Green Building Market Grows 50% in Two Years

The value of green building construction starts was up 50% from 2008 to 2010–from $42 billion to $55 billion-$71 billion–and represents 25% of all new construction activity in 2010, according to a new market report. 

The green building market size is expected to reach $135 billion by 2015, state
McGraw-Hill Construction’s "Green Outlook 2011: Green Trends Driving
Growth" report.

Green building is the bright spot in an otherwise tough economy, and in some sectors, that rate of growth has been remarkable. In nonresidential building, for example, the green building market share is even higher than the overall market. Today, a third of all new nonresidential construction is green–a $54 billion market opportunity.

In five years, nonresidential green building activity is expected to triple, representing $120 billion to $145 billion in new construction (40%-48% of the nonresidential market) and $14 billion to $18 billion in major retrofit and renovation projects.

To break it down further, health care construction this year is expected to grow its green share to as much as 40% (valued at $8 billion-$9 billion in 2010)–phenomenal growth in just two years. Education (valued at $13 billion–$16 billion in 2010) and office green construction (valued at $7 billion–$8 billion in 2010) also remain strong sectors, showing high increases in market share, due in part to the fact that bigger projects are the most likely to “go green.”

This year, the U.S. Green Building Council’s LEED specification is mentioned in 71% of all projects valued at over $50 million.

“It’s an amazing area of opportunity at time when the construction market is extremely challenged,” said Harvey M. Bernstein, vice president, Global Thought Leadership and Business Development, McGraw-Hill Construction. “In today’s economy, firms that specialize in green or serve this market are seeing a tremendous advantage–and they’re doing good at the same time. Green building leads to healthier places for us to live and work in, lower energy and water use, and better profitability.”

Aside from market size estimates, the 32-page Green Outlook 2011 report provides insights into key trends, perceptions and motivators in the green building space. For example, building owners cited three business benefits as the main drivers for building green:

• Reduction in operating costs of 13.6% on average for new buildings and 8.5% for retrofits
• Increase in building values of 10.9% for new buildings and 6.8% for retrofits
• Increase in return on investment (ROI) of 9.9% for new buildings and 19.2% for retrofits.

Beyond these bottom-line advantages, McGraw-Hill Construction attributes green building’s rapid expansion to owners’ desire for market differentiation, growing public awareness, and an increase in local and federal government regulations. As of September 2010, green building legislation and initiatives were present in 12 federal agencies and 33 states, and the proliferation of local government initiatives have increased at an especially impressive pace–from 156 localities in 2008 to 384 localities in 2010