Construction: It's not easy building green
How your business could fill the growing gap between eco-friendly construction supply and demand.
(Photo: Simon Battensby/Getty)
When Vancouverite Thomas Mueller recently renovated his home, it was imperative to him that every component of his remodel be environmentally friendly. He wanted everything, from the tiles in his bathroom to the grout around his energy-efficient windows, to be as non-toxic as possible while promoting energy and water efficiency.
Full disclosure: Mueller is CEO of the Canadian Green Building Council (CGBC), which promotes sustainable building and manages the Leadership in Energy and Environmental Design (LEED) rating system in Canada. That might explain his green obsession; but, relative to the general population, he's no outlier-not anymore.
Demand for all things green in the construction realm is growing rapidly. Recent data from Washington, D.C.-based industry researcher McGraw-Hill Construction shows that environmentally friendly building activities will jump to 48% of all U.S. non-residential construction (worth some US$124 billion) by 2015, up from 31% in 2010. Mueller says projections are comparable for Canada. And on the residential side, 13% of all new homes in Canada in 2008 met Natural Resources Canada's ENERGY STAR standards. A year later, that figure had climbed to 22%, and experts expect the upward trend to continue.
As massive as the Canadian construction industry is, it hasn't been able to keep pace with demand. Yes, the aisles of your local building-supplies superstore are dotted with eco-friendly alternatives; similarly, the Yellow Pages might contain a smattering of green-focused contractors. Yet, the needs of builders are far from sated. This means plum prospects for firms that supply innovative green building products and services, as well as for the companies that support those suppliers.
There are many forces behind the eco-building boom. For one, governments have rolled out several incentive programs in recent years, such as Feed-in Tariff in Ontario and SolarBC in B.C. These are designed in large part to reward builders for incurring the higher up-front costs associated with choosing green options.
But even if these government schemes disappear, the success stories of early adopters have awakened consumers and businesses alike to the lower long-term operational costs of energy-efficient buildings. "The savings are tenfold over the life of the building," says Michael Atkinson, president of the Ottawa-based Canadian Construction Association. "More and more, people are understanding that using energy and water efficiently goes right to the bottom line."
Plus, there's no discounting the appeal homeowners and organizations see in appearing to be eco-friendly. Third-party green building certification programs, such as LEED, BOMA BESt and BuiltGreen, have become badges of honour, particularly for businesses. Builders like these programs because they attract big-name tenants, such as banks, that must meet social-responsibility mandates. "This is driving commercial real estate worldwide," confirms Jerry Yudelson, author of Marketing Green Building Services: Strategies for Success and a consultant based in Tucson, Ariz.
Finally, many builders are going green now because they soon won't have a choice. For instance, the latest draft of the National Building Code includes many energy-efficiency provisions. And some jurisdictions are mandating eco-friendly building features, including the City of Toronto, which now requires all new industrial developments to have green roofs.
These trends are converging to create a rush on green building supplies, from eco-certified lumber to low-volatile organic compound paints to double-glazed windows. In the past two years, Ottawa-based distributor Alpine Construction Supplies has experienced a major spike in demand for green alternatives from contractors, architects, engineers, building consultants and homeowners alike. Products with eco-labels or proof of certification are particularly popular, says Alpine general manager Garett Gravel: "We're seeing a strong demand for more documentation."
Any product or service that helps end-users curb energy consumption is also red-hot. The solar-energy segment, in particular, is growing at a rapid clip. "This is still a huge market that has yet to be tapped," says Rajesh Ahuja, president of Vaughan, Ont.-based contractor Dependable Mechanical Systems Inc. While large manufacturers have the market for solar panels mostly cornered, there is plenty of room in the market or companies that specialize in the installation and maintenance of solar panels.
There also is strong demand for tools that contribute to the efficiency of lighting and heating, ventilation and air conditioning (HVAC) systems. According to Konkana Khaund, a green building technologies analyst for market research firm Frost & Sullivan in Toronto, HVAC costs typically comprise 35% of a building's operations budget; lighting, 30%. She says there's plenty of room for upstarts to gain market share by offering cost-saving, sensor-related solutions (that, say, turn down the furnace when the house's front door is locked) and dimming controls: "Those are the areas that need new players."
Opportunities abound on the services front, too. In general, construction tradespeople have not kept up with demand for green building. For instance, green roofs laden with heavy vegetation, soil and irrigation systems require specialized services; this will put a rush on engineers trained to reinforce roof beams, installers familiar with rainwater collection systems and maintenance technicians with vegetation expertise. As the market expands in coming years, opportunities for firms that provide these services will blossom, says Yudelson.
The construction industry isn't known for adapting swiftly to market shifts, meaning most players are short on knowledge of green technologies, tools and practices. "There's a gap in the trades," says the CGBC's Mueller. "There is still a lot of education required." Contractors that get ahead of the curve and position themselves as eco-experts could outperform the market in the years to come-as will training institutions and consultants that specialize in teaching tradespeople about new green building materials, installation practices and certification standards.
Ultimately, industry observers firmly believe the interest in green building is here to stay. As energy prices continue to rise, builders and property owners will seek products and services that help them to shrink their costs and carbon footprints. "I can't see it going away," says Alex Carrick, chief economist at Markham, Ont.-based Reed Construction Data Canada, which collects and analyzes industry data. "It's very hard to put an idea back in the box once it's out."
Information is current as of the original date of publication.
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