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Property Development: Going Green

In recent economic times, the United States has been ravaged by the worst economic slowdown in modern times. The effects of this contraction have rippled throughout the myriad industries which comprise the overall U.S economy. Particularly affected by this recent downturnas many property developers and industry professionals knowis the United States real estate market. In fact, the popping of the real estate bubble in 2008 was one of the primary fuses which caused the combustion of the economy. Fortunately, as history has displayed, tough recessions in the markets are always followed by promising expansions, correcting the contraction. The modern real estate market is no exception. Recent, progressive growth within the real estate markets has provided a light at the end of the tunnel for many developers who can nowgleefullyexpect their profit margins to begin to increase. The current progression in the market does not stand alone, though, with its potential to skyrocket developers profit. In fact, a highly particular and exponentially increasing niche market is growing within the development industry which poses to not only increase your profits, but also allow you, as a developer, to better the community and environment. Sustainable development, often referred to as green building, is providing developers with a healthier and more sustainable alternative to regular structure development as well as offering an increasing financial incentive to developers who choose to go green. So whether you are interested in bettering communities, providing more sustainable solutions, or increasing your bottom line, sustainable development provides you with the excellent growth market to achieve your various professional goals. While the future looks promising for the real estate development industry due to moderate but positive prospective gains which developers can expect to achieve, high consumer demand and the financial efficiency benefits for sustainable green structures provides a promising beneficial market for developers to take advantage of.

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What is Sustainable Development and What Effect Does it Have?

Due to the flurry of attention given to the recent green movement which has been sweeping across all areas of American industry, most developers have at least a keen idea of what sustainable real estate development is. In fact, if it were possible to summarize the green movement in a few words one could say that its primary purpose is to utilize resources more efficiently and effectively in order to better the environment and our lives. This simple definition applies also to the topic of sustainable development. According to the research report published by the Environmental Protection Agency Building Green for the Future: Case Studies of Sustainable Development in Michigan, Green Buildings use resourcesenergy, water, materials, and landmore efficiently and effectively than buildings that are simply built to code. This effective allocation of resources benefits not only the environment, but also our health and pocketbooks in the long run. When deciding which avenue to follow in the development and production of a new structure, developers ought to analyze not only the financial factors and implications of their actions but also the socio-environmental effects of their structures. Green property development can help you not only maximize your profits due to high demand but also maximize your beneficial contribution to the world. By developing green you can provide many social and environmental benefits to the industry and world. According to the EPA report, green development has several positive environmental factors. These are a reduction on the impact on the natural environment, as well as healthier working and living spaces [which] improve occupant productivity. These positive environmental and social factors should provide a compelling argument for you to consider green development in your professional practice. Property development is a business, though, and is likely the source of yourand many otherslivelihood. Therefore, in order to balance the extra efforts required to develop green properties, a financial incentive should also be present to reward your efforts to better the environment and peoples lives.

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Economic and Financial Effects of Green Real Estate Development

Regardless of the socio-environmental benefits, as a business manager, it would be foolish to undertake extra efforts and risk without economic incentives in place. Fortunately, sustainable development is geared to provide you with promising returns for your efforts and offset your risk premium due to high consumer demand and its benefits due to financial efficiency. These benefits are due to sustainable structures more cost efficient use of resources and lower maintenance costs. Sustainable structures, according to the EPA, also reduce developers risk factors by eliminating unhealthy and unsafe environments from building sites and structures, which can greatly lower your liability costs. Although developing green structures can be more costly, they have the possibility of generating massive future returns do to their efficiency and increasing consumer demand. According to Jonathan Schein, a prominent commentator or green development and economics, in his article When Does Green Real Estate Development Finally Take Hold?: The costs for retrofitting can be prohibitive, but considering the alternative, an empty building and a property that is unable to be leased or sold, it appears that once the economy starts humming along once again, green and sustainable practices are going to be the way of doing business. He also states in his article that on the ownership front, green structures have the potential to earn a much higher price in the future real estate market, generating higher returns for both the developers and building owners. Scheins statements are not just blind assumptions, though. Research conducted and published within the article Sustainability is the Future for Commercial Real Estate on corporateclimate.net argues for the economic benefits of sustainable real estate development (These benefits are outlined in Fig. 1).

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Fig.1 Economic Benefits of Green Real Estate Development. Source: Sustainability is the Future for Commercial Real Estate. www.corporateclimate.net.

The evidence provided by these three reports acts as a compelling social, environmental, and economic call for modern property developers to elect to pursue green development practices in their business. Whether it be the monumentally important environmental effects which green development can have upon society such asaccording to the EPA reportthe diversion of millions of tons of waste materials from landfills due to green construction methods or increasing worker productivity due to the use of natural lights, or the astounding financial profits which developers can achieve by going green, We can see the benefits outweigh the initial financial barriers. These financial benefits are derived both from the continuously increasing demand for green structures, lower maintenance costs, and higher sales prices. As developers, and members of the Urban Land Institute, you have a responsibility to not only achieve financial success but better the environment and the communities in which you develop. I believe, due to the evidence provided, that sustainable development can help you achieve all of these criteria, making you not only more profitable and environmentally beneficial, but also help you fulfill the primary goal of the ULI: to better communities, the environment, and the profession of property development.

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Deluca, Frank A. "Environmental Leader." Environmental Leader RSS. N.p., 12 Mar. 2012. Web. 25 Nov. 2012 Eisner, Caroline Ed. "Building Green for the Future: Case Studies of Sustainable Development in Michigan." Environmental Protection Agency. PDF Document. N.p., n.d. Web. 25 Nov. 2012. Schein, Jonathan A. "When Does Green Real Estate Development Finally Take Hold?" The Huffington Post. TheHuffingtonPost.com, 10 Nov. 2009. Web. 25 Nov. 2012. "Sustainability Is the Future for Commercial Real Estate." Corporate Climate. N.p., n.d. Web. 25 Nov. 2012. "What Is Sustainable Real Estate Development." Sustainable Development Info. N.p., 28 Sept. 2012. Web. 25 Nov. 2012.