Green building costs and savings | U.S. Green Building Council
Please upgrade your browser. This site requires a newer version to work correctly. Read more

Green building costs and savings

Published on Written by Posted in Industry

At first glance, the additional work and alternative materials needed to build green may seem like a burdensome cost, but closer attention reveals this perception to be misleading. If sustainability is viewed as an expensive add-on to a building, we would mistake efforts to reduce energy costs or improve indoor environmental quality as comparable to specifying a better grade of countertop or a more impressive front door. Under this approach, any improvement beyond a minimally code-compliant baseline looks like an added cost. 

If, however, we consider energy improvements part of an overall process, we often find that the added costs are balanced by long-term savings. The initial expenditures continue to pay back over time, like a good investment. The best returns on these investments are realized when green building is integrated into the process at the earliest stages rather than as a last-minute effort. For instance, specification of more costly, high-performance windows may allow for the use of a smaller, lower-cost heating, ventilation, and air-conditioning (HVAC) system. More fundamentally, if we view sustainable design as part of the necessary functional requirements for building an energy-efficient structure and providing a safe, healthful environment, we can compare the cost of the green building with that of other buildings in the same class, rather than against an artificially low baseline. 

A landmark study by the firm Davis Langdon found no significant difference between the average cost of a LEED-certified building and other new construction in the same category: there are expensive green buildings, and there are expensive conventional buildings. Certification as a green building was not a significant indicator of construction cost.

Interestingly, the public dramatically overestimates the marginal cost of green building. A 2007 public opinion survey conducted by the World Business Council for Sustainable Development found that respondents believed, on average, that green features added 17% to the cost of a building, whereas a study of 146 green buildings found an actual average marginal cost of less than 2%.

Green building is, however, a significant predictor of tangible improvements in building performance, and those improvements have considerable value. Studies have shown that certified green buildings command significantly higher rents. A University of California–Berkeley study analyzed 694 certified green buildings and compared them with 7,489 other office buildings, each located within a quarter-mile of a green building in the sample. The researchers found that, on average, certified green office buildings rented for 2% more than comparable nearby buildings. After adjusting for occupancy levels, they identified a 6% premium for certified buildings. The researchers calculated that at prevailing capitalization rates, this adds more than $5 million to the market value of each property.

Download our guide, An Introduction to LEED and Green Building, to learn more

  • 10
    Nora Knox made 10 contributions in the last 6 months

Nora Knox

Digital Marketing Manager U.S. Green Building Council
USGBC Articles can be accessed in the USGBC app for iOS or Android on your iPhone, iPad or Android device.
iOS App on App StoreAndroid app on Google Play
  • Share on Twitter
  • Share on Facebook
  • Share on LinkedIn