Sustainability in CRE has risen as a beacon for forward-thinking leaders. But for some, it’s dismissed as just another “buzzword.” However, in the realm of commercial real estate (CRE), sustainability is not only crucial but transformational.
Modern tenants are increasingly driven by eco-conscious decisions. A global shift in values means that sustainable commercial spaces are now in high demand. This translates to higher rental rates for green properties. According to research, LEED-certified projects take in 3.7% more in rent and have 4% higher occupancy rates than comparable non-LEED buildings. Meanwhile, ENERGY STAR buildings earned 2.7% more in rent and had 9.5% higher occupancy rates.
Sustainability and the bottom line
But beyond the rent premiums sustainable buildings can command, sustainability in CRE (or lack thereof) can affect the bottom line in other ways.
The green revolution has paved the way for stringent regulations. Several local governments have started to implement sustainability mandates that, if not followed, can lead to hefty fines. Some of them include:
- New York Local Law 97
- Boston’s Building Energy Reduction and Disclosure Ordinance
- New Zero Net Energy (ZNE) code revisions in California
These are just a few examples of that CRE building owners need to prepare for in the coming years.
But there are other financial benefits for owners who invest in sustainability. For instance, energy-efficient buildings significantly reduce utility bills. And as corporations continue to prioritize sustainability, properties with green certifications are seeing their market value skyrocket. And with the looming shadow of more rigorous regulations, investing in sustainability in CRE now could prevent costly future adaptations.
The environmental imperative
Sustainability in CRE, while financially sound, represents far more than just monetary savings. The call to action for the CRE industry goes beyond the profit and loss statements. It echoes an urgent plea from our planet. Commercial real estate, being a major contributor to global emissions, shoulders significant environmental responsibility. Almost half (40%) of global emissions come from real estate. Of these emissions, approximately 70% are produced by building operations.
The rise of green buildings provides a beacon of hope. These environmentally conscious structures are pivotal in significantly reducing carbon footprints, acting as the frontline warriors in a global battle against climate change.
Beyond the ecological benefits, green buildings present a ripple effect. Sustainable commercial centers can lead the way in transforming urban landscapes. These hubs not only provide energy-efficient spaces but also inspire and foster community growth, paving the way for more green spaces in urban settings. This, in turn, boosts public health, enriching communities and fostering a symbiotic relationship between the built environment and nature. The emphasis here isn’t just on constructing buildings, but on building a sustainable future for all.
Tech’s role in sustainability
The CRE sector is increasingly using technology to enhance sustainability. A primary motivation is the ability to gather and utilize data more effectively. Previously, data in the CRE industry was fragmented and often unusable. Now, with the advent of smart technologies, it’s possible to gather accurate, real-time data that can be used to address specific sustainability in CRE challenges.
For example, some technology employs machine learning to regulate a building’s HVAC systems. By creating a digital replica of the building, this tech can autonomously conduct a comprehensive system audit. That leads to benefits such as energy savings, improved tenant comfort, and enhanced indoor air quality.
Importantly, even older buildings can adapt to this technology as the right tool can integrate with current building management systems, eliminating the need for additional capital expenses.
Maximizing ROI on sustainability in CRE
The modern commercial real estate landscape is a testament to the power and necessity of sustainable practices. It’s not merely a buzzword. It’s a call to action for a brighter, greener future—both for the planet and your wallet.
Learn more about how to build a sustainability strategy that meets your goals and achieves a return on investment.