Going green gaining ground in property valuation

Back in the day, which wasn't that long ago, everyone thought going green was the right thing to do even if we didn't quite know what to do or how to do it. Whether going green provided benefits in addition to good corporate citizenship was, at that point, unknown. With corporations adopting a sustainability policy, enter corporate real estate executives who manage the real estate activities of corporations whose core business is not real estate. Many productivity and cost studies later, the benefits of going green became clearer. Employees, a company's greatest and most expensive asset, preferred working in green spaces. They responded positively to daylighting, ergonomic office chairs, desks and tools, recycling, the use of sustainable materials, saving energy, water and other resources. The result was a workforce with increased productivity and lower turnover. Building owners took notice. Though requiring expenditures, which savvy property owners view not as short-term capital expenses but as long-term investments, they heeded a growing body of hard evidence that sustainability practices enhanced property value and provided a competitive marketing strategy to attract high quality tenants at higher rents and increased retention. Appraisers are taught to reflect the thought and actions of real estate investors in their analyses of what a property is worth. Thus, the challenge for the appraiser is both the why of and how to value green and sustainable buildings. While employee health and happiness can greatly enhance the bottom line of the company that employs them, it is irrelevant to the value of the building they work in. Going green has gained a lot of ground since its only initial benefit was good corporate citizenship. It's become a corporate operating philosophy, a means of increasing productivity, a marketing strategy for building owners, a gold mine for manufacturers of sustainable products and materials, energy brokers and sustainability consultants and, having come of age, is now being addressed by educational institutions as an important area for study. Appraisers, who have the job of valuing green/sustainable real estate, a relatively new and complex area of analysis, look to organizations including The Green Building Certification Institute, Green Building Research Institute and the Appraisal Institute for that education. The latter is meeting the growing need for green valuation education with its Valuation of Sustainable Buildings Professional Development Program which educates appraisers on the complexities of how to value high-performance residential and commercial buildings. As N.Y.C.'s only commercial property appraiser with a LEED-AP, making me somewhat of a pioneer in green valuation, I can say with both experience and authority that going green increases property value. I also predict that it is only a matter of time before lenders require that their due diligence underwriting consider financing risks associated with non-green assets and appraisers must be prepared to meet that challenge. Steven Schleider, MAI, LEED-AP, is the president of Metropolitan Valuation Services, New York, N.Y.