Benefits of Green Building Certifications for Property Managers

How Becoming Certified Can Help your Bottom Line

For property managers looking for ways to increase revenue and decrease costs, there are many things you can do which may or may not provide value to your tenants. However, one way to provide value while increasing revenue and decreasing costs is to get your property green building certified.

While obtaining a green certification may seem like a costly and timely project, green certifications are something that more and more tenants are pushing for. And it’s often easier than many people think, and even with a few small modifications to existing buildings, you may be eligible for certification. Any level of certification can reap big benefits for property managers.

Some of these benefits include:

1. An edge over the competition

While many companies have returned to the office, more are working in downsized spaces, as remote and hybrid work continues to be a driving force in employment. Vacancy rates, while expected to bounce back eventually, have remained high in the commercial real estate space. This means that commercial tenants have more choice than ever before, and with so much competition, especially in major cities, it’s vital that you stand out in the crowd.

Increasingly, commercial tenants are pushing for cleaner, greener, and healthier workplaces. Especially post-pandemic, wellness and sustainability are two of the top considerations for occupiers to consider. By offering assurances of these things through certification, you’ll be in a better position over other buildings.

2. Charging higher rent prices

A 2018 report by the World Green Building Council found that commercial offices that are located in certified buildings generally see better overall health of employees, improved productivity, and higher job satisfaction. Since these are considered premium features, property managers can charge higher market rates for these buildings.

In fact, JLL reported that in the APAC region, 7 out of 10 companies were willing to pay higher rents for green-certified buildings. So even if some changes are needed upfront in order to be certified, you’ll see greater returns on investment over time.

3. Decreased vacancy rates

In addition to premium rents, green-certified buildings experience fewer vacancy rates when compared to overall vacancy rates. Most of that comes from the two benefits listed above – a better working environment and fewer green buildings available within a city.

Because of this, tenants are more likely to re-up leases and stay longer in green-certified buildings. This results in fewer tenancy turnovers and less time with vacant office spaces that impact the bottom line.

4. Lower operating costs

While greening a building can definitely be an upfront investment, it can actually save money in the long run as operating costs drop significantly. This comes through improved design systems that run more efficiently and the longevity of such systems. Switching antiquated heating systems out for cleaner, greener heating systems, for instance, will run longer for fewer costs and require less maintenance.

Even small changes like this can have a huge impact on the bottom line, while also helping a building reach certification levels.

5. Increased efficiencies

A green building certification looks at many different factors, including energy efficiency and waste management. By having top-notch systems already in place, it will make your job easier, while also reducing tenant complaints, and costing less.

For example, energy efficiency lights will last longer, and require fewer changes, saving you the hassle, while having streamlined recycling systems means less waste levy changes and better overall waste efficiency.

6. Lower emissions

Commercial real estate accounts for 39% of global greenhouse gas emissions from both the construction of new buildings (11%) and the rest from the buildings and energy themselves. But green buildings overall contribute less to global greenhouse emissions overall. On average, 50% fewer greenhouse gas emissions from water consumption and 48% less greenhouse gas emissions from waste than conventional buildings.

This is great for the planet, the communities around your buildings, and your overall brand reputation. By lowering your building's carbon footprint, you’re working toward a more sustainable future.

7. Governments are pushing for it

With more countries pushing for greener communities and net zero emissions, many governments are looking to implement new requirements on building standards. In New Zealand, all new government buildings have to meet minimum Green Star standings. While it’s currently just for government buildings, many hope to see such standards introduced for all commercial buildings in the future.

Because policymakers understand the importance and costs associated with these new standards, many places have incentivised building owners to go green. These include funding opportunities, tax incentives, or public-private partnerships to help build new green buildings or retrofit old buildings. While these incentives vary by country or state, property managers can use these to help offset some of the costs associated with making a building more green.