The Commercial Construction Index tracks global green building and sustainable development. Listen to “A Podcast That Builds” host Ben Johnson and Dodge’s Donna Laquidara-Carr discuss the findings from the World Green Building Trends 2018 Report, including insights into the future of green building and what it could mean for the construction market. Below is a transcript of this construction podcast.
Ben Johnson:
Hello and welcome to “A Podcast That Builds”. I’m your host, Ben Johnson, and I’m joined again today by Donna Laquidara-Carr, director of Industry Insights Research at Dodge Data & Analytics. Welcome, Donna. Today’s show is on this new report, World Green Building Trends 2018. So why don’t we start with just an overview of what the report is who the main players are and the reports history.
Donna Laquidara-Carr:
Sure. And let me start with the history. So, we started back in 2008 with a global green survey. We’ve, from the beginning carrier has been a really important partner in this, Carrier, and their parent company, UTC and they have supported it through all of the various versions of this study. We really saw the study formalize and crystallize into its current form in 2012 which has given us great longitudinal data to really understand how green has evolved globally and that’s been important. We do have some other players on the current report that are also really critical to this study. Our premier partners were the AIA, the American Institute of Architects, and Autodesk and they both brought not only insights, Autodesk helped us realize that we really wanted to look at technology a little deeper and allowed us to create a technology section in the report that I’m very excited about. And for distributing the survey and financial support. The US Green Building Council was essential and that they have always and consistently throughout its history been a supporter of this effort as well. We also had some real support from the world green building council who helped us distribute the survey globally and who provided insights really helped us. We, with their subject matter expertise throughout the globe help helped us to really understand the full interpretation of the findings.
Ben Johnson:
So, the headline coming out of this report in the media has been that 47% of participants in this study expect to do more than 60% of their projects green by 2021. But what does that actually mean in terms of change over time? And how does that compare to right now?
Donna Laquidara-Carr:
Well, it’s interesting, you know, doing this over so many different studies we’ve really learned a lot. One is that you know, people are very optimistic when they respond to this survey. So, we see the strong growth predicted and you know, we report very accurately what they said. If you look back at some of the previous studies, you see that green has steadily grown globally, that that is accurate but perhaps not always at the level that they seem to predict. However, what you to remember is that this is market research. So, we’re not go doing a precise measurement. What we’re measuring is the market’s interest and engagement with green building, whether that’s growing, whether that’s fading and it’s clear that even as the green building movement has matured, this market has really still excited taking hold, growing in new ways. It really, the, the report reaffirms that this is still an area of vital interest.
Ben Johnson:
So specifically, what are some advantages besides feeling good about our built spaces that are cited by participants for building green?
Donna Laquidara-Carr:
Since we started doing this study, we have been asking about business benefits and one of the things that’s been very striking is how consistent they’ve been over the years. So, we typically see operating cost savings between a 12 month and five-year period at anywhere between eight to 15%. And that has been reported consistently across the board. And that is for both new green buildings and renovations. We also see increased asset value. Right now, owners are predicting 7% and that stayed pretty consistent although we have seen it tick up slightly from 5% when we measured that in 2012. And then the payback for green building, which is critical because people only invest in the commercial markets if they see that they’re going to get payback within a reasonable period of time. We’ve seen that stay consistently between six and seven years for both retrofits and new buildings. These are incredible market drivers that we think have been influential in the growth that we’ve seen over the years. Although this study does suggest that there are other factors that are influencing that growth as well.
Ben Johnson:
So, what are some of those other factors affecting growth?
Donna Laquidara-Carr:
Well, one of the things that really was a striking finding in this study was the importance of social factors in driving green. We see health as a critical factor. We asked more questions about health this time, but still it emerged very strongly as one of the biggest drivers of green. In addition to that though, we see a lot of the social factors driving green all going up. And I must admit, when I first saw that result, I was a little bit taken aback because you don’t typically tend to see factors across the board go up. I actually went back and made sure our data was correct. What they could do is they could, they could pick up to three factors as important and it looks like the respondents in earlier studies that tended to focus on one or two more people were picking more social factors as important things like helping the domestic economy or driving sustainable business practices. So, all of those factors tended to, to get a little uplift in this report, which suggests that owners, architects, contractors are seeing that green has more benefits than just those operating costs savings.
Ben Johnson:
So, what role did we find that technology is playing in the evolution of green building and sustainable development?
Donna Laquidara-Carr:
Well, it’s interesting, that’s an interesting question because you could easily flip it on its head and say, what role did green pill building play in the evolution of technology because they’ve been so tied together. But in answer to your specific question, there’s really two areas where technology is making a huge difference in green. And it’s interesting because they’re at the opposite ends of a building life cycle early. The ability to do early analysis during design on energy, on light, on all of those other factors. Really when we interviewed our green experts in this report, that really emerged as a critical factor that people have seen changed in the last five years. And now what a lot of people are paying more and more attention to on the other end of the building life cycle is sensors. You know, being able to bore, accurately run the building, being able to more accurately track how the buildings performing; these things will help keep the building you know, performing well across its life cycle and are really critical and especially when you can marry digital models to those sensors and create digital twins for these buildings.
Donna Laquidara-Carr:
That really seems to be an interesting area that’s really in its infancy, but the, all the pieces are there. So, we’re, we’re excited to watch that develop as it goes along.
Ben Johnson:
Yeah, I can definitely see how I’m in the planning stages. If you can, you can model out exactly how long it would take to make up financially for a specific green building choice. It makes it a lot easier and reduces risk, which of course increases the chances that its green building is going to be implemented. So, looking forward, are there any impediments to green building that you see becoming more prevalent?
Donna Laquidara-Carr:
Actually, no. And I’ll explain that answer a little bit. First. A, we’ve really seen the perception that higher costs are a big barrier to green. Go down a bit. And that’s important because it’s still the top barrier. So, I don’t want to diminish it. It’s still widely recognized in most countries as a very big barrier to green. But it went from about three quarters of the respondents back in 2012 saying this is really a difficult challenge to about half. So, you know, that’s a big change over time and that can be due to a lot of reasons. One thing we have observed though in these studies is when you look at those who have more green experience, they tend to find the cost a lot less of a burden. So, it’s actually not surprising that as you know, the green building movement matures, you get more sophisticated green operators out there that they are able to have the cost not be a significant factor. A few emerging regions around the world did find that people lacking the skills to do green works sufficiently was, it was a bit of an issue, but you know, that will also fade over time. So, we really do see most of the barriers coming down.
Ben Johnson:
You mentioned regions in there. So, let’s, let’s talk regionally. I know that you’ve created actually nine different mini reports covering different geographies around the globe. And that was also a good time to mention that in the show notes for this episode, you’ll find a link not only to the main report we’re talking about to all of these other free nine reports as well. But what are some of the standout examples of areas where green building is advancing quickly or slowly or accelerating or not?
Donna Laquidara-Carr:
Well, most of the areas saw acceleration. That’s the, you know, they really are expecting, they saw a change between what they thought they were doing three years ago and what they’re doing now and they’re expecting to see additional change, usually pretty dramatic change in the next three years. So that’s great. But I do want to add a little note of caution. Some of the regions had a very high level of participation by members of green building councils. Some of the regions had very little participation on the other hand by Green Building Council members. And we do find there is some direct correlation to the amount of activity going on now. So, you know, you don’t want to draw a direct comparison and say for instance, in the Mena region Saudi Arabia and the UAE were two countries that we featured in Saudi Arabia. The amount of green council participation was very low, and the amount of green activity was extremely low in the UAE.
It was well over half of the participants are members of a green building council and they had one of the most robust at the levels of activity of green building indicated in the study right now. So, you do need to be a little bit cautious and assuming that Saudi Arabia is that far behind the UAE, it’s better to look at the countries individually, see what’s going on with them. That said, one of the interesting things that leaps out, remember how I told you that most of the time people are a little bit more optimistic than, than the, the numbers bear out when we do the study three years from now. Singapore, however, because it has agreed mandate actually predicted very accurately back in 2015 what levels of green building they were going to be doing. And it was an aggressive prediction. So certainly, you know, you can see that a green mandate has a great deal of power in that market.
Ben Johnson:
These are very interesting results and mostly pretty positive results as well. But as one of the minds behind this report, what did you find interesting or surprising in this?
Donna Laquidara-Carr:
Well, as I’ve, I have already mentioned some of what I really, really leaped out to me. Certainly, the prevalence of health as a huge factor. And you know, I’d love to do a more detailed study on that globally because we know that in markets like Canada and the U.S. commercial construction is driving an interest in health, they see it as an amenity in their buildings. They see it as something that’s going to give them a competitive advantage. However, there is some evidence, but I don’t have the data to support it yet that some concerns about air quality in China and India might be the reason that they’re particularly interested in health, which means that health to them means very different things. Right? In the u s it can mean spaces that encourage activity, right? And spaces that have social programming. Whereas in China, in India there might be a much stronger emphasis when they’re thinking about health, about things like just cleaning the air so that the air inside the building is actually cleaner than the air outside the building.
So, I think that that is such a rich area and we just scraped the surface of it. You know, that demonstrating that there’s a global interest in health doesn’t really get at the nuances of how that plays out in the markets. So that I think is an area I’d like to go further in also that, that that really was a surprising finding when I saw that the social factors for sustainable development have increased. That is truly important. I think it really does, again demonstrate that the market is recognizing that perhaps even if you can’t put a benefit on a spreadsheet, it is still a benefit.
Ben Johnson:
So, were the results in line overall with what you were expecting before conducting the survey?
Donna Laquidara-Carr:
Yeah, I would say basically, especially some of the key results. We, I’m, you know, I was pleased to see the green is still growing, but that was our expectation going in. We weren’t expecting to see the market flattened out, but it’s good to confirm that very important. The business benefits, again, they’ve been steady over the last couple of surveys. So, it was heartening to see that they’re still steady and that they’re still there’s still, people are still seeing those benefits from green, but you know, that that wasn’t a particular surprise. So, the, the surprises were the points that I made before most of the data really was in line with what we anticipated.
Ben Johnson:
Well, thanks so much for participating today, Donna. It’s always great to hear your insight.
Donna Laquidara-Carr:
Thank you very much. Always a pleasure to talk to you, Ben.
Ben Johnson:
As I mentioned previously, to get free access to the World Green Building Trends 2018 Report and the regional sub reports. See the show notes for a link or visit Dodge at construction.com and click Resources. You can also reach Dodge at (877) 784-9556. That’s all for today’s show. We’ll see you next time, when we’ll be discussing the Q4 2018 Commercial Construction Index Report.
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