LEED has grown to become the world’s most widely used green building rating system, with nearly 80,000 projects participating in LEED across 162 countries, including more than 32,500 certified commercial projects. As the best model for sustainable construction, LEED’s growth and impact around the world is undisputed—but the growth has not always been linear. As the real estate market evolves and changes, so does LEED. USGBC’s Business Intelligence team has taken a look at commercial trends over time that showcase LEED’s staying power and significance to the marketplace. What did we find?
LEED’s early growth (2000–2008)
When LEED was introduced in 2000, project registrations experienced slow and steady growth for the first several years as this new way of thinking of how buildings are built, operated and maintained took shape across the construction industry. LEED began as a way for New Construction (NC) projects to embrace energy efficiency and environmental best practices. After a few years, USGBC expanded the rating system and developed new ways for other building types to become LEED-certified, and the Operations and Maintenance, Commercial Interiors and Core and Shell commercial rating systems grew quickly.
- USGBC was registering roughly 60 projects a month on average over the period between 2000 and the end of 2006. At the end of 2006, a cumulative total of 5,000 projects had been registered with USGBC.
- At the start of 2007, New Construction represented 66 percent of new projects registered, while the other third were split between mostly between Commercial Interiors and Core and Shell (14 percent and 13 percent, respectively) with Operations and Maintenance representing 5 percent of the projects being registered at that time.
- The number of registrations between 2007 and 2008 increased for a total of 18,400 projects registered in LEED Online. By the end of 2008, USGBC was experiencing approximately 700 project registrations per month.
- Certifications grew as steadily as registrations. From 2000 through the end of 2006, USGBC had certified a total of 715 projects, equating to 11 projects a month during that time period. Over the next two years, the total number of certified projects doubled as an additional 1,500 projects were certified at a rate of 63 projects per month.
- By the start of 2009, USGBC had certified a total of 2,200 commercial projects under version 2 of the NC, CI, CS and OM rating systems.
- The green building movement as a whole was expanding dramatically during this same period of time. USGBC credentialed a total of 40,000 LEED professionals through the end of 2007. By the end of 2008, that number nearly doubled to 75,000.
- Perhaps the clearest signal of the rapid expansion of the movement was the impact on the Greenbuild International Conference and Expo. After hosting conferences that brought in 9,000 to 13,000 attendees in previous years, Greenbuild Chicago in 2007 gathered an additional 10,000 attendees, nearly a 100 percent increase over the number of attendees from the previous year.
LEED’s staying power (2009–2015)
The real estate market began to see signs of distress just as LEED was hitting its stride. A November 2007 commercial real estate report from CMD (at the time, REED Construction Data) noted that commercial real estate growth had hit its peak and that growth in this particular construction sector had started to wane. The report went so far as to reference the emerging crash in the residential market, but suggested the impact on commercial construction would be small. In retrospect, their forecast, along with many others, was rosy. According to the U.S. Census Bureau, there was an 8 percent drop in the value of construction put in place between 2008 and 2009 and a 14 percent drop between 2009 and 2010. In fact, this indicator did not rebound to see positive growth until 2012, when a 7 percent increase was then followed by a negligible increase of less than 1 percent the following year.
Congruently, construction starts from McGraw Hill showed a sharp decline in new construction square footage starting in 2007, with a steep decline between 2008 and 2009. Square footage for construction starts began to bottom out by the end of 2009. It was not until 2010 that the industry began to see the tide turn to increased activity.
Even in this market, LEED continued its steady growth:
- LEED project registrations continued to increase throughout 2008 and into 2009. During 2008, there were 2,100 projects registered on average each quarter. The 2,300 projects registered during the first quarter of 2009 were on trend with the previous year’s average.
- A spike occurred the following quarter. There was a nearly 300 percent increase in the number of project registrations in the month of June 2009, the last month projects could be registered under the second version of LEED.
- Once the LEED v2 deadline passed and projects began registering under the new v2009 rating system, numbers resumed to the pre-spike pace, with roughly 500 projects a month being registered through the remainder of the year.
- Project registrations mirrored the overall market trend of a decrease in construction activity between 2009 and 2010, with the exception of a 9 percent increase in registrations between 2010 and 2011. After that time, average monthly LEED project registrations resumed the registration rate that occurred during the two years preceding the recession.
In order to get a better view of gross square footage registered during the spike of 2009, especially when compared against McGraw Hill construction starts, we smoothed out the trend line with a 36-month moving average (see below). This data reveals a trend over time accounting for projects that registered earlier than normal. The registration trend decline slows and stabilizes starting in 2012. A project, in theory, can register at any point during its construction; as a result, registrations typically lag typical indicators of construction activity, and we can expect to see trends react one to two years after construction activity indicators move.
Market leadership: LEEDv4 (2016 and beyond)
With the launch of LEED v4, USGBC took a different approach that has resulted in smoother trends for growth from v2009 to v4—not a sudden spike, like we saw with the launch of v2009.
- There are currently 773 v4 projects registered, as of April 22, 2016, indicating a steady rate consistent with a gradual transition.
- Between 2014 and 2015, there was a 2 percent increase in the registrations of v4 projects.
- As of April 2016, v4 registrations appear to be on a similar trend with steady continued growth by the end of this year. LEED v2009 continues to grow at a similar rate. There was an 8 percent increase in the number of v2009 projects registered between 2014 and 2015. If this year’s trend continues, we can expect to see a similar increase in registrations for version 2009 until it sunsets in October of this year.
- The green building movement continues to be supported by its growing network of accredited professionals, currently counted at 201,000 LEED credential holders.
- The Greenbuild International Conference and Expo is the largest green building conference in the world and continues to grow. We expect more than 20,000 green building professionals to join us in Los Angeles, Oct. 5–7, 2016, for this year’s event.
USGBC remains committed to market transformation for the built environment through the use of LEED. Continued improvements to the rating system under v4 ensure that LEED is setting the bar for green construction. The LEED Online and Education @USGBC platforms make it easier for professionals to use LEED and certify projects. Innovative new products like the Dynamic Plaque improve performance management, transparency, efficiency and tracking for LEED buildings. The USGBC community and volunteer network continues to grow throughout the globe; and GBCI’s newer rating systems, SITES, PEER, WELL, ParkSmart and EDGE, bring forth new ways to push sustainability and energy efficiency efforts forward on a global scale.