Environmental friendliness can be a solid business proposition for many of your clients

Craig Grella, co-founder, Cornerstone Funding Services Inc.

As published in Scotsman Guide's Commercial Edition, April 2008.

Environmental awareness has hit a fever pitch recently. As public perception evolves and environmental groups worldwide step up their efforts, green issues find themselves at the forefront of civic consciousness.

Already, numerous cities around the country require that new public buildings incorporate green construction techniques. Eventually, all new commercial buildings may be required to have ecologically friendly features. As this transition occurs, banks and other lenders will more-readily acknowledge the increased value of environmentally sustainable buildings. These lenders also will likely alter their loan programs to finance such properties.

Green-Building Standards ___________________________ What is ENERGY STAR? It is a joint program of the U.S. Environmental Protection Agency (EPA) and the U.S. Department of Energy. According to the EPA, it provides an energy-performance rating system and recognizes top-performing buildings. It offers a strategy to measure current energy performance, set goals, track savings and reward improvements. The rating system can be applied to appliances, construction materials, lighting and more. What is LEED? According to the U.S. Green Building Council, LEED -- Leadership in Energy and Environmental Design -- is a national benchmark for the design, construction and operation of green buildings. It recognizes performance in five main areas: sustainable site development, water savings, energy efficiency, materials selection and indoor environmental quality. Commercial buildings can receive four different levels of certification -- certified, silver, gold and platinum. For more information, visit energystar.gov or usgbc.org.

As a commercial mortgage broker, you can benefit from understanding the long- and short-term goals of commercial owners and developers who seek to make their projects more environmentally friendly. Further, by making clients aware of programs that encourage sustainable commercial-building practices, you can tap into an emerging market.

Impact and certification

Property-owners often will ask three questions when considering whether to build green:

1. How does it impact my bottom line?
2. How does it improve my image?
3. How does it help the environment?

Out of those three, how the development affects the bottom line is usually the determining factor in whether an owner will choose to employ environmentally sustainable materials and design. Higher sales prices and lower operating costs are two items that have a clear impact on the bottom line. When those savings come at the expense of higher upfront or development costs, however, the choice to go green may not be so simple.

Many groups are sensitive to this fact, and they offer programs that make it easier and more enticing for developers to build green. Two of the more-popular programs are the U.S. Green Building Council's Leadership in Energy and Environmental Design (LEED) certification and the U.S. Environmental Protection Agency's (EPA) ENERGY STAR program (see sidebar).

LEED certification is a standard by which buildings are measured. It includes an analysis of materials, structure, energy efficiency and overall sustainability. Buildings that are LEED-certified will often bring a higher price upon disposition because of their long-term operational savings. Moreover, as green buildings continue to gain popularity among the general population, property managers are starting to see a higher rental premium for properties with LEED certifications.

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