Dan Neyer
SoapBlog 2: Why Neyer Properties Has Gone Green
Three years ago, I didn't know much about green building, but the concept intrigued me.
My staff is committed, progressive and curious, and we began to investigate green building because we felt it was the right thing to do and would be an effective marketing tool. But was green building a sound business investment, or just a feel-good practice?
We had a lot of questions, and the only way to find the answers was to do the research and do the math. What was the return on investment for installing high-efficiency HVAC or energy-efficient windows? Could xeriscaping be attractive and still offer significant water savings? Did offices with lots of natural light and green products in flooring, carpet and wall coverings really improve the health and attitudes of workers, or were they just cosmetically cool?
What we found was that green building is not only the right thing to do for the environment and our physical and emotional health, it makes economic sense, too.
Our green office buildings use up to 30 percent less energy and provide a 50 percent savings in water use over typical office buildings. Employees are healthier in a green environment—there are fewer allergens in natural carpets, flooring, and wall coverings-- which translates into fewer sick days. Fewer sick days means more employee productivity. Every business wants that. And happiness from being in a green, clean environment aids in employee job satisfaction and retention.
Now let's picture the following scenario and crunch some realistic numbers: A company named Green Living, Inc. rents 10,000 square feet of office space at $15.00 per square foot for a total of $150,000 a year. Average salary per employee is $60,000. Health insurance, employment taxes, and benefits add another 40 percent; and overhead adds another 30 percent for a total cost of $100,000 per employee per year.
Each employee is also at least 2 percent more productive in the green office space. This is because air in the space is cleaner and fresher, more natural light comes in, and employees are happy to work there. This small gain of 2 percent productivity (one less sick day per person per year) translates into a large number—$8.00 per square foot. For these same reasons, there is also a half-percent gain from employee retention over time, or reduced turnover, which equals $2.00 per square foot.
Energy savings knock off 25 percent of the utility bill, and green landscaping combined with low-flow restroom fixtures eliminates 50 percent of water use and treatment costs. These operating cost savings equal about $1.00 per square foot.
Added all together, this 10,000 square foot green office saves an employer $11 per square foot over renting a traditionally-built, non-green building. Net result: green building makes this effective office rent cost only $4.00 per square foot.
Now compare these numbers to the added cost of $11.00 to the $15.00 per square foot rent in a typically-built, non-green building. With two percent more sick days, a productivity drop, employee turnover, and increased water and utility costs, the cost to rent a non-green building is now actually $26.00 per square foot.
In essence, because employees are the biggest expense for a company, creating a healthier, more efficient work environment is a win-win for both employee and employer. Going green means increased productivity and quality of life for each employee, as well as an increase in revenue and cost savings for the company.
Green building significantly reduces a company's net effective rents. It transitions rent from an obligation to an investment that pays dividends in real dollars and human capital.
Dan Neyer is president of Neyer Properties, a leading commercial real estate, land development, and commercial development company in the greater Cincinnati-northern Kentucky region. It is headquartered at Keystone Parke in Evanston, the first LEED-certified Gold office campus in Ohio, Kentucky and Indiana.