A question that many real estate professionals ask themselves when trying to create sustainable buildings is, how much does LEED certification cost?
To develop or refurbish a property successfully, it is necessary to account for all the expenses that go into this certification. This does not only include the fees for LEED itself, but also additional construction and operating costs that occur when going green.
Depending on which of the 4 levels a developer or investor wants to achieve for their buildings, the costs can be very different. But with a thought-through approach, costs can be minimised for elements that do not contribute significantly to the sustainable performance.
In the following article, you will learn how much LEED certification costs, how these expenses are spread out over a building‘s life cycle, and if it is worth it to invest in the green building certificate.
How Much Does LEED Certification Cost?
There are three main aspects that contribute to the LEED certification costs: LEED Fees, Construction Phase, and Operating Phase. The fees for getting the certification vary but will likely cost at least $10,000 – $30,000. During the construction phase, green buildings are on average 2% more expensive, but the higher the LEED level, the higher the costs. The operating phase only contributes minimally to overall expenses.
The Comprehensive LEED Certification Cost Breakdown
As already mentioned, there are different phases of a property‘s life cycle that are affected by the LEED certification costs. Depending on when LEED has been started to implement into the project, these expenses can differ.
The best option is to consult about the green building standard already during the very first planning phase. This helps to receive building permits on time and allows for hiring the right partners or professionals throughout the development.
To have a comprehensive look at the costs, they will be divided into three categories. LEED certification fees, construction costs, and operating costs.
LEED Certification Fees
First of all, it is important to understand how much it costs to attain the LEED certification itself, without considering the extra construction costs. These fees are complex and depend on a number of factors, including:
- Chosen rating system
- Type of project (new development, recertification)
- Size of the building
- Membership of the USGBC
- Appeals and Inquiries
To simplify the process of identifying all individual costs for a property, we decided to only focus on fees related to the LEED category „Building Design and Construction“ (BD+C). New developments fall in this category.
First of all, there is a registration fee for submitting a new project. For members of the USGBC, this amounts to $1,200 and for non-members to $1,500.
In addition, a flat fee must be paid for each building that is related to the certification. This costs $4,000 for members and $5,000 for non-members.
If you need a faster review of the submitted project, a one-time fee of $5,000 can be paid to reduce the progress time from about 25 days to 12 days.
The next big part of LEED certification costs are related to the site of the building. If the GFA (gross floor area) is smaller than 250,000 sq ft, $0.057 per sq ft and a minimum of $2,850 must be paid. For properties with a GFA less than 500,000 sq ft, it costs $0.055 per sq ft and at least $14,250. Up to 750,000 sq ft, the price per square feet is $0.050 and the minimum costs are $27,500. Larger projects can be requested on the USGBC page and will provide you with an estimate that suits your project.
The mentioned prices are all for members. For non-members, they are about 20% more expensive.
Other costs in this section are the expedited review for $10,000 and appeals, which costs between $500 to $800, as well as inquiries for $220 per credit.
All of these fees must be paid to the LEED organisation once the proposal and documents have been submitted online. As mentioned previously, the earlier you start with the entire certification process during your development, the easier it will be to implement the necessary sustainable changes for your building.
You will also be connected with a so-called „LEED Coach“ if you want to. These are professionals with many years of experience in the field that can help you to successfully achieve the desired LEED certification level.
Estimating how much the construction costs are for a sustainable building can be difficult. Unfortunately, there is no “flat fee” as seen with the LEED fees. But one thing can be said for sure, it costs less than you expect!
In order to estimate how much LEED certification costs, in the construction phase of a property, we can rely on academic papers that have studied a large number of these buildings.
Each LEED certification level is associated with a different increase in expenses, as more technologies, high-quality materials, and consultants or professionals are needed to create a successful development.
Some of these include green building features like sustainable insulation, solar panels, green roofs and façades, building automation systems, rainwater harvesting, recycled materials and so on.
Certification Level and Increased Construction Costs
- Certified -> 0.0% – 1.0%
- Silver -> 2.0% – 2.5%
- Gold -> 1.4% – 8.0%
- Platinum -> 6.0% – 9.5%
- Average -> 2.0%
Sources: Massachusetts Technology Collaborative, Journal of Sustainable Real Estate, Renewable and Sustainable Energy Reviews
It becomes evident that the actual construction costs are only 2% higher on average for the different LEED levels. This is much less than most people usually estimate without looking at the exact numbers.
Which Factors Influence LEED Costs the Most?
There are a number of factors that can affect these costs, but usually they lie in the range that has been outlined previously.
Some parts that can have an impact on expenses include:
- Construction Site
- Building Type
- Laws, Regulations, Planning Permits
- Government Incentives
To give an example, if the property is located in a region that does not get much sunlight, it will be harder to use solar panels. This means other technologies must be found which can be more expensive. Another example can be, if local governments provide incentives for certain green building materials. Consequently, construction costs might be lower.
The longest period of a property’s lifecycle is the operating phase. It is essential to consider costs that might arise during these times as it can have a significant impact on the net present value of an investment.
Fortunately, green buildings are great at reducing operating expenses like electricity, water, heating, cooling, or maintenance costs.
But how much does LEED certification cost during this period itself?
As there are no costs for the certification itself after the process, you would only encounter additional expenses should you wish to recertify your building.
If the property has to follow monitoring procedures after the construction, which is most likely the case to achieve a high LEED level, then this might create some expenses. Here, data will be collected on many aspects of a property such as air quality, water quality, energy consumption and more. To run this process efficiently, systems are needed that control everything. It is not possible to estimate exactly how much this will cost to run, as it depends on each building. Compared to the savings of the LEED certification this should be negligible.
Is LEED Certification Worth the Costs?
As mentioned previously, the average premium for LEED-certified buildings is only about 2%. There are many factors that can influence construction expenses, so it needs to be analysed in detail if the return is high enough for a project.
If you want to learn more about the financial benefits and the values of green buildings, take a look at our comprehensive article here.
On average, the asset value is up to 18% higher, rental income up to 12%, occupancy rate up to 16% and even productivity increases by 5%.
To find out what the LEED certification cost is, it is necessary to focus on 3 main aspects: LEED Fees, Construction Costs, Operating Costs. There are a number of fixed and variable fees that arise when applying for the certification but the biggest contributor in terms of expenses is the construction phase. Here, on average, the costs are 2% higher than a normal “non-green” building.
If you want to learn more about the future of commercial real estate, including topics such as sustainability & ESG, PropTech, architecture, development and investment, feel free to take a look at our other articles on Smart CRE. Here you will also find insights into the job market and how to start a career in real estate.
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