Economics of green building

By CHUCK SODER

for Crain`s Cleveland

4:30 am, August 3, 2009

(Original article found here)

Steve Revnew says a copy of Builder magazine is all one needs to get a feel for how big of a deal green construction is these days.

It isn`t even necessary to read the articles. The amount of advertising touting green products and services says it all, according to Mr. Revnew, director of marketing for paint maker Sherwin-Williams Co.

“That`s where the dominant amount of the ads and promotional materials are (focused),” he said.

Mr. Revnew`s company is one of many in Northeast Ohio that are winning business by feeding what has become a massive appetite for environmentally friendly construction.

Sherwin-Williams has been in the space for a while, Mr. Revnew said, noting that it has been 10 years since the company released its “Harmony” line of paints, which release no volatile organic compounds.

Five years ago, however, it noticed that an increasing number of architects and contractors were showing an interest in green products, so the Cleveland company worked to develop more of them. The effort resulted in the eventual release of paints that required fewer coats, as well as paints that last longer because they are washable.

Today, those products are logging “double-digit” sales growth despite the real estate downturn, Mr. Revnew said.

While Mr. Revnew declined to say specifically how much revenue green products generate for Sherwin-Williams, the paint maker and other companies clearly have a growing audience for green construction products: From October 2008 through February 2009, a total of 4,083 commercial construction projects were registered for certification through the U.S. Green Building Council`s Leadership in Energy and Environmental Design, or LEED, program. That`s up 66% from 2,465 during the like period a year earlier.

Not surprisingly, Mr. Revnew said he expects the upswing to continue because green practices are becoming part of everyday life in the construction industry.

“It`s no longer a trend. It`s mainstream,” he said.

Among the Northeast Ohio companies reaping the benefits of green building is roofing materials company Viridian Systems in Tallmadge, which was formed when Youngstown-based Roth Bros. Inc. in March bought the assets of W.P. Hickman Systems.

Viridian president Brian Dunn said the company is growing and hiring today partly because of demand for its environmentally friendly roofing and building maintenance products. Among them are white roofs that reflect the sun`s heat to cool buildings and vegetative roofs that help insulate buildings while reducing storm water runoff and protecting the roof itself.

The down economy won`t be able to stop the green building movement`s momentum, Mr. Dunn said. All sorts of companies are entering the fray because demand is so strong, he said.

“If they`re not green, they`re scrambling to be green,” he noted.

Randy Korach, president and chief operating officer of roofing and building maintenance products maker Tremco Inc., sees similar opportunities.

The Beachwood company, which employs 3,600 worldwide, receives just a small portion of its revenue from green products, but the niche is growing fast, Mr. Korach said. For instance, sales of green roofing products have grown 10-fold in the past five years, he said, noting that they started from a small base.

“It`s as big a driver as we`ll see in the next generation,” he said.

Contractors are getting in on the action, too.

Donley Inc. marketing manager Jeff Dentzer said about 90% of requests for proposals that the construction management and general contracting company receives are looking for LEED experience. Donley started seeing an increasing interest in green construction from building owners, even in the profit-focused private sector, about three years ago, and it only has accelerated since, Mr. Dentzer said.

“It`s going to be accepted as standard building practice,” he said.

Keith Sutton, president of home building company Sutton Builders Inc., said rising energy costs and a growing sense of environmental responsibility are key drivers, making it easier for him to get customers` attention when touting the techniques he`s used for years.

“People listen when you start to talk about green features and energy efficiency,” Mr. Sutton said.

Government and organizational mandates are big motivators as well, said Bill Doty, co-owner of Doty & Miller Architects, a Bedford firm that focuses largely on green construction projects. For instance, the Ohio School Facilities Commission in 2007 began requiring that any construction projects financed with commission money be designed to meet LEED Silver certification requirements. The Cleveland Foundation and the Gund Foundation adopted similar requirements that same year, he said.

More mandates are on the way, meaning more opportunity for the private sector, said Mr. Doty, a self-described “green capitalist.”

“I see huge growth in it,” he said.