What will sustainability look like for the future of CRE

Takeaways

1. The built environment accounts for nearly 40% of global energy usage.
2. Temperature regulation is one of the most important considerations for reducing energy consumption and greenhouse gas emissions. 
3. Sustainable building solutions such as HVAC automation can significantly reduce operating costs.
4. Sustainable office buildings can reduce employee absenteeism and improve productivity.

The financial case for sustainable CRE

The real estate industry has been slow to adopt sustainable building solutions. This is due, in part to a belief that it’s not cost-effective to implement. 

‍CRE realtors ranked renewable energy systems and green building features as the least important aspects of a building and ranked utility and operating costs as their number one concern.

Ironically, implementing renewable energy systems and other green features are excellent ways to reduce energy expenses and operating costs. 

According to the World Green Building Council, “operating costs for sustainable assets are over 13% lower for new construction and close to 9% for retrofitted building projects.”

‍Sustainable buildings offer other financial benefits as well, including 

• Higher resilience to climate events
• Lower insurance premiums, and 
• Public demand for sustainability measures

Sustainable features such as renewable energy sources, rainwater collection systems, efficient ventilation, and temperature-regulating building materials allow occupants to stay productive and comfortable despite extended power outages, wildfire smoke, and extreme temperatures. These features help keep buildings functional and mitigate the risks of physical and systemic stress, which can lead to lower insurance premiums.

Sustainable real estate is quickly becoming a critical selling point for investors and occupiers.

On top of the financial savings, sustainable real estate is quickly becoming a critical selling point for investors and occupiers. People want to live and work in built environments that are healthy for them and the planet. Traditional real estate can’t meet those demands, as it’s responsible for 36% of the world’s energy consumption and emits 10% of global greenhouse gas. 

CRE owners who focus on sustainable new builds or retrofits will have a competitive advantage over traditional real estate when it comes to finding buyers and tenants. 

2023 sustainability trends

Climate change events, government regulations, and public demand have contributed to an explosion of innovative solutions for sustainable CRE. Here are some of the top trends in the industry.

Building automation

The internet of things (IoT) has made it possible to automate a wide range of building operations, from lighting to security. But one of the most impactful automations is temperature control. This is a big win for sustainability — half of the greenhouse gas emissions from the built environment come from heating and cooling. 

Automating HVAC systems with IoT technology can save up to 30% on energy costs each year, so the potential savings are significant, especially if this solution is deployed across a portfolio. 

Thermal regulation

A theme is developing here: Temperature regulation is a critical component of sustainable CRE and climate change resilience. Drawing inspiration from the color-changing abilities of squid, engineers from the University of Toronto have developed a new window design that excels at thermal regulation. 

It uses layers of flat plastic sheets filled with customized fluids to control various aspects of temperature regulation, such as filtering UV wavelengths and controlling how much light is let in. The design is still in the prototype phase, but the team is confident that “this can all be done with simple, non-toxic, low-cost materials.” 

It’s a promising solution that could cut greenhouse emissions, reduce energy expenses, and create resilience to extreme weather events. 

Tenant wellness

Considering how much time people spend indoors, it’s important to build sustainable spaces that support the mental and physical wellness of occupants. The U.S. Green Building Council reports that 32% of people have direct experience with built environments that have negatively impacted their health. 

The American Journal of Public Health published a study on the impact of work environments on employee health. It found that poor air quality, inadequate lighting, bad acoustics, and temperature extremes have serious health consequences. 

When compared to workers in green, LEED-rated buildings, people who work in traditional office buildings had lower levels or productivity and higher absenteeism due to asthma flare-ups, allergies, headaches, and depression.

Green buildings can offer these features to support occupant health:

• Incorporating plants and green spaces
• Using natural light
• Programming HVAC systems to optimize indoor temperatures
• Installing adequate ventilation systems
• Improving acoustics by masking sounds through design choices such as site location noise-blocking trees

Utilization data

Understanding how a space is used is an important part of CRE sustainability — it helps owners get the most out of the space they already have. Optimizing existing square footage is more environmentally friendly than building new real estate, and it ensures building owners aren’t investing money in new spaces they don’t actually need.

Optimizing existing square footage is more environmentally friendly than building new real estate.

Lighting, heating, and cooling systems in commercial real estate have a significant worldwide environmental impact, and according to the WGBC, reducing this energy consumption is essential to global climate change goals. 

Considering how much money companies spend annually to heat and cool unused spaces, it’s clear that utilization data can make a significant difference by helping owners optimize lighting and HVAC systems based on occupancy. 

Sustainable CRE brings financial and environmental ROI

The real estate industry is a major contributor to greenhouse gas emissions and environmental degradation, but it can also play a crucial role in reducing these impacts through sustainable development, management, and operations. 

Implementing sustainable practices such as energy-efficient building design, renewable energy, waste reduction, and water conservation can reduce environmental harm and generate significant financial savings for commercial property owners.