If the workplace is any indication, you could almost believe corporate America really cares about the environment.
Sustainable construction is one of the fastest- growing segments of the already red-hot commercial-building industry. An estimated 5% of all new U.S. commercial construction received the U.S. Green Building Council’s Leadership in Energy and Environmental Design (LEED) certification last year. And by 2010, 10% of all new commercial construction will be sustainable, according to the
Existing construction is getting an eco-lift too. Developers such as Hines and the Durst Organization, and some Real Estate Investment Trusts (REITs), are snapping up half-empty office buildings and renovating them according to green standards. That can often bring 3% higher rents and a 7.5% increase in a building’s value, according to the McGraw-Hill report.
On average, green buildings save 10% of utility costs each year–and sometimes much more.
So how do individual investors get in on this latest real-estate boom? The easiest opportunities may lie in REITs that have made a substantial commitment to new or renovated green buildings. In a sign of just how hot this phenomenon is, however, two of the biggest, greenest REITs, Arden Realty and Equity Office Properties Trust, have been swallowed up by
For investors who get a bit woozy at the thought of betting solely on the vagaries of the commercial-real-estate market, a mutual fund with green-building holdings might be the safer way to go. The Spectra Green Fund, unlike many of its socially conscious counterparts, has consistently outperformed the Russell 3000 for the past three years. The fund, which among other things invests in clean-energy stocks, is putting a small percentage of its assets in green REITs. Rashid also likes to invest in the building segment through the back door, focusing on the supply and equipment manufacturers that green builders rely on, such as
Walecia Konrad is an award-winning journalist who has worked at several leading business publications, including Smart Money and Business Week. She specializes in investing and personal finance.