Vertical Markets for Green Buildings

In this chapter, we address several selected vertical markets for green buildings i.e., markets that are already developed or that are expected to develop rapidly. These include commercial offices, K-12 education, higher education, public facilities, high-rise housing and healthcare (still a developing market). In this terminology, a vertical market refers to a particular type of use for a building - office, education, medical, etc., whereas a horizontal market applies to green technologies that could be used in a wide variety of building types, for example, solar energy systems can be used in offices, schools, churches, etc. Vertical markets for green buildings exist in every area of the country, so it makes sense to look at how these markets view green buildings at the present time and how marketers are trying to address the needs of particular building types.

Table 5.1 shows the projected growth rates of various vertical markets from 2007 through 2010. Some observers believe that green buildings will experience an "inflection point" in 2007, as a number of factors coincide to give this market an accelerated boost. From Table 5.1, it is easy to see that a design firm should be focused on the fast-growth sectors, including education, commercial offices, government, and institutional projects and healthcare, while waiting for the rest of the market to catch up. Some potentially slower growing green building markets such as high-rise residential, retail and hospitality should still offer good marketing potential for firms already established in them.

It pays to remember two key facts when addressing each of these markets: few architects have designed a LEED-certified building (as of the end of 2006), and few owners have purchased one. Therefore, we are still very much in the early adopter stage of market development. Many building owners now put out requests for proposals that specify that a building project must achieve a LEED rating, but only a few selected government agencies are demanding a higher-level LEED Silver or Gold rating. Some nonprofits are even going so far now as to specify that a new project has to achieve a Platinum rating, but these are still relatively rare occurrences.

Table 5.1 Projected annual growth rates for green buildings by market sector1

Market Sector

Projected Growth Rate in Green Construction (%)

Education

65

Government

62

Institutional

54

Office

48

Healthcare

46

Residential

32

Hospitality

22

Retail

20

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