Energy performance is emerging as a key benchmark in how commercial real estate buildings are judged — and priced — in today's market. In fact, a growing number of institutional investors and corporate clients are not only urging, but also requiring, that green design be included in the commercial real estate properties they buy or lease.

Although “green” is a loosely used term to define all things environmentally friendly, the commercial real estate industry is increasingly turning to standards such as the Environmental Protection Agency's Energy Star program and the U.S. Green Building Council's Leadership in Energy and Environmental Design (LEED) certification to define the level of sustainable practices and products that have been put in place.

The strategy at Malvern, Pa.-based Liberty Property Trust is to build only LEED-certified office buildings and follow LEED guidelines wherever possible in its industrial construction. “That is based on a sense that to not do so is to build an obsolete project — at least over the long term,” says John Gattuso, senior vice president and regional director for Liberty's urban group. The $6 billion office real estate investment trust currently has 42 LEED-registered or certified properties.

According to an exclusive green building survey conducted by National Real Estate Investor and its sister publications, 51% of corporate respondents and 60% of developer respondents across all commercial property types indicate that they own, manage or lease at least some green properties.

In addition, 88% of corporate and developer respondents expect to own, manage or lease some green properties five years from now [Fig. 1].

That volume has increased even in the past year. When asked the same question in the 2007 survey, 84% of corporate users and 77% of developers said they expect to own, manage or lease at least some green properties over the same period.

While commercial real estate developers continue to raise the bar on green design to meet tenant demand and maximize property values, owners of existing buildings are bracing for a trickle-down effect. Some industry experts believe that buildings that are not energy efficient will be adversely affected when it comes to rents and sale prices.

Industry data reflects that surge in green building activity. In the past year, the number of LEED-certified buildings jumped nearly 40%, from 878 to 1,212 as of August 2008, according to the U.S. Green Building Council.

That volume includes some 133 million sq. ft. of new construction and major renovation on commercial and institutional properties. Another 8,088 buildings totaling 1.3 billion sq. ft. are currently in the process of obtaining LEED certification.

Indeed, familiarity with LEED increased substantially among all survey respondents over the past year [Fig. 2].

“We consider our sustainable facility program to be part of our overall corporate business strategy,” says Kevin Dollhopf, vice president of worldwide real estate at Winston-Salem, N.C.-based Hanesbrand Inc.

The apparel company's goal is to reduce its carbon footprint and conserve natural resources throughout its 27 million sq. ft. global real estate portfolio. Following LEED and Energy Star criteria are a key part of the program.