homes, homeowners are increasingly spending more on green features as opposed to those which merely increase comfort or improve aesthetics.

So what is the greatest obstacle preventing green building making that leap from toddler to adolescent? In many markets, there still aren’t enough builders doing it.

Friday, April 16, 2010

April 2010 column for Builder & Developer magazine now online

My column for the April 2010 issue of Builder & Developer magazine is now online. In this issue, entitled "New Home Quality and Customer Service Improving in Recession," I wanted to review how builders have leveraged the downturn in volume to improve building quality, led by homebuilding giant Pulte Homes. You can read it by clicking here. An excerpt:

If there is one silver lining to be found from The Great Recession, it’s been the significant increase in both product quality and customer service from the nation’s largest home builders, which should position builders to grab market share from the existing home market in the years ahead. In fact, according to the 2009 New-Home Builder Customer Satisfaction Study by J.D. Power & Associates, overall customer satisfaction among 26,231 buyers of newly built homes averaged 811 on a 1,000-point scale, up by 32 points in 2008 (the survey can be found online at www.jdpower.com/Homes.)...