Commercial real estate industry makes progress in reducing energy consumption
A new report from the Urban Land Institute’s (ULI) Greenprint Center for Building Performance shows that several of the world’s leading commercial real estate owners and managers are making significant progress in reducing energy consumption, carbon emissions and water usage in their buildings.
Volume 8 of the Greenprint Performance Report, which tracks, benchmarks and analyzes the performance of nearly 8,700 properties owned by Greenprint’s members, demonstrates a 3.4-percent reduction in energy consumption, a 3.3-percent reduction in carbon emissions and a 4.3-percent reduction in water use between 2015 and 2016. Since Greenprint started tracking building performance in 2009, the energy consumed by members’ properties has dropped 13.9 percent; carbon emissions have decreased 17.9 percent, and water usage has dropped by 12.1 percent.
The reductions occurred even as building occupancy rose, suggesting that greater space usage does not necessarily cause a decline in building performance.
“To adapt to evolving environmental and climate-related vulnerabilities, building owners and policy makers are thinking about ways to protect against the possibility of eroding asset value,” said Charles Leitner III, Greenprint Chairman Emeritus. “Leaders in the real estate industry that have committed to mitigation and adaptation strategies are already benefitting from asset value preservation and creation.”
Globally, buildings account for more than one-third of global climate-changing carbon emissions. The results from the new report indicate that Greenprint members are on track to exceed Greenprint’s target of a 50 percent emissions reductions by 2030, which is in line with the goals of the Intergovernmental Panel on Climate Change (IPCC) and ratified by the Paris Climate Accord.
This marks the seventh consecutive year that members have experienced improved building performance, in terms of energy consumed and emissions reduced. The reduction in emissions in 2016 are the equivalent of 2.6 million trees planted, 21,500 cars taken off the road, 10,800 homes consuming no energy, and 236,000 barrels of oil not consumed.
The report notes that several market drivers motivate property owners to improve environmental performance and create financial value through the implementation of best practices. These include:
- Investor mandates – The focus on sustainable and responsible investing has grown significantly over the past several years, with investment in the U.S. surpassing $8.5 trillion in 2016 and accounting for more than 20 percent of the value of professionally managed assets.
- Tenant demand – Major tenants are embracing sustainability and other next-generation features as part of their leasing criteria. ULI’s Tenant Energy Optimization Program helps owners and tenants work together by offering a returns-based approach to integrating energy efficiency into tenant space design and construction that leads to reduced energy use and costs. This program aligns with the U.S. Environmental Protection Agency’s Energy Star Tenant Space recognition, which helps tenants receive acknowledgement for their investments in energy-efficient spaces.
- Regulation – Global adoption of energy efficiency regulations for commercial buildings are helping to drive change, such as Energy Performance Certificates across the European Union; mandatory benchmarking in 26 U.S. cities and states as well as Tokyo and Singapore; and mandatory energy codes for most countries in North America, Europe and Asia.
- Goal setting – Many real estate owners have begun implementing multi-property retrofits, technology upgrades, and operational improvements. Setting portfolio-wide goals help owners ensure that their investments achieve the maximum return in financial value and environmental benefits.
The 8,684 properties owned or managed by Greenprint members are located across 28 countries and account for over 1.9 billion square feet of building area. The value of real estate assets under management by Greenprint members exceeds $1 trillion, which is more than 5 percent of the value of high-quality commercial properties globally.