CAN GREEN PRODUCE A REAL ROI?

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The short-form answer to last week's Quick Pollquestion--as answered by Sally Wilson--is a resounding yes. Wilsonis CB Richard Ellis' global director of environmental strategy inaddition to serving as senior vice president of brokerage. Despitethe enthusiasm for the benefits, Wilson admits that she is lessconfident about the general level of education and insists thatthis late in the game, Green in no longer an option; it's anecessity. For the record, the 173 participants in last week's pollshowed themselves to be a savvy bunch, relatively, with 41% sayingthat Green can produce an ROI Only With Incentives. A surprising35% are as enthusiastic as Wilson, claiming they're Living TheBenefits. And 24% believe It's All Hype and Snake Oil. Here'sWilson's take:

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"There's a real lack of awareness of the market opportunitiesassociated with Green. But it can produce a real ROI. If you're notbuilding Green, your product will become obsolete.

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"Around 2006 we reached a tipping point, and things arehappening rapidly now. A lot of things are coming together. Thefirst thing is that there's a strong vehicle for developing Greenbuildings through the US Green Building Council's LEED program.There's a rating system for an owner-occupied building or acommercial interior or a spec building or an existing buildingconversation.

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"The second thing is the growing awareness about the risk ofclimate change. I just read about Ernst & Young releasing theirTop 10 Risks to Businesses, and the number-one risk was climatechange and sustainability. So there's corporate awareness aboutclimate change and the risk to their businesses and their brands.So the awareness is there in what is a huge sector for ourmarket.

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"Part of that corporate awareness is social responsibility.They're driving down into their vendors and their supply chains thedemand to be Green as well. So there's this driver of Greenproduct, but the Green product is very limited.

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"The last piece is government involvement--not on a nationalbasis but on a local basis. Look at Chicago; Washington, DC; NewYork City; Los Angeles, where there are mandates coming out for newbuildings to be Green.

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"So all of these things are happening together. If you don'tbuild Green today, where will you be tomorrow? If you have aclass-A property now and you're not converting or figuring out howto invest properly to make that conversion to a more sustainable orhigher-performing property, there's going to be a bigger gapbetween your product and the LEED product."

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John Salustri

John Salustri has covered the commercial real estate industry for nearly 25 years. He was the founding editor of GlobeSt.com, and is a four-time recipient of the Excellence in Journalism award from the National Association of Real Estate Editors.