Cost is one of the biggest challenges to developers looking to go green. This is especially true for short-term investors, who might see green development as an obstacle to a larger return. Green construction—including LEED certifications—have grown wildly in popularity and have become a way to drive value and occupancy at an asset. Even industrial development has turned to greener building and LEED certification, disrupting the reputation of industrial properties as dirty manufacturing plants.

“Building to green standards often means increased costs, especially if the goal is to attain LEED Platinum, the highest level of LEED certification,” Jon Pharris, president of CapRock Partners, an experienced industrial and green developer, tells GlobeSt.com. “For long-term owners/investors such as REITs or sovereign wealth funds, those additional features may be a valuable and worthwhile investment. However, for short-term players the additional expense does not always directly translate to a quantifiable return on investment.”

One of the challenges could be achieving higher rents in a energy-efficient or LEED certified property, as some developers expect. “LEED platinum or gold buildings do not always generate obtainable lease rates substantially different from those of CalGreen building,” says Pharris. “While many corporations want to pursue a carbon neutral footprint, it is rare for a tenant in Southern California—where the base new industrial development complies with CalGreen—to refuse to lease a CalGreen building instead of a LEED certified building.”

Want to continue reading?
Become a Free ALM Digital Reader.

Once you are an ALM digital member, you’ll receive:

  • Unlimited access to GlobeSt and other free ALM publications
  • Access to 15 years of GlobeSt archives
  • Your choice of GlobeSt digital newsletters and over 70 others from popular sister publications
  • 1 free article* every 30 days across the ALM subscription network
  • Exclusive discounts on ALM events and publications

*May exclude premium content
Already have an account?


NOT FOR REPRINT

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.

Kelsi Maree Borland

Kelsi Maree Borland is a freelance journalist and magazine writer based in Los Angeles, California. For more than 5 years, she has extensively reported on the commercial real estate industry, covering major deals across all commercial asset classes, investment strategy and capital markets trends, market commentary, economic trends and new technologies disrupting and revolutionizing the industry. Her work appears daily on GlobeSt.com and regularly in Real Estate Forum Magazine. As a magazine writer, she covers lifestyle and travel trends. Her work has appeared in Angeleno, Los Angeles Magazine, Travel and Leisure and more.

More from this author

GlobeSt Net Lease Spring 2024Event

This conference brings together the industry's most influential & knowledgeable real estate executives from the net lease sector.

Get More Information
 

GlobeSt

Join GlobeSt

Don't miss crucial news and insights you need to make informed commercial real estate decisions. Join GlobeSt.com now!

  • Free unlimited access to GlobeSt.com's trusted and independent team of experts who provide commercial real estate owners, investors, developers, brokers and finance professionals with comprehensive coverage, analysis and best practices necessary to innovate and build business.
  • Exclusive discounts on ALM and GlobeSt events.
  • Access to other award-winning ALM websites including ThinkAdvisor.com and Law.com.

Already have an account? Sign In Now
Join GlobeSt

Copyright © 2024 ALM Global, LLC. All Rights Reserved.