October 1, 2009
Corporate Real Estate Cost Savings through Productivity Improvements
There have been many recently debated articles regarding the greening of corporate office space and whether or not there are enough green buildings in this country to make correlations to the overall effect green buildings has to energy and operational efficiency. Now there seems to be increasing interest among researchers on how much productivity is improved in green buildings vs. “brown” buildings and how that can be translated to a savings per square foot basis in corporate real estate. If correct it could be proven that productivity improvements have a large impact on the overall efficiency of a commercial building.
A recent study by Norm Miller, PhD of the University of California, San Diego and Dave Pogue, LEED AP who is the Director of Sustainability for CBRE titled “Green Buildings and Productivity” explores this question on how the productivity of employees improves through working in green buildings.
The researchers examined two measurements of productivity (sick days and self reported productivity change when the employees moved from a “brown” building to a green one) and surveyed 154 buildings containing over 2,000 tenants that were deemed green through an ENERGY STAR Label or LEED Certification (at any level). The 534 tenant responses were collected across the country and in suburban and central business districts.
The results of the study were significant for those tenants who claimed greater productivity with the following numbers:
Productivity Impact for Those Tenants Who Claimed Greater Productivity
Average Productivity Increase 4.88%
Average Salary (Note: There are other ways to measure this) $106,644
Average Impact Per Worker in Value Add $5,204
Net impact at 250 Sq Ft Per Worker Using Salary as Index (Note: Impact
could be more on marginal revenues than this) $20.82
When factoring in the number of reduced sick days the researchers developed this analysis of the net impact of the results on a square footage basis:
Productivity Impact of Fewer Sick Days Using Average Survey Results
Average Fewer Sick Days 2.88
Working Days Per Year 250
Average Salary $106,644
Average Impact Per Worker in Value Add $1,228.54
Net Impact at 250 Sq Ft Per Worker $4.91
The researchers also analyzed how increased productivity and reduced sick time can be analyzed on a Net Present Value (NPV) basis and these were the results:
Discounting $25/yr/sq. ft for 10 yrs. at 10%, based on the sum of the two benefits shown above and rounded and assuming a 10 yr differential for such benefits and a fairly conservative discount rate the received a present value of $153.61/ sq. ft..
Based on these results it would indicate that LEED and ENERGY STAR certified buildings and ones that have increased air quality and quantity lead to more productive and less sick workers. While the sample size may be too small to completely correlate the overall and exact impact there seems to be a decent chance to expect a positive result of having employees work in a green or energy efficient building. I look forward to reading more reports that analyze a greater number of green buildings as more become available in the market place.
You can access the report at the following link:
Please feel free to contact us at the Sustainability Roundtable Inc. to discuss this report and any others as we explore the impact green buildings and highly efficient buildings have on employee productivity going forward.