We are beginning to see some signs of life in the green building sector. As a sub-sector of the broader construction and real estate market, green building was demolished with the collapse of the rest of the sector over the past several years. However, with the crash I believe there are some are opportunities in this quietly evolving sector. Although green energy and electric cars are receiving the hype, green building could very well become one of fastest areas of green growth in the next decade.
In a widely reported study, McGraw-Hill Construction’s Green Outlook 2009 stated that the value of green building construction starts was up five-fold from 2005 to 2008 (from $10 billion to $36-$49 billion), and could triple by 2013, reaching $96-$140 billion. That’s an average annual increase of 29%, a persuasive growth rate that is not reflected in the market today. What’s driving this kind of growth? Several factors.
Thousands of Green Building Professionals are Arriving in the Marketplace
A new generation of architects, designers and consultants are learning how and why to build green. As these professionals enter the market, expect them to begin putting their lessons to use – increasing the demand of green building products.
For instance, the American Institute of Architects recently modified its continuing education requirement to include 4 hours of education in sustainability. As of April 2009, the U.S. Green Building Council counted 20,000 organizations among its national membership, and more than 100,000 LEED Accredited Professionals around the globe, breaking new records every month. LEED is an internationally recognized green building certification system, and its professionals provide and seek out sustainable design projects.
Companies are Responding to Demand for Green Building Products
With the demand from professionals increasing, new and old building suppliers are adding green building products to their offerings. Buildinggreen.com’s GreenSpec database of green building products now includes more than 2,100 product listings, with about 200 products being added per year. “New products are being introduced all the time, making it a challenge for our staff to keep up,” said BuildingGreen founder Alex Wilson in a company press release.
A major driver of the development of green products continues to be the U.S. Green Building Council’s LEED Rating System “Designers of LEED buildings are looking for green products, and manufacturers are responding,” said Wilson.
Consumer Green Building Demand is Increasing
Homeowners are also beginning to realize the value of green building, both for their green credentials and as a money saver. AVID Ratings Co., which conducts an annual survey of home-buyer preferences, said there are 10 “must” features in new homes, one of which is energy-efficient appliances, high-efficiency insulation and high window efficiency.
Government Stimulus & Policies are Helping to Drive Green Building
President Obama’s stimulus package contained several green building programs, including:
• $50 billion for energy programs, focused chiefly on efficiency and renewable energy
• $5 billion to weatherize modest-income homes
• $4.5 billion make federal buildings more energy efficient
• $4 billion to repair and make more energy efficient public housing projects
The California Building Standards Commission last year published a set of voluntary construction guidelines for buildings to be more sustainable and energy efficient. In January, the Commission adopted these guidelines, and they will become mandatory for all new construction in 2011. Under the name CAL Green, these codes will reduce water use, mandate recycling of construction waste, reduce polluting materials and increase enforcement of energy efficiency in new California homes, schools, hospitals and commercial buildings. California is a leader in environmental policies, and other states are certain to follow its lead.
Green Building Companies to Watch
Here are a few green building companies to consider in the long term. Prices for all four stocks listed below are up year to date, but significant hurdles remain for them while the construction and real estate markets continue to struggle. More companies can be found on our website under the Building & Efficiency sector.
Autodesk (NASDAQ:ADSK) operates as a design software and service company. The company provides software that can be used to predict a design’s performance, helping customers to incorporate sustainable design principles into their practice, which contributes to a cleaner and healthier environment. Autodesk is working with the U.S. Green Building Council to integrate its technology with the LEED system. It was named one of the top ten green companies in 2010 by Portfolio 21.
Acuity Brands (NYSE:AYI) is a provider of sustainable lighting products, reducing energy use and carbon emissions.. The company supplied all of the lighting and lighting controls for Eco-Office, an 10,100 square foot, environmentally responsible building project built by the Southface Energy Institute, to showcase some of the innovative green building technologies available in today’s market.
Interface (IFSIA) engages in the design, production, and sale of modular carpet for commercial, institutional, and residential customers. Finding alternatives to oil-based products is a significant part of the Interface plan to develop and integrate sustainable practices into every part of its business. It is striving to become a carbon neutral company. Interface promises that 100 percent of the fuel and electricity required to operate their manufacturing, sales and office facilities will be from renewable sources by 2020.
Herman Miller (NASDAQ:MLHR) designs and manufacture interior furnishings for various environments, including office, healthcare, educational, and residential settings. It is a sustainable business that manufactures its products without reducing the capacity of the environment to provide for future generations. The company focuses on the recyclability of their materials, the safety of the chemicals they use, and the overall environmentally sensitive design standards of their products. Also many of the Herman Miller buildings are LEED-certified Green Buildings.