SAN FRANCISCO -- The American Institute of Architects is holding its annual conference this week and the topic that seems to come up in every meeting is schools.

"For the next few years, commercial is where it is at – schools, federal and government buildings," said Don Ernst, green products director for Timber Holdings, which is releasing a new line of sustainable flooring and molding for the inside of buildings at the show. Traditionally, Timber has focused on high-end sustainable hardwoods from South America for exteriors.

"K-12 will continue no matter what," said Noah Eckhouse, vice president of the global building performance group at Bentley Systems, which specializes in complex simulation and planning software for HVAC and construction engineers. The company recently also participated in a large project for the Los Angeles County Community College System.

Chalk it up to the American Recovery and Reinvestment Act (ARRA). A lot of attention has been paid to how the ARRA will funnel money into transportation, solar and smart grid, but it also contains billions for retrofitting government buildings. In all, $4.5 billion will be spent retrofitting federal buildings and another $6.3 billion goes to grants for improving the energy efficiency of state agencies. A substantial portion of that money will likely go to buildings.

Additionally, $95 billion goes to schools. Most of this money will go toward educational programs, but those grants potentially ease the pressure on capital improvement budgets.

In many ways, the ARRA is more generous to state-owned buildings than homes. Under the bill, homeowners can quality for a 30 percent tax credit on home energy retrofits. However, the credit is capped at $1,500. A similar provision for solar is not capped. Thus, homeowners can get $8,000 or more in credits for solar systems that might have a longer payoff period.

But there are others as well, added Eckhouse. Schools, like other government buildings, own their own buildings. Thus, the party that owns the building and pays for retrofits is the same person that pays the power bills.

"The owner/operator message has gotten through," he said.

In commercial buildings, by contrast, the owners are often motivated to flip the building as soon as possible and thus aren't motivated to retrofit. In "class A" office building space, owners may retrofit and improve energy efficiency in order to seek high-end tenants and higher rents.

In class B office buildings, "there is a lot of mediocrity," he said.

The there are demographic and historical factors. Many of the elementary schools and community college buildings in the U.S. were erected in the '50s, '60s and '70s. As a result, they are old, and likely inefficient. You also often don't have the same worries or concerns about historical integrity that you might when retrofitting a college.

The economic squeeze may also increase the attractiveness of community colleges. For all of those reasons, communities are actually a more attractive market than colleges, Eckhouse said.  

Technology is also coming to the rescue. Several companies – Serious Materials (drywall that requires little energy in manufacturing), Aspen Aerogels (highly efficient insulation); E2E Materials and Timber (green flooring and wood) – have begun to release products in time for the big retrofit.

Timber, for instance, has 100,000 square feet of green flooring and laminates under production with a partner in Germany. It will start coming to the U.S. in the next 30 days.

Ernst added that green building product makers also understand that they have to be cost-effective. Timber's traditional hardwoods are premium products. They are bought for architectural showcases and come from trees that need to sit 100 years in the Amazon rainforest before they can be harvested. The flooring products grow quickly and come from more familiar species like walnut.

"We [Americans in general] want sustainable but we also don't want to see a green upcharge," Ernst said. "If these products cost 30 to 40 percent more, they aren't going to do it."

Timber hopes to keep any premium on its interior products at a five percent or less.

Style and aesthetics, though, can also play a role within the price envelope, added Eckhouse. One company to keep an eye on, he said, is Project Frog, which specializes in pre-fab schools and small commercial buildings. The company raised $8 million last year and also wowed Massachusetts officials with a 1,200 square foot "school of the future" erected last year. It's been getting a lot of buzz.   

Join industry leaders and influencers at Greentech Media's Green Building Summit in Menlo Park, Calif., June 11.