Living in the San Francisco Bay Area, I must admit I am a little biased on one issue. Be it from California, Berkeley or even San Francisco, we are advocates for using green technology. If it saves the earth or uses less electricity, these jurisdictions are for it. But are we getting ahead of ourselves? Are these huge pushes for “being green” really even worth it? Personal bias aside, I’m going to give you the facts on what’s happening with green technology, and why you likely SHOULD be acting now…not because it saves the earth, but simply because it can save you MONEY.
First let’s look at an example which can very well be transferred to the real world. Going green can literally be applied to any type of property — residential, apartment, office, industrial, etc. But, the likely best candidate is going to be a property where the owner pays the utilities and the building is an older one. Again, this is the LIKELY best candidate — simply because you own a newer apartment building doesn’t mean you should look into having your building audited.
Once an owner takes the initial first step of having their building audited — which can cost anywhere from 5 to 10 cents a square foot, a group will closely look at two things. First, what potential does your property have such as age and amount of use for your HVAC systems? Secondly, they’ll look at what federal, state and local programs are going on that could be of benefit to you. Currently, there are multiple opportunities at the federal and local level for most building owners who want to go green.
After having your building audited by the group of your choice, they’ll present you with a few options. This is where we get into the payback timeframe and talk numbers. In the past, the technology was too expensive and the payback would be 15 or ever 20 years…it just made NO economic sense to do any improvements. However, with the current drop in prices in multiple green sectors — such as solar panels — and the tax incentives provided by multiple sources, many people see a payback of 7 to 10 years. If you live in a high electricity cost area, such as California or New York, this pushes the payback timeframe easily into under 3 or 5 years. When you look at this in numbers, a 5 year payback is the same as making a 20% return…Making a 20% return in commercial investment real estate currently is almost unheard of. Not only that, consider this improvement is to a building YOU ALREADY OWN — in other words, the risk of going out and buying another unfamiliar property is non-existent!!!
If you want a real life example, let’s look at one extremely well known landmark — the Transamerica Pyramid in San Francisco. The Transamerica pyramid obtained it’s LEED Gold status around 2010. The owners of the building spent nearly $4M in retrofitting the building. However, they now save an estimated $1 MILLION each year…they’ve reduced their waste by 70%, their water by 45%, AND they make a consistent 20% return ANNUALLY so long as they own their building.
Most new construction projects have many of the new green technologies in place — simply because it makes economic sense. 5, 10 years ago and prior, it usually didn’t. THIS is why there is such a huge push for having buildings retrofitted. Yes, there’s usually an upfront cost, but the payback nowadays in many places is so short it doesn’t make sense to NOT retrofit your building. Not only that, there’s currently programs emerging to handle the brunt of these upfront costs so property owners can still retrofit their buildings — just with a slightly less return period. Less energy waste, less water waste, and more money in everyone’s pocket…all the more reason that even if you’re not a huge proponent of “going green”, it’s hard to dispute the aspect of saving green…now that’s good to know. 🙂
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