"The construction industry has an immense impact on the environment, so green building products are a key market within the global environmental movement," says Larry Fisher, research director at NextGen, in a release. "After all, buildings are one of the heaviest consumers of natural resources and account for a significant portion of the greenhouse gas emissions that affect climate change."
He adds that in the US, "buildings account for 38% of all CO2 emissions, use 13.6% of all potable water, and consume 72% of all electrical power generation. Commercial and residential developers need to assess the total life cycle of all the building products and materials they utilize, as they can have a substantial, lasting effect on the environment."
Fisher tells GlobeSt.com that advances in green materials themselves will play a "substantial" role in the growth of sales and usage, "provided those advances include making the materials less expensive to produce." He adds that notwithstanding the slight decrease in the cost premium for using green materials in construction, "the market's too nascent for increasing volume to offset prices. Economies of scale will kick in eventually."
Asked whether the larger percentage of worldwide growth in green materials will come from retrofitting rather than new construction, Fisher says it's difficult to tell. "That certainly appears to be the case right now, in the context of the global economic downturn, as new construction starts have fallen off substantially," he says. "Once the global economy recovers, we would hope developers would use green building materials increasingly, to the extent they are available."
In the US, the market for green materials is expected to grow 7.2% annually to $80 billion by 2013, outpacing the growth in the construction industry generally, according to a March report from Cleveland-based the Freedonia Group. That's a faster pace than the 5.8% CAGR NexGen projects worldwide over the next four years.
Overseas, Fisher says, "the Asia-Pacific region will see the highest CAGR in green building materials during the forecast period of our study, but the largest global region for green building product sales generally will be Western Europe. Latin America, Eastern Europe and EMEA contribute small but growing portions of the global green building materials market; together, those three regions will contribute less than 3% of sales in 2013."
NextGen's report, titled "Green Building Materials: Making Cement, Insulation and Wood Products Increasingly Environmentally Friendly," notes that green building has become "a global phenomenon, driving innovation in the products that are used and the buildings in which we live and work. What started with a handful of government buildings utilizing first-generation sustainable building products is now a worldwide movement, with commercial construction and residential building moving to the fore in sustainability." The report says that both the new residential building and home improvement sectors will present significant opportunities for green building products manufacturers.
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Paul Bubny
Paul Bubny is managing editor of Real Estate Forum and GlobeSt.com. He has been reporting on business since 1988 and on commercial real estate since 2007. He is based at ALM Real Estate Media Group's offices in New York City.
