The commercial real estate (CRE) industry’s interest in sustainability has surged in recent years. As targets for net-zero emissions get closer and political forces shift, green property management has gone from a “nice-to-have” to a huge competitive differentiator.
However, retrofitting existing buildings with green features and adopting new environmentally conscious protocols isn’t necessarily cheap.
If you’re wondering if the juice is worth the squeeze, consider the following quantifiable benefits of shifting to more sustainable property management.
Tap Into Government Subsidies and Tax Incentives
The political climate is shifting in favor of sustainable practices. President Biden’s proposed two trillion-dollar infrastructure plan includes a $27 billion Clean Energy and Sustainability Accelerator for private investment in retrofits of commercial buildings, among other measures.
Additionally, 30 states and three territories have adopted a renewable portfolio standard (RPS) with more expected to follow. This mandates that utilities increase production of energy from renewable sources such as wind, solar, biomass, and other alternatives in lieu of fossil and electric fuel sources.
These new measures aside, there are multiple tax incentives currently available for energy efficient upgrades to commercial buildings.
Take Advantage of Low-Hanging Fruit
Some green property management initiatives, like redoing building insulation, installing solar photovoltaic technology, or installing switchable privacy glass are on the expensive side. But others can be enacted at relatively modest cost.
For example, a rooftop garden. This aesthetically pleasing option absorbs solar heat and minimizes storm water runoff, saving buildings from unneeded wear and tear.
Or if you haven’t already done so, switch to LED (light-emitting diode) lightbulbs. They’re low cost, consume just 10% of the energy of standard incandescent bulbs, and last up to 40 times longer.
Quick fixes like these are a great place to start your organization’s sustainability journey. And unlike the more expensive options, winning executive buy-in is usually easy.
Green Property Management Lowers Costs
After upfront investments, green property management yields big-time savings down the road. Consider:
- LEED buildings report almost 20 percent lower maintenance costs than standard commercial buildings.
- Green building upgrades typically decrease operation costs by up 10 percent in in the first year.
How is this possible? Sweeping technology advancements empower buildings to eliminate waste and inefficiency, and harness natural resources at a greater scale than ever before.
Cost-saving examples include:
- Efficient plumbing fixtures and wastewater recycling to reduce water consumption.
- Fixtures that moderate lighting based on natural light or whether a space is being used
- Thermal air conditioning units that use solar energy for cooling, eliminating electricity costs.
Given the available cost savings, it’s arguably business malpractice to take a short-sighted approach to sustainability.
Keep Your Building in Line with Workforce Preferences
Tenants want to rent office spaces that help them retain employees and attract top talent. To keep your spaces in-demand, advertise a building’s commitment to sustainability.
Workers today are more environmentally conscious than ever before. Particularly 18-34 year olds: nine in 10 millennials say it is important for them to work for a sustainable company.
Considering that millennials comprise 35 percent of the workforce—and they’re predicted to be 75 percent by 2025, their preferences matter to office tenants considering lease renewals.
Green Property Management Helps Market Your Space
Green initiatives go beyond the feel-good factor: They can now be a key driver of leasing strategy.
According to a 2019 study of green building performance in North America, green certified buildings have a higher probability of lease renewal, more satisfied tenants, and lower vacancies.
As traditional office portfolios now compete with coworking spaces and home offices, every leasing advantage helps.
It’s Not Easy Being Green… Or Is It?
Not to disagree with a certain frog, but it actually can be easy to be green. Green property management doesn’t require an all-or-nothing approach. Even small measures can help win tenant loyalty and bump up your bottom line.
That said, why should sustainability be a priority now?
Because any portfolio with long-term growth goals must implement sustainable practices in the future. To meet the commitments made in the Paris Climate Agreement, by 2030 the average building’s energy usage needs to be 30 percent lower than current levels.
This pressure will only increase for CRE portfolio owners and operators. By getting ahead now, owners and operators can tap into current tax benefits and subsidies and avoid last-minute scrambles to meet regulations.
All signs point to a greener CRE future. To learn more about what’s coming next to the industry, read Building Engines’ new whitepaper: Operating for the Future: What’s New and What’s Next for Commercial Offices.