VALUATION ISSUES IN A GREENING WORLD

INTRODUCTION

As most readers of this publication are well aware, the concept of “green building” or “sustainable development” focuses on meeting the needs of the current generation without compromising the ability of future generations to meet their own needs. More specifically, “green building” references the characteristics and quality of a subject property resulting from the employment of the principles and methods of sustainable construction. A significant body of research on this concept is evolving, espousing the favorable social, environmental, and economic impacts of this approach to real estate development.

The concept of green building evolved in Europe where space and resources are less plentiful than in the United States. Nevertheless, federal, state, and local governments in the United States have all embraced the concept over the last fifteen or twenty years. And despite clear evidence of a politically driven agenda, it is difficult to argue the sensibility of green building; however, in a capitalist culture sensibility implies an increase in economic value. Regardless of minor operational efficiencies, environmental impact reduction, and natural resource supply/demand concerns, the true test of long-term “green building” as a cultural trend will be an economic one. Simply put, green buildings will have to provide value superior to that of conventional buildings if the concept is expected to become the status quo.