Expenditures associated with maintaining employees – salaries, benefits, technology, etc. – are typically more than 80% of an office tenant’s cost of doing business. No wonder employers are always on the lookout for ways to lower costs and increase productivity.
Interestingly, many employers have been slow to make a connection between these priorities and the cost saving, productivity raising benefits of a green building. New information from Carnegie Mellon University and the US Green Building Council demonstrates that the savings a green building enables ( from items like increased productivity and lower healthcare costs) can equal 27% of the price per square foot.
This is one of the ironies of the green marketplace. Companies keep an unwavering gaze on the tangible costs of a green project (which, by the way, are now within 0–2% of traditional costs), but have trouble focusing on the value of these savings. To illuminate how they come into play, let’s use Hallmark’s LEED-Gold registered project, Lakeside Offices at Park Place, as an example. The impact of its $26.50 price per square drops to less than $20 per square foot when green-enabled savings are considered.
$26.50 - As mentioned above, this is our starting point for a single square foot of Lakeside's Class A space. An average employee requires 225 square feet of space for work needs. Meet Bob, America’s average employee. Bob was working in an office building that was built before the word ‘sustainability’ had anything to do with the environment. Bob is paid $45,000 per year. Bob’s employer has decided to relocate to Lakeside.
$26.50 $26.02 According to a Carnegie Mellon University study, working in a healthy environment reduces absenteeism costs, which the study estimates to be an average of $765 per employee per year, by 14%. So using our estimate of 225 square feet of space per employee, Bob’s employer stands to save $.48 per square foot through less absenteeism.
$26.02 $25.22 Being in a positive work environment is going to do more than reduce sick days. It’s also going to raise Bob’s productivity. By how much? 12.5% according to the same study. If we assume Bob previously brought in $100,000 in revenue each month, the company is now reaping $112,500. Even better, the cost of Bob’s office space lease just became a smaller portion of expenses – 3% smaller, which equates to $.80 per square foot. His company is beginning to look like a smart business.
$25.22 $22.11 Even better than increased productivity and lower absenteeism, Bob’s employer is also going to realize tremendous savings in health care costs – a 14% reduction on average. The Carnegie Mellon study shows that employers spend $5,000 per employee on health care costs each year. This means Bob’s company is set to save $700 per year per employee for its move to a new building. This translates to a $3.11 savings per square foot.
$22.11 $20.47 Let's a ssume Bob's company has 50 employees and his employer lost 20% of his workforce annually in his old building (10 people). According to the Carnegie Mellon study, Bob's employer is going to benefit from a 30% reduction in employee turnover by moving to Lakeside. He now stands to lose an average of seven employees each year at a cost of $5,300 each. So the move to green will save Bob's employer $15,900 per year. Divided across employees, Bob’s share of this amount is $370, which equates to a savings of $1.64 per square foot.
And those are just savings related to employees. When utility savings are added to the picture, the cost of a square foot of space continues to fall.
$20.47 $19.76 The average building certified as green using the US Green Building Council’s LEED rating system uses 32% less electricity. If Bob’s employer paid $500 per year for electricity in Bob’s 225 square feet of space in the old office, the company stands to save $160 per year in Lakeside. That’s a savings of $.71 per square foot.
$19.76 $19.40 Now let’s take a look at water conservation. The USGBC estimates that green buildings save an average of 40% on water usage. Estimating that Bob’s employer was paying $200 per year for Bob’s share of the water bill, and the company will save $80 through its move to Lakeside. That’s $.36 per square foot.
Just under $20 per square foot for Class A space with environmental benefits? Sounds like it’s time for savvy businesses to shift their gaze to green. |
