It isn’t easy being green in Europe

Many of the new sustainable buildings popping up around Europe contain technology to make use of solar power and rainwater, and aim to transform surrounding neighborhoods.

But these state-of-the-art developments in cities like Madrid and Paris haven’t resolved the debate over whether going green pays off for investors. While new buildings generally have adopted green designs, the economic argument hasn’t been strong enough to persuade most owners of existing properties to upgrade.

In recent years, green advocates have said almost as a matter of faith that sustainable buildings command higher rents for owners and save occupiers money on utility bills, a situation in which everyone seems to win.

The only problem: There has been too little statistical evidence to back up the claim.

“We believe there is a link between building sustainability and value. The challenge is to quantify it,” said Richard Holberton, director of research for Europe, the Middle East and Africa at property firm CB Richard Ellis in London.

Some have tried to do that. Nils Kok, a professor at Maastricht University in the Netherlands, published a study in May based on a comparison of 1,100 leasing transactions in the Dutch country from the combined databases of three large property agents in the Netherlands: CB Richard Ellis Group Inc., DTZ Zadelhoff and Jones Lang LaSalleInc. The study concluded that nongreen buildings carried a 6.5% discount in price compared with green buildings.

But proving the green-building investment case hasn’t been made easier by the recession. Since property markets crashed in 2007, property leasing and investment activity has declined so much that the data may be skewed and not allow assessors to draw clear distinctions between sustainable buildings and the rest of the market, said Mr. Holberton of CB Richard Ellis.

To be sure, green architecture has become standard in new construction. The Generali Tower, a building under construction in Paris’s La Defense district, will generate electricity with wind turbines installed on the top of the building.

The new headquarters for Banco Bilbao Vizcaya Argentaria SA, designed by Swiss architects Herzog & de Meuron, is being built outside of Madrid in a desert-like environment. BBVA said in 2008 when the bank unveiled the design of the structure that it envisioned energy savings of 30%, a 35% reduction in greenhouse gases, up to 50% lower water usage and 70% savings in waste treatment. The buildings are low, three-story structures that are laid out like a carpet atop the landscape.

The investment case for an owner-occupier like BBVA is clear. But the case is harder to make for owners to convert their properties to green buildings. They need to be convinced that tenants will pay a high enough premium to be in a green building to justify the higher cost.

There also is a bit of confusion because there are two main green certificates issued. In the U.K., there is the Building Research Establishment’s Environmental Assessment Method. In the U.S., the Green Building Council publishes the Leadership in Energy and Environmental Design standard, or LEED.

Both certificates measure more than just energy efficiency. They also take other factors into consideration that include waste management, air quality and access to public transportation.

Dan Probst, Chicago-based chairman of energy and sustainability services at Jones Lang LaSalle, said that when he went to the trouble of doing an analysis of the major certificates, he found them to be “fairly similar.”

“It does appear that LEED is becoming more prevalent outside the U.S.,” said Mr. Probst.

One reason that may be happening is many multinational corporations will tend to choose one certification that they will use world-wide. For example, when Deutsche Bank AG renovated its Frankfurt headquarters in 2006, it brought the twin towers up to U.S. LEED standards.

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