The market for sustainable design and construction continues to grow apace with the healthy overall market. And now, new standards are beginning to appear to cover markets beyond buildings, broadening the scope of environmental construction. However, shifting notions of what it means to be green have many in the industry, and their clients, struggling to keep up.

ENR 2016 Top 200 Environmental Firms

ENR 2016 Top 100 Green Design Firms

ENR 2016 Top 100 Green Contractors

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The market growth for green design and construction can be seen from the results of the ENR Top Green Buildings survey. As a group, the Top 100 Green Design Firms generated $5.37 billion in design revenue from projects in 2015 registered with and actively seeking certification from third-party ratings groups under objective sustainable-design standards, such as the U.S. Green Building Council’s (USGBC) Leadership in Energy and Environmental Design (LEED) standards. For the group, this revenue is a 3.1% increase from the $5.21 billion in 2014.

Domestically, green design revenue rose 3.8%, to $4.27 billion in 2015, from $4.11 billion in 2014. The Top 100 had $1.10 billion in revenue from green projects outside the U.S. in 2015, unchanged from 2014.

Among contractors, the market did better. As a group, the Top 100 generated $52.58 billion in contracting revenue in 2015 from projects actively seeking green certification. This revenue was up 8.0% for the group, from $48.71 billion in 2013.

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A Steady Market

The overall market for sustainable design has been steady. However, after a surge in interest in green building coming out of the construction recession starting around 2010, the market’s gains over the past couple of years have only been incremental.

For example, Turner Construction, the nation’s largest general buildings contractor, reports that new sales for third-party certified green projects were down in 2015 compared to 2014, “but in broad terms our green sales have been steady for the last several years, hovering around 50% of total sales,” says Michael Deane, Turner vice president and chief sustainability officer. “I see no indication that this will change dramatically in the near term.”

Many executives worried that the drop in energy prices over the past two years would undercut the financial incentive for owners to build green. But many designers and contractors say that this has not been the case. “Most developers and owners believe that today’s drop in energy prices is only a short-term phenomenon and that costs will steadily rise in the future,” says Lori Top, manager of the commercial architecture group at Burns & McDonnell.

On the corporate commercial side, sustainability appears to be market-driven to meet tenant expectations. “An uncertain market may curtail overall building construction, but it will also tend to place a higher premium on the quality of what is constructed,” says Stevens Williams, principal at Flad Architects.

New markets on the buildings side are becoming increasingly interested in sustainable design and construction. For example, health care and hospital owner interest in sustainable design, construction and operations is on the rise, says Brian Murray, operations manager for Brasfield & Gorrie LLC.

Further, manufacturing appears to be a growth market for certification. “The recent progress made in the certifications of industrial facilities, particularly high-energy-use facilities, is opening up opportunities for LEED expansion,” says Edward Pieterick, senior technologist for sustainable design at CH2M.

And future interest in green design and construction continues to grow. “A recent survey we conducted of our clients indicated that more than half of them have strict sustainability goals for their real estate portfolios and that about two-thirds of them focus on sustainable features and amenities to lower their real estate operating costs,” says Jennifer Taranto, director of sustainability at Structure Tone.

The financial aspects of sustainable building definitely does go into the owner’s thinking. “Yes, owners are asking questions about the proposition value: Will potential tenants be swayed by green characteristics? Do they need a plaque? What is the cost to increase energy efficiency? Owners still want sustainable projects, but the strategies to pursue them are changing, as is the value proposition. The return on investment still remains important,” says Greg Gidez, director of design services for Hensel Phelps.

LEED v4 Causes Concerns

One of the biggest developments in sustainable construction is the pending implementation of USGBC’s LEED v4. The standard, introduced in 2012, has been engulfed in controversy, particularly as it relates to material content and its attempt to limit the use of products and materials that contain “chemicals of concern” that may have an impact on human health.

“As we build buildings that are progressively more efficient, we create tighter boxes. If we don’t pay attention to the materials we put inside them, we create perfect gas chambers.”

–Beth Heider, Chief Sustainability Officer, Skanska USA

Improvements in green building technology have made many sustainable construction firms worry about their impact on building occupants, which they say LEED v4 is addressing. “As we build buildings that are progressively more efficient, we create tighter boxes. If we don’t pay attention to the materials we put inside them, we create perfect gas chambers,” says Beth Heider, chief sustainability officer, Skanska USA. She says healthy materials, light, air and lower utility consumption all predict how buildings will function and their impact not only on the environment, but also on human well-being and productivity.

The materials’ reporting credits in LEED v4 were designed to address the concerns about the chemical composition of building materials. Despite this, there has been worry about the costs of complying with the more stringent standards.

But some firms have reported that many of the fears have been mitigated. “I have been predicting that the shift to v4 would result is a sharp drop-off in the number of projects that choose to certify, but the USGBC’s long roll-out may have worked as they intended—to let folks get used to it and come to terms with the perceived added difficulty and expense,” says Deane of Turner Construction.

Deane notes that LEED v4 is more aligned with the shift toward human health concerns and transparent disclosure and avoidance of chemicals of concern. “I do believe that market expectations and more rigorous codes and regulations will mean buildings will continue to be ever more energy efficient, water efficient and healthy for occupants whether they seek third-party certification or not.”

However, some firms say their clients worry about the costs of compliance. “Customers are in tune with studies that indicate it will be more difficult and more costly to attain the same prior LEED certification levels and they see this as an increased investment,” says Murray of Brasfield & Gorrie.

This concern is having an impact on current LEED registrations. “There has been a significant push to register buildings before the October 2016 deadline for LEED v3 registrations,” says Julianne Laue, senior energy engineer for Mortenson Construction. USGBC will stop accepting registrations for LEED certification under the LEED 2009 standard (LEED v3) as of October 31. After that, all new LEED registrations will have to be under LEED v4.

There also are some concerns among construction firms about the impact of LEED v4 on their process. Bid preparation and estimating is taking longer as contractors are having to deal with specifying the right materials. “Currently achieving the LEED v4 materials credits is a herculean feat that requires an abundance of time in preconstruction in order to research products and develop a specification that meets the requirements prior to the bid phase,” says Taranto of Structure Tone.

Taranto says even the most experienced teams are still finding their way around LEED v4’s requirements. However, she believes that the struggles surrounding data collection for the materials credit will fade after two or three years as teams get used to them and get more access to material content data.

Many firms already are working on LEED v4 projects. For example, Webcor Builders is currently working on its first LEED v4 projects at the San Francisco Airport: Terminal 1 Boarding Area B, Consolidated Administration Campus and a hotel. “There is still a lot that needs to take place before LEED v4 certification pursuit becomes a comfortable and well-understood process,” says Jenelle Shapiro, senior sustainability manager for Webcor Builders.

New Standards

For many construction firms and owners, LEED v4 does not go far enough. There are two major moves in the sustainability field that are emerging as major trends: net-zero and occupant health.

Many people involved in sustainable design and construction are frustrated by the pace of improvement in green design. “The industry also is stuck in a rut,” says Lance Hosey, chief sustainability officer for Perkins Eastman. He says that since the AIA 2030 Commitment began collecting data for energy performance, the volume of projects submitted has skyrocketed, but the average energy reduction has flat-lined at about 35%, “which also is the approximate average for LEED-certified buildings.”

“As a whole, the industry has gotten very good at modest improvements, but remains very bad at significant gains.”

–Lance Hosey, Chief Sustainability Officer, Perkins Eastman

“As a whole, the industry gotten very good at modest improvements but remains very bad at significant gains,” Hosey says. Studies show that adopting current best practices can yield at least 50% greater energy efficiency—for no additional cost. “We need to rethink the entire design process and eliminate the distinctions between design and sustainability.”

Many professionals in the industry share Hosey’s impatience with the progress of green building innovation. “True sustainable design is about more than just securing LEED or similar certification,” says Anica Landreneau, director of sustainable design for HOK. “It’s about getting our built environment to a state where we are generating as much or more clean water and energy as we consume, where we have eliminated waste and created environments supportive to human and ecological health.”

Many sustainable building advocates say net-zero design is working to answer these concerns. There have been several successful net-zero energy projects completed over the past few years. With their success, these projects have paved the way for more dramatic achievements. “Net-zero energy and net-zero water are becoming more commonplace. Owners and architects are taking this on and at the same time, the ability to hit target goals is increasingly achievable,” says Robert Phinney, sustainable design director for Page.

“I notice an increased emphasis on deep energy efficiency, up to and including net-zero energy and using Passive House strategies to radically reduce energy demand,” says Deane. He says this emphasis in combination with a growth in supply of renewables makes the potential for net-zero real and affordable.

One of the most significant standard for net-zero is the Living Building Challenge (ENR 4/11 p. 42). “The Living Building Challenge (LBC) has been gaining ground in the past few years as a more ‘extreme’ option to the LEED rating system,” says Jenny Bloomfield Sciara, sustainable construction manager for JE Dunn.

Bloomfield Sciara says that, because owners have to send in actual energy, water and waste numbers for the first 12 months after completion under the LBC, there is no way to fudge numbers. “You can only achieve the Living Building Challenge rating after you have occupied the building for at least 12 months, once the LBC Technician comes to verify that everything was installed as it was intended.”

The Living Building Challenge is beginning to gain some attention. “In our latest client survey, 8% of those surveyed said they plan to do a Living Building Challenge project in the next two years,” says Taranto of Structure Tone.

Another trend is the increasing interest among designers and contractors in the health of the occupants of buildings once a structure is completed. “The hardest part to green is post-construction,” says Gidez of Hensel Phelps. He says that if the building operators and occupants are not in sync with the optimized system, many efforts are wasted. “We’re also seeing performance requirements, but when you can’t control the users, you can’t control the performance.”

There are standards now seeking to address occupant activity. One of the most influential developments is the WELL Building Standard. “The WELL Building Standard allows clients to centralize their endeavors and create a narrative so that the employees know more about the benefits they are provided and having the medical research to back it up,” says Taranto.

The WELL building standard is placing emphasis on important areas of health and productivity that provide far greater organizational payback than basic utilities. “However, we are finding that many projects are willing to pilot the WELL building standard, but not pay for third-party verification,” says Colin Rohlfing, director of sustainable development at HDR.

However, many in the construction industry say that the WELL Building Standard is more about regulating occupant activities than building design and construction. “The WELL Building Standard promotes not only healthy building materials, fresh air, and natural light, but also healthy eating, exercise, and stress reduction,” notes Deane. He says there is very little about WELL that has to do with “bricks and mortar” that doesn’t piggyback on LEED.

New Standards for New Markets

For the past couple of years, sustainable design and construction have branched out from buildings to other markets. The USGBC and its Green Building Certification Inc. are promoting any number of new certifications. Among these are the PEER—Performance Excellence in Electricity Renewal—covering power system performance; Sustainable Sites, concerning buildings’ surrounding landscapes; and even the Green Garage Certification—ParkSmart.

One of the most prominent new standards is Envision Sustainable Infrastructure Rating System, which is transforming the way infrastructure projects are designed and built. “Envision is applicable to all civil infrastructure and is being used for projects ranging from renewable energy, power plant design, roadways, streetcars, water supply projects, wastewater treatment plants and transportation centers,” says Michaella Wittmann, director of sustainability for HDR.

Wittmann notes that HDR has been involved in building the Holland Board of Public Works Energy Park project. The Holland Energy Park is part of a Community Energy Plan for a 40-year framework to achieve a sustainable energy future and reduce energy demand in the city. “It is the first power plant and park project to receive an Envision award. It was awarded an Envision Platinum award, the highest level achievable,” she says.

Many infrastructure firms are taking increasing notice of Envision. “The use of the Envision rating system, introduced in 2012, will begin to grow. We are already using Envision checklists on many of our infrastructure projects,” says Heider of Skanska USA.” We’ve made a commitment to Envision as the sustainability metric that will drive infrastructure.”

“The proliferation of specialized green certification programs, such as ISI Envision, GreenRoads, GPCI, and others, has opened up a much broader base of projects to certification potential,” says Pieterick of CH2M. “However, some of these programs appear to have similar interests and could benefit from alignment,” he says.

Laws and Regulations

Federal, state and local laws and regulations continue to drive much of the sustainable construction. But the focus of many of these laws increasingly are not on insuring that all the boxes are checked on a rating system, but on results. “Outcome-based building codes, where providing actual performance data on buildings is in the early adoption stage, will likely be the reality ten years from now,” says Anne Hicks Harney, sustainability director for Ayers Saint Gross. “Energy models are notorious for not showing the true, total picture of building performance. We need to insure that all of our buildings perform better, not just in the model.”

“Energy models are notorious for not showing the true, total picture of building performance. We need to insure that all of our buildings perform better, not just in the model.”

–Anne Hicks Harney, Sustainability Director, Ayers Saint Gross

One of the most significant and advanced of these laws is Zero Net Energy (NZE) building design in California’s Title 24 energy code requirements to help to standardize ZNE for residential buildings by 2020, and commercial buildings by 2030. “We’re all opening our eyes a bit within the construction world—2020 is right around the corner,” says Shapiro of Webcor.

Another sustainability movement concerns resiliency of the built environment. “This is in response to more extreme climate events­—storms, flooding, drought, tornados, etc.—that have been experienced in recent years,” says Laue of Mortenson. “This is good for attracting and retaining employees, as well as having potential for decreased insurance premiums for employers.”

Some firms already have a resiliency game plan. “Beyond any specific building sector, our designers are routinely discussing resilient principles with our clients to make informed choices,” says Greg Mella, director of sustainability for SmithGroupJJR. He says there are many elements raised with clients on resiliency, including: designing buildings to maintain temperature and humidity for up to 7 days without power; providing passive design strategies to maintain function while reducing or eliminating reliance on mechanical and electrical systems; ensuring that the structural design includes a 1.5x safety factor for seismic loading; and providing HVAC redundancy, extended emergency power and electrical backup.