Creative Construction : the capacity for environmental innovation in real estate development firms

Abstract

Based on his own experience as a green development entrepreneur, the author argues that much of the pressure to create greener real estate developments fundamentally misunderstands the nature of the real estate development industry. Beginning with a model of real estate development firms, the author identifies four areas where green development practice creates tension in the conventional development process. These tensions lead to four hypotheses that green developers will share several common characteristics. 1) Large developers with easier access to capital are likely to have pushed further than small, local developers in the adoption of environmental innovation. The small firms who have been leading adopters are likely to utilize alternative financing arrangements with at least some investors that give the developer or the investor a longer-term stake in the project. 2) Early adopters of environmental innovation have moved away from price competition in the selection of development team members, in favor of long-term relationships, inter project learning, and negotiated bid arrangements where partners, especially the providers of design and construction services, are familiar with the requirements and the past projects of the developer. 3) The developer exerts greater control throughout the entire development process, especially in the provision of design and construction services. 4) Early adopters of environmental innovation have moved aggressively towards industrial construction and CAD/CAM construction techniques because it gives the developer more control over the installation of products and the ability to reduce waste. These hypotheses is tested and refined through a three-part study involving surveys of commercial and residential development practitioners, including the author's own firm.The study concludes with a predictive statement about the future of the real estate development industry and a restatement of the hypotheses given the research findings.