This month's commentary on recent industry goings-on.

Green Is Good for the Buildings Business

Two recently released studies, one by the New Buildings Institute (NBI) and one by CoStar Group, have validated what the green building community has stressed all along: third-party-certified buildings outperform their conventional counterparts across a wide variety of metrics, including energy savings, occupancy rates, sale price and rental rates.

In the NBI study, the results indicate that new buildings certified under the U.S. Green Building Council’s (USGBC) LEED certification system are, on average, performing 25 percent to 30 percent better than non-LEED certified buildings in terms of energy use. The study also demonstrates that there is a correlation between increasing levels of LEED certification and increased energy savings. Gold and Platinum LEED certified buildings have average energy savings approaching 50 percent.

According to the CoStar study, LEED buildings command rent premiums of $11.24 per square foot over their non-LEED peers, and have 3.8 percent higher occupancy. Rental rates in Energy Star buildings represent a $2.38 per square foot premium over comparable non-Energy Star buildings and have 3.6 percent higher occupancy. And, in a trend that could signal greater attention from institutional investors, Energy Star buildings are selling for an average of $61 per square foot more than their peers, while LEED buildings command a remarkable $171 more per square foot.

Geothermal Opportunities

Highlights of a recent report from Glitnir Geothermal Research:

• The investment requirement to service current geothermal projects in the United States is approximately $9.5 billion. A total investment of nearly $17 billion will be required to develop available resources over the next eight years, with a further $22.5 billion during the following 10 years.
  
  
• The geothermal industry here is very fragmented, consisting of relatively few big companies and many small ones. Many of the smaller companies lack the financial wherewithal to fully develop projects profitably. Therefore, we should expect considerable consolidation in the next few years.
  
  
• For successful development of the geothermal industry, it will be necessary to increase the capacity of drilling equipment and related human resources.

A hint of what the industry could mean for drilling contractors: The Geothermal Energy Association tells us that a typical commercial geothermal plant costs $138.5 million to build, and 27 percent of that cost is for drilling.

Is your firm involved in geothermal projects already or are you considering it?

Who Let In the Cynic?

Random economic thoughts while trying to predict when my 401k will become worth less than the stamp used to mail me its quarterly report:

• The politicians who tear their rotator cuffs patting themselves on their backs for being so gosh-darned environmentally friendly recently dropped the investment and production tax credits for alternative energy source development. Any wild guesses at what could possibly have influenced this decision?
  
  
• A certain politician, who obviously knows what’s best for all of us, stages a photo op at a gas station. This multi-millionaire tells us she feels our pain at the pump, and encourages us to carpool because it saves money, and is good for the environment. Just out of camera view is a fleet of seven idling limousines, ready to speed off to the next fundraiser.
  
  
• Don’t even get me started on the ethanol scam.
  
  
• Learn it: ai xian xie. It’s pronounced “eye-she-yen-she-ya.” That’s “yes, sir” in Chinese. It’s always good form to be polite to the new boss. Also regarding our impending new economy, it will be useful to know that one American dollar equals seven Chinese yuan.

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