{"id":1309,"date":"2012-07-03T13:26:00","date_gmt":"2012-07-03T13:26:00","guid":{"rendered":"https:\/\/www.sherin.com\/real-estate\/2012\/07\/03\/leed-certification-worth-the-cost\/"},"modified":"2023-11-08T18:36:44","modified_gmt":"2023-11-08T18:36:44","slug":"leed-certification-worth-the-cost","status":"publish","type":"post","link":"https:\/\/www.sherin.com\/real-estate\/2012\/07\/03\/leed-certification-worth-the-cost\/","title":{"rendered":"LEED Certification \u2013 Worth the Cost?"},"content":{"rendered":"<p>Dana Developer has just acquired a coveted brownfield site in Blackacre and is planning to construct a 300,000 square foot Class A office building with retail at street level.\u00a0 There is no question that the facility will be built at least to minimum LEED-certifiable standards, as the Blackacre building code requires this for all new construction.\u00a0 Because of the project\u2019s location on a brownfield site, its proximity to public transportation, its innovative design features, and a <a href=\"http:\/\/www.triplepundit.com\/2009\/08\/usgbc-true-green-leedership\/\">state-of-the art bike rack<\/a>, Dana believes the project should be able to achieve LEED Gold certification.\u00a0 Should she go for it?\u00a0 Aside from the feel-good aspects of achieving certification, are there quantifiable, positive impacts on project value that she could realize?<\/p>\n<p>The answer is apparently still evolving.\u00a0 A recent article by Reese Fox at Deloitte Financial Advisory Services LLP sets out some of the <a href=\"http:\/\/www.awarenessintoaction.com\/whitepapers\/getting-the-true-assessment-of-a-leed-certified-buildings-value.html\">possible implications of LEED certification on real estate appraisal<\/a>.\u00a0 As this article points out, one mainstay approach to valuation is the analysis of \u201ccomps.\u201d\u00a0 According to the <a href=\"http:\/\/www.usgbc.org\/\">USGBC website<\/a>, approximately 9 billion square feet of space are in some stage of LEED certification, which would seem to indicate that the pool of comparable projects is fairly large.\u00a0 However, in real estate \u201clocation is everything\u201d \u2013 and, while the number of certified projects is growing (1.6 million square feet daily, worldwide, according to USGBC), there may not be other similar LEED certified projects in Blackacre. \u00a0Other potential issues in valuing a LEED certified building include depreciation of particular features of green buildings, evaluating the premium potential tenants may be willing to pay to occupy space in such a project, and comparing construction costs (which are often higher for LEED certified buildings than for conventional construction).\u00a0 Perhaps the most challenging aspect of valuing green buildings is putting a price tag on obtaining the actual LEED certification vs. simply building to a greener standard.\u00a0 Some <a href=\"http:\/\/apps.americanbar.org\/buslaw\/blt\/content\/2011\/01\/article-mergens-perrus.shtml\">commentators have recently cautioned<\/a> that using terms like \u201cLEED Compliant\u201d or \u201cbuilt to LEED standards\u201d could be viewed as misleading and should perhaps be avoided.<\/p>\n<p>On the legal front, caselaw will certainly evolve in the future concerning the value of LEED certification.\u00a0 In a recent tax appeal before the Oregon Tax Court, <em><a href=\"http:\/\/www.greenrealestatelaw.com\/wp-content\/uploads\/2011\/05\/2011_WL_1837667_5-31-11_1655.pdf\">CLP Elements LLC v. Benton County Assessor<\/a><\/em>, the tax assessor argued for a higher building valuation based in part on the fact that the property had made substantial progress toward achieving LEED Silver certification (and was, at the time, purported to be the only privately-fund LEED Silver project in Oregon \u2013 did someone mention comps?).\u00a0 The property owner countered that the property was not certified on any level, and would, in fact, never be certified.\u00a0 The court decided the case on other grounds.\u00a0 However, we can expect to see the LEED certification argument raised in other cases and in other contexts.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Dana Developer has just acquired a coveted brownfield site in Blackacre and is planning to construct a 300,000 square foot Class A office building with retail at street level.\u00a0 There is no question that the facility will be built at least to minimum LEED-certifiable standards, as the Blackacre building code requires this for all new [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":1762,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":"","_links_to":"","_links_to_target":""},"categories":[],"tags":[],"class_list":["post-1309","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.6 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>LEED Certification \u2013 Worth the Cost? 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