The U.S. green building market is accelerating at a dramatic rate, according to McGraw-Hill Construction’s latest intelligence report—The Green Outlook: Trends Driving Change. The report revealed that the size of the U.S. green building market has expanded five fold over the last three years to a $36-$49 billion in 2008. Further, MHC expects this market could triple in the next five years, reaching $96-$140 billion.

Education Sector Poses Strong Opportunity for Green Building

The most stable market in the U.S. for green today and in the short-term is in the commercial and institutional construction sectors. Green building has grown from 2% of new construction starts in 2005 (valued at $3 billion) to 10% to 12% by the end of 2008—a market worth $24-$29 billion. Of this market, the biggest share is from education and office buildings.

The education sector in particular is a strong, stable market for green buildings over the next five years. With green at 10%-15% of this market in 2008 (or $8-$10 billion), it is expected to double over the next five years. Much of this strong market is coming from increased government interventions that are either mandating or forcing public schools to go green, such as legislation in Ohio, Washington State and Hawaii. Additionally, higher educational institutions—particularly those with building projects planned for the future—are establishing green policies in their construction guidelines.

Industry Reporting Business Benefits

Green building is a bright spot in an otherwise tenuous economy. U.S. Green Building Council members report green building to be less affected by the down market compared to non-green building, and homebuyers are willing to pay more for a green home.

Perceived economic benefits are driving green building, particularly in the commercial and industrial construction sectors, with industry players reporting the following business benefits:

• Decreases of 13.6% in operating costs from green building (up from 8.5% in 2005, a 60% increase)
• Increases of 10.9% in building values from green (up from 7.5% in 2005, a 45% increase)
• Increases of 9.9% in ROI from green (up from 6.6% in 2005, a 50% increase)

The study also showed that 77% of the industry expects revenues to grow as a result of green building.

Green home owners are also reporting financial benefits from their homes, including on average an 18% decrease in both energy and water bills.

The Future of Green Building

With the new presidential administration and U.S. Congressional session beginning in January 2009, federal government attention to energy reductions and green building is expected to increase. Coupled with the already active state and local government efforts, the industry will continue to have pressure to build green. As a result, industry players already working in green building will have a market advantage.

Global pressures will also play a role—not just because it is likely the U.S. will start to play a more active role in international policies around sustainability but also because emerging markets will be looking at products and services that can help them meet their carbon reduction plans. This will help encourage and foster the implementation and development of cleaner construction practices and greener building products, which will in turn support the growing expansion of green building in the U.S.