Tangible Integrity: Why Google Leases Green Office Space
I went to a local ULI Green Trends Program last night. Kacey Clagett, of Field Paoli, moderated a panel consisting of David Radcliffe, Sustainability Director for Google, David Johnson, West Coast Director for William McDonough & Partners and Richard Springwater, Head of The Prado Group, the developer who built Foundry Square. Great discussion overall on why going green makes sense from the perspective of a tenant, architect and developer.
David Radcliffe’s comments on why Google leases green space stood out. Not only is leasing green space consistent with the general corporate philosophy, but he took the time to detail Google’s thinking process about green space. You can imagine that Google can throw a great deal of brain power at anything they want to study. It is safe to say that a couple of those brains went into overdrive deconstructing their “green space = value†proposition. Here’s a short summary on their perspective:
When Google evaluates space decisions, they look at their total cost of occupancy, which is made of:
- Base Rent
- Additional Rent – operating expense reimbursements
- Workplace Services, overhead
- Other related costs
Google studied their total costs of occupancy for leasing green space and figured out that they were paying a higher Base Rent compared to non-green space. However, since Base Rent was only 34% of their total costs of occupancy, the increase in rent for the green space increased their total occupancy costs by only 1.7%. So, the additional cost of green space is negligible in their view.
They also looked at one of their most important activities, attracting talent. They ran various tests attempting to isolate what mattered most to employees and linked it to sustainability initiatives, including occupying green space.
You gotta keep Google’s hiring scale in mind as you read this: Radcliffe pointed out that Google is hiring on a scale of 200 employees per week (!!). The right or wrong hiring equation has massive business implications for them, so they spend lots of energy learning and making sure they are delivering on what the right talent cares about.
They isolated several key variables of what their employees and talent care about the most. Tests revealed that a company’s integrity is THE most important variable to the employees and recruits. Integrity trumped pay, career development and every other traditional measure of employer relevance to Google employees. And the employees and recruits interpret green working facilities along with other green initiatives as being visible evidence of Google’s integrity.
So, for Google, leasing green space provides huge upsidewith very little or no downside. Not a bad deal at all.
