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Sustainability Practices in CRE, Enhanced Value

We hear the term “green” everywhere. It’s in our homes, classrooms, workplace. Sustainability is now inescapable because it turns out that most people care about the environment. Businesses have taken note of this and emphasize the importance of corporate social responsibility. Investors, developers, designers have been changing their strategies to be more environmentally friendly. This isn’t happening solely in the U.S. It’s worldwide now, and it’s not exactly a trend anymore. You can say that the world is becoming one huge tree hugger.

Changing the Landscape of Design

Even designers are taking sustainability into consideration. Resilience to poor weather conditions is a key element in designing buildings. After all the horrible storms this year (i.e. Hurricane Harvey, Maria), resilience to terrible storms is a must. These disasters that are beyond one’s control have ruined homes, lives, and the economy. Designers need to make necessary changes when it comes to properties because they have to protect not only the property but also tenants. Resilient design can offer lower insurance premiums, which can bring in more tenants and monetary value.

Designers are also changing their materials to be more environmentally friendly. For instance, some are opting for timber rather than steel and concrete; timber is strong and releases less carbon than steel and concrete do. Some designers are also implementing the use of bamboo. Bamboo grows fast and the best perk is that it’s strong. It’s reusable and there is an abundant supply of it! Designers have opted for bamboo for not only these reasons but also because it releases a lot of oxygen and absorbs more carbon dioxide than trees do.

What’s Driving Investors & Developers?

There are several perks for investors and developers to improve environmental performance. Some include investor mandates and environmentally friendly goals such as generating a certain amount of solar energy annually. Another perk is better tenants. The demand for sustainability and energy efficiency is high, and this is becoming worldwide. Better tenants bring in long-term occupancy, which means potentially higher values. A rise in value can also lead to higher rental rates.

Another perk is that when firms label their buildings as LEED certified, they can expect lower utility costs, better tenants, better marketability, and of course, a reduced environmental impact and carbon footprint. This all leads to an increase in value of their properties. The commitment to sustainable buildings and practices is increasing; many firms are focusing on reducing carbon emissions, and this is occurring across more than 7,400 cities! Also, some firms are working with waste collectors to not only reduce waste but also improve the accuracy of waste data.

Global Trends

As mentioned, investors and developers are becoming more dedicated to creating a sustainable environment. In other countries, real estate firms have created sustainability workshops to reinforce the idea of a sustainable economy. For instance, there is a rise of “green bonds” in Europe. These bonds are a source of real estate financing in capital markets. They are intended to primarily finance a sustainable project. Banks have issued these bonds to “support the social and sustainability initiatives” real estate firms are making.

The global spending for sustainability has also grown. The largest expense goes to lighting, followed by HVAC. Assets and property mangers can vouch that when there is so much competition in the market, firms need to focus on increasing the value of their assets. So how do they do this? By investing in building efficiency, such as installing solar panels, designing buildings with resilience to poor weather conditions, outdoor recreation facilities, etc. This emphasizes that sustainability is an absolute must and needs to be a priority.

The dedication and actual practice of sustainability highlight that we need to take care of our environment. Businesses are the only ones that are held accountable—we all are. If we love the greenery, technology, and amenities we have now, we might as well take great care of them.

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