Do sustainable real estate practices cost more? Generalizing about the cost of incorporating sustainable real estate practices can lead to misconceptions about the financial toll of "greening" real estate. The key is understanding what exactly is being compared.

• Author: Tobin, Michael C.
• Position: REAL ESTATE

Whether renovating current space or building something new, there is a mythology about the cost of sustainable real estate practices that should be put to rest. The myth is that sustainable real estate practices are more expensive than traditional approaches to design and construction. Since this is causing more harm than good in the market, it's time to shed light on the truth.

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So, to the first fallacy about sustainable real estate practices--are they more expensive?

A common answer is that "a sustainable-built project costs an average of 10 percent more."

But that answer can be incorrect. Sustainable real estate practices are not necessarily more expensive. In fact, there is no basis to state that constructing or renovating space using sustainable building practices costs an average of 10 percent more.

To prove this premise and debunk the 10-percent cost premium myth, one must ask what is the basis of comparison--i.e. sustainable design and construction practices are more expensive than what?

There are three typical responses when asked to explain the cost basis of the 10-percent premium myth. These are outlined below, followed by the subsequent myth-busting reasoning.

Cost Basis Myth 1

Sustainable space is more expensive than typical space of similar size and function.

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MYTH BUSTER: There is no common definition of a "typical" building or tenant space on which to base that comparison. There are also very few buildings that are "exactly" the same, given the many variables that go into developing a building--the date of construction, location of the building, ownership structure and many other factors affect the reasoning behind the design, construction, financing and pricing of building projects.

There are millions of buildings in the United States alone that have been constructed and operated over the course of centuries, and it is practically impossible to compare their original construction costs to what their costs would have been if sustainable practices had been used.

Yet, as difficult as it may be, studies have been conducted that have attempted to answer this question by neutralizing as many variables as possible. Multiple studies by firms that specialize in providing construction market intelligence attempt to properly define a "typical" set of buildings for comparison purposes.

A few of these studies have attempted to make an accurate and statistically relevant comparison for the cost...