April 22, 2008

Productive Knowledge Inc.

Jim Weiss 414-940-6555

David Niles 414-617-6597

Marketing of Commercial Green Building Expertise

Should Focus on Benefits

MILWAUKEE, April 21, 2008 – Construction-related companies need to stress benefits along with their expertise when marketing their green building expertise in the commercial real estate sector, according to a recent study.

Contact Jim Weiss for a full report on the Marketing of Green Building Expertise.   Download a summary of the Best Practices in the Marketing of Green Building Expertise presentation to the Wisconsin Green Building Alliance.

“Businesses and developers that are looking at green buildings are doing so primarily for the energy conservation benefits,” said Jim Weiss, president of Productive Knowledge Inc. in Milwaukee. “So those marketing their green building expertise need to promote that benefit and offer solid information to substantiate claims. While ‘green’ may attract interest, benefits sell.”

While green building is currently a small segment of the commercial real estate market, about 3 percent nationwide, it is rapidly growing, especially in some state such as California and Illinois. Local regulations are driving some of that growth, but so is a desire to lower energy costs, increase interior air quality, and to reduce the significant negative impact that non-residential buildings have on the environment.

A recent Johnson Controls Energy Efficiency Indicator survey also revealed significant interest in sustainable design, with respondents indicating that a third of the new building projects they are involved in will seek green certification.

 

Companies Seeking Best Ways to Market Green

Construction companies and architecture and engineering firms are seeking to capitalize on that expanding market, but few of those companies have engaged strong proactive marketing campaigns to promote their green building knowledge and experience.

“Many of those companies are hearing a lot about green, but they’re not sure whether it’s worth it to invest in gaining green expertise, or what messages and strategies are most effective to promote such expertise,” said David Niles, co-owner of Productive Knowledge Inc., which gathered information for its “Best Practices in the Marketing of Green Building Expertise” through interviews and a survey.

Market studies have projected a major expansion of the green building market in the non-residential sector, with the segment expanding to 10 percent of the total market in 2010 compared to this year’s 3 percent, according to McGraw-Hill Green Building Smart Market Report.

 

Market Will Continue to Expand

“The market is clearly growing and will continue to be solidified as more units of government incorporate green elements into building codes,” Weiss said. “That means there is a window of opportunity now open for companies to grab market share and a leading position in green building.”

The Productive Knowledge study found that five key messages resonate in the marketing of green building expertise:

• Sustainability
• Energy conservation
• Healthful work environment
• Design and style
• Increased building value

Other than “sustainability,” each of those messages addresses a desired benefit for the building owner and occupant. Sustainability’s emergence as a key marketing message reflects a growing awareness of the impact of buildings on the environment, Niles said. “An increasing number of business owners are seeking green buildings because ‘it’s the right thing to do,’” he said.

 

Lower Energy Costs is Top Attraction

When asked what attributes clients seek in green buildings, “lower energy costs” was the top answer, followed by “better work environment,” “marketability of leasable space” and “sustainability.”

A variety of studies have shown that buildings constructed to one of the industry green standards, such as the EPA’s Energy Star of the U.S. Green Building Council’s Leadership in Energy and Environmental Design (LEED) have, on average, significantly lower energy costs, as much as 25 percent less annually.

There also have been correlations made between improved air quality in green buildings and higher worker productivity and fewer health problems.

A recent CoStar Group study showed that LEED and Energy Star buildings are commanding higher lease rates, higher occupancy rates, and higher prices for such buildings when sold.

Certified green structures can cost more to design and build, with estimates ranging from 5 to 15 percent more, depending on the level of greenness incorporated. The U.S. Green Building Council says a platinum level green building –the highest level, will cost about seven percent more than a traditional building, with a lower cost differential for lower levels of green.

 

Perceived Cost Premium is Big Deterrent

The cost issue remains one of the biggest challenges for green building; 77 percent of respondents to the Best Practices in the Marketing of Green Building Expertise survey said the cost perception is a deterrent to green building.

“Companies promoting green building services need to have a good handle on the cost issue and how higher upfront costs can be offset by lower operating costs,” Weiss said. “While the current trend of green building is relatively new, there is a growing body of evidence on green building costs and ROI.”

Survey participants said networking and speaking engagements were the most effective ways for them to promote their green building expertise, followed by public relations, web site information, event sponsorship, green directories and print ads.

More than two-thirds of respondents said their companies are allocating more resources to marketing green building services this year, which indicates confidence in the market. On a related note, most plan to increase their knowledge and authority in the field, primarily by getting more staff LEED certified.

 

Companies Expected to Be Internally Green

Nearly 80 percent of respondents said their customers expect them to be environmentally sensitive in their business practices.

“It’s not sufficient to be a green building expert,” Weiss said. “Clients will expect you to operate “green” -- to have a culture of green within your own company. To sell green effectively, you must be green.”

Weiss also noted that while traditional marketing methods are effective in the green world, there are additional factors that must be addressed. He also noted that the green market is segmented, and that different message points appeal to different segments.

The Productive Knowledge “Best Practices in the Marketing of Green Building Expertise” study was conducted with its research partner Business Development Directives for the Wisconsin Green Building Alliance.

For more details, contact Jim Weiss at 414-940-6555.

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