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Responsible Property Investing in a Tough Economy
June 16, 2008
Greener Buildings
Why should  investors put their capital to work in the green building sector? 
In this article , authors Jeff Feinstein  (President and Vice Chairman of the Schuster Group) and Michael Butler (Chairman and CEO of Cascadia Capital) provide their top 3 reasons . . .

  • Smart Niche Investing: One of the best ways to hedge risk in a an economic downturn is by turning to niche investing, and the green building segment offers tremendous potential for robust risk-adjusted returns in a new real estate cycle characterized by softening prices and weaker credit availability.

  • Supply and Demand: We can already see this eco-power by looking at supply-demand ratios, which have pushed rental rates in green buildings above those in non-green structures.

  • The Retrofit Revolution: As noted above, legions of existing buildings will have to be retrofitted to conform and comply with 21st century environmental standards. Only 7 percent of LEED applications currently come from existing buildings. But this will rapidly change -- especially with the declining cost of green building materials and sweeping global initiatives like the Clinton Foundation’s multi-billion-dollar program designed to retrofit old buildings around the world.

Responsible property investing is definitely new -- and largely untested on a broad scale -- but it offers surprising clarity amid the uncertainty in a tumultuous market.

We know sustainable real estate will improve the environment in a very significant way; we know it will enhance the overall economy and contribute to prosperity; and we know tenants value green environs more than ever and are willing to pay for them. The only question is whether smart capital will underwrite the promise and potential of eco-building.


 

 
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