Three Sustainability Trends in Commercial Real Estate - Earth Day 2020

Today, Earth Day celebrates its 50th birthday. The Earth Day Network is the world’s largest recruiter to the environmental movement, working with more than 75,000 partners in over 190 countries to drive positive action for our planet. 

Commercial Real Estate (CRE) has seen a large uptick in green design and sustainable building in the last decade. Here is a look at three sustainable trends we’re seeing in CRE:

1) Solar Energy

Solar energy is one of the easiest ways for property owners to expand their sustainable footprint. Solar energy can boost cash flow by reducing utility expenses, increasing common areas maintenance (CAM) reimbursements, and facilitating lease extensions. According to Billy Grayson, Executive Director of Urban Land Institute, “[s]olar gave us a reason to talk to a tenant who might be 4 years into a 10-year lease. Because of PPA terms, we could reach out to a tenant with an offer to lower their energy costs by 30-50% and lock in a rate for the remainder of their lease that would never go up by more than 1% a year. [A]ll they would have to do is extend their lease from 6 to 10 years. If the tenant agreed and got a lease extension, we could book that future revenue, increasing the NPV of our building.”

2) LEED

One of the most prestigious certifications a building can have is LEED (Leadership in Energy and Environmental Design). LEED is the most widely used green building rating system in the world. Available for virtually all building types, LEED provides a framework for healthy, highly efficient, and cost-saving green buildings. LEED certification is a globally recognized symbol of sustainability achievement and leadership. Many green businesses look for the LEED certificate, making the property more desirable to potential tenants.

3) Design

Another consideration for building owners is the property’s layout and function. Many large companies are seeking innovative ways to increase productivity among their workforce, making it desirable for employees to stay on site. This has led to the demand for a mixed-use property in CRE. Mixed-use spaces include residential, retail and/or office spaces in the same building. These support a more sustainable environment with the decrease in automobile-based lunchtime commuters.

Our team looks forward to working with increasingly sustainability-minded clients. Please reach out to any of our professionals to start the discussion today.