(Real Estate) Cost Analysis of Green Building Construction 2

Order Description

Need thoughtful responses to each post 75 words each. Please number each thanks as listed . Post 1 (Maddi) -he cost of a project is critical to the feasibility of a
development or building as it enters the construction phase. As such, analyze the costing processes for your case study project. Areas of focus should include:

Overall project cost
Cost for sustainable systems or “green” features; renewable technologies, storm water design approaches, plumbing fixtures, electrical systems, hvac systems, glazing.
(note: If costs are not publicly available, make assumptions based on the readings.)
Life Cycle Cost Analysis: Prepare a life cycle cost analysis on a specific product or material outlining the cost impact on the construction cost and the building
operations for your case study project. It should be supported by an economic analysis (using an electronic spreadsheet such as Microsoft Excel).
Discuss why certain decisions were made to include elements or abandon them. Use your own assumptions based on the project. Post 2 (Soler) -COLLAPSE
The major factors that drive cost in implementing sustainable features in a design are the registration and certification fees which must be paid, and the man-hours
generated from managing the certification process: from project management to confirm that the sustainable systems are being implemented correctly; to managing the
paperwork necessary to ensure that the project points being achieved are being met through proper documentation. When analyzed side-by-side, the premium for choosing
LEED certified systems are only a fraction of the cost more than non-LEED systems, sometimes only a few dollars per square foot. In addition, over the life-cycle of
the building, non-LEED systems are shown to be much less cost-effective, as they are less energy efficient, and the overall health benefit to the individuals working
in a healthier environment is also greater.

First cost decisions usually drive construction because often there are budgetary restrictions for upfront costs. When utilizing life-cycle cost analysis, including
the cost to operate and maintain an asset, evaluating the life-cycle and replacement cost of materials may seem abstract. But they are key in attributing a true
monetary and holistic value to a project. It is always advisable to value engineer a project and make equal substitutions if necessary, but care must be taken to
ensure that the quality is the same, that it does not diminish the health benefits received, and if a lesser quality is chosen that all stakeholders are in agreement
on that.

For my case study, One Bryant Park, the owner/developer the Durst Organization wanted the most effective sustainable systems implemented without restrictions on cost,
and did not place an emphasis on receiving incentives for utilizing those systems. Because their mission was progressive in ensuring that tenants received the benefit
of working in a healthier environment, and because they had the financial backing to do so as a large company and with the support of major tenant Bank of America,
this was entirely feasible for this project.

Sources:

Kaplow, S.D. Green Building Costs Less Than Conventional Building. Retrieved from: https://www.stuartkaplow.com/legal-library/environmental-law/green-building-costs-
less-conventional-building/

Douglas Durst Discusses Current Projects and Sustainable Developments in the City. (2010, December 15) Sourced from: https://www.citylandnyc.org/douglas-durst-
discusses-current-projects-and-sustainable-development-in-the-city/ Post 3. (Kyra)Some of the factors that drive cost as related to sustainable features in a project
include geographic location, ownership entity structure, length of holding period and project vision. Certain states and regions have laws and other mandatory green
building codes that will likely drive costs while areas without such mandates potentially provide a wider range of construction options and prices. Besides this,
geographic regions with climate related issues such as chronic flooding, prolonged periods of drought or extreme temperature exposure (either hot or cold) may also be
driven to finance certain sustainable features specific to their regional needs.

Besides location, the overall vision of a project and the way that ownership is structured can also affect costs during development, including first costs. An
individual owner of a development might only have to consider his/her own investment, budgetary concerns and vision (LEED?, If so, which level?) however, a development
owned as a joint venture or that has equity partners has to consider others’ interests and returns on investment. Additionally, whether an owner(s) intends to hold the
building for its full life, to sell it upon development or to hold it for a specific term can make a difference in green building expenses, especially first costs.
Although, interestingly enough, certain green systems now have the same upfront price point as traditional construction methods (lighting and some utility components),
and others break even by virtue of smaller, but more efficient systems (HVAC systems).

A long-term owner-operator may be more likely to invest in sustainable systems and materials with longer payback periods, as he/she will benefit from the operating
efficiencies of the building, including energy savings, higher occupancies, less tenant turnover, and higher resale values; as such, short-term holders should take
note. Most sustainable systems pay for themselves within 6 years or sooner and green building costs are averaging just over 1% of total construction costs. Ultimately,
the gap for both first costs and payback time is closing when comparing green construction vs traditional development. Consequently, factors such as length of holding
period and project vision may, in the near future, no longer be drivers of cost as related to sustainable features in a project. Post 4 (Grace)Any decision to move
forward on a real estate project is driven in large part by the cost. As part of an overall pro forma, the project cost in relation to the expected income is how
developers determine whether the project is worth pursuing. In addition, unexpected or excessive costs during a project can set it back significantly. We can go
further and break out the projected pro forma costs into categories- construction (first) costs and operating (life cycle) costs. Sustainable products can often be
more expensive than their non-sustainable counterparts, although this has changed over the last 10 years. The first cost decisions can drive a project more than a life
cycle cost for several reasons. Examples include:

1) The first costs are generally higher, and any additional costs or savings here can make a bigger impact on the overall project feasibility.

2) Sustainable construction and life cycle cost savings can be difficult to predict and quantify during the study period or evaluation phase. It can be difficult to
predict the exact cost savings that will be realized beforehand and determine a true ROI until after the fact.

3) The break even point for sustainable products may occur years after the building goes into service. Investors, lenders, and other partners may not care about
operational savings in year 7 (for example), if they plan to exit the project after year 5.

The text outlines that there is a cost premium for sustainable construction- 6.5% for LEED Platinum buildings and a 1.84% premium on average for all LEED certified
buildings in their sample. However, this is more than offset by savings in operating costs, building value increases, occupancy increases, and higher rents over time.

*Kibert, Charles. 2016. Sustainable Construction: Green Building Design and Delivery. Pages 492-496