Over the past decade, green development practices have come to the forefront of the real estate world. From 2005 to 2008, the value of green construction increased from $10 billion to $50 billion, and there has been a 20% annual increase in professionals obtaining LEED certification since 2001. Despite its recent surge, green development has reached an interesting turning point in the context of the current economic downturn. While all types of new construction have fallen victim to the recession, intentions for green development and investment are continuing to strengthen -- ramping up for a significant amount of sustainable development activity once the economy rebounds.
 
While the long-term outlook of green development seems destined for success, different real estate sectors are not in absolute agreement regarding near-term expectations. Developers remain hopeful for ground-up green projects despite the current recessionary business climate. Investors and lenders, however, are unlikely to become involved in new sustainable development deals during the downturn, suggesting that many green projects will be unable to gain financial support until an economic recovery occurs. In the short-term, municipalities will be one of the few groups involved in sustainable development, as the public sector increases efforts to pass new green legislation and retrofit public buildings with green features.
 
New government legislation that encourages sustainable development practices will bring about another shift in the decision-making paradigm of a green project team. When the concept of sustainable development was first introduced to the real estate world more than a decade ago, the fundamental driver behind a project going green was the reduction in energy usage, with environmental ethics nearly trumping the importance of bottom line financials. In the context of current economic conditions, the financial gains that can be achieved through green development are becoming increasingly important, while environmental benefits such as a reduced carbon footprint and air quality improvements have become secondary benefits. As new government legislation is passed during the downturn, the reasons for which developers and investors "go green" will shift again, this time driven by public agency incentives and regulations. Whether by strict development guidelines or incentives for building sustainable properties, developers will be swayed to produce sustainable buildings by the government.
 
Other interesting metrics that are affected by the downturn are the premiums associated with green properties (over those that are conventionally constructed), including construction costs, asset transaction prices and lease rates. As the sustainable development industry and overall economy change, so too do the premiums. Green premiums will remain relatively stable through the downturn due to minimal activity in all sectors of real estate, yet these premiums are likely to shift during the recovery. Green construction costs have fallen in the past few years and will continue to fall as a result of better technology, cheaper materials and increasing competition. Technological advances will also lead to decreased operating expenses in sustainable properties, savings that will eventually trickle down from the property owners to the tenants. The sale price differential between a green building and its conventional twin -- hypothetically speaking -- is also likely to change. Green assets will be in high demand during the recovery as investors position themselves for a green-dominated future, driving up sales prices and their associated premiums over conventional properties.
 
Green development is no longer simply an environmentally-friendly label, but a new technology that has the capability to create larger profit margins for real estate professionals while simultaneously reducing the energy usage of buildings around the world. Although developers and investors are less likely to adhere to green development practices during the current recessionary economic climate, sustainable development will become an industry standard in the long-term, with a continued emphasis on real cost savings and government-legislated environmental benefits associated with green technology.

Richard M. Gollis is Founder and Principal of The Concord Group, a premiere national real estate advisory firm with offices in Newport Beach, CA; San Francisco, CA; and Boston, MA. Jesse L. Turcotte is an Associate in the Boston office.

Photos courtesy of: The Luminous Landscape and EcoVillageGreen

Financial controls of revenue received are often taken for granted. Not a month goes by without news of a previously trusted employee siphoning money from an employer's accounts for personal gain. There is no business that is immune from this type of criminal conduct. Recent cases reveal that businesses of all types, as well as law firms, municipalities and unions, are all susceptible to the criminal misdoings of a trusted employee. The main reason is that businesses generally need to improve upon safeguards against this type of behavior.
 
Employee misconduct could not only prove to embarrass a business, but it could also prove to be financially crippling. There are several basic controls that employers can utilize to protect themselves from the potential of this type of criminal behavior: 

• Employers should regularly conduct audits and periodically evaluate their cash-handling procedures.
• No one person should be entrusted with the "keys to the cash register."
• As your company grows and takes on new forms of payment, such as wire transfers or credit cards, more than one person should know the procedures of these payment systems to enable effective review and auditing.