Concern for the environment is becoming more widespread among the general population, and as this trend continues to grow, so does consumer demand for buildings that reflect these values. According to a preliminary report compiled by Dodge Data & Analytics, demand for energy-efficient, environmentally conscious buildings has doubled every three years since 2008. Some of the highest growth rates have been seen in emerging economies, meaning that green buildings have contributed a significant amount to the overall global economic recovery.
With these trends in mind, developers and builders are bracing for even greater demand among consumers for environmentally conscious homes and buildings. The challenge lies not only in keeping pace, but with meeting the constantly changing expectations and engineering considerations such projects entail. Technology will also play as much of a role in building these structures as it will in helping them meet energy efficiency standards. Construction firms who can effectively leverage construction safety systems, among other new innovations, will see even greater rewards from this rapidly growing market.
"Builders are bracing for even greater demand for green homes."
Green building trends
In their survey of more than 1,000 construction industry professionals specializing in architecture, engineering, contracting and consulting, Dodge found similar trends across specialties and countries. Respondents were generally in agreement that at least 60 percent of all business would be green-focused by 2018. The growth of such projects was most apparent in emerging economies, with Dodge researchers finding the most confidence in the Middle East, Africa, Asia and South America. The survey also revealed similar information as previous studies from 2008 and 2012, with 46 percent of respondents continuing to see most promise for green projects in the commercial building segment. In addition, green projects in institutional buildings like schools, hospitals and public spaces, are expected to surpass those in existing buildings by 2018.
In an interview with Dodge Research Director Donna Laquidara-Carr, Construction Dive further elaborated on the findings of the study, and what they mean for the industry's financial health as it continues through a wave of growth. According to Laquidara-Carr, green building currently accounts for as much as 33 percent of the entire residential construction market, and that number is only expected to rise. She noted Dodge did further research into the issue by surveying single-family builders and remodelers who are members of the National Association of Home Builders, and found even more insights. While builders reported an expected increase in green projects totaling 60 percent by 2020, remodelers had less optimistic outlooks. Just a third of remodelers thought more than 60 percent of their business would fall under the green category in the same amount of time.
These numbers are impressive yet optimistic, and almost mysterious without knowing the reasons behind them. According to Laquidara-Carr, the construction industry is banking on the hope that consumers will pay more for green buildings. Some studies have shown this to be the case, including one from the Washington, D.C. area. According to research from the Institute for Market Transformation, homes in this area of the country with green features like solar panels or LEED certification sold for 3.46 percent more than similar homes without these options. Indeed, Dodge found that around 69 percent of builders and 78 percent of remodelers were confident in the consumer's desire to pay more for environmentally conscious engineering. In addition, survey respondents noted increases in energy costs, decreases in green product expenses and greater recognition of these innovations by real estate appraisers and municipal regulators as signs of a coming green renaissance.
Despite the rosy future for green construction, the Dodge study, among others, did find some instances of tightness in the market. In particular, builders are reporting a rising cost to meeting green standards. At least 58 percent of builders surveyed said they saw cost increases of 5 percent or more for green construction projects, and 78 percent expected similar numbers in 2016. The reasons for this high price tag are many, but the primary culprit, according to Laquidara-Carr, is a persistent labor shortage in the industry. Without enough workers qualified to complete green projects, managers find themselves beyond deadline and over budget.
The Dodge study also found a correlation between buyer knowledge of homes in general and consumer desire for green technology within them. Somewhat surprisingly, consumers 60 years old or older were more likely to use green technology in their homes than any other age group. This age group also had the smallest number of respondents who reported having no knowledge of energy efficient or sustainable home technology.
"We think knowledge is critical. Owning a home teaches you a lot," Laquidara-Carr said. "We think that as millennials get into homes and understand them, these products will gain in importance. But if there's anything the industry can do to bring millennials up faster and understand it better, it will help drive (quicker adoption)."