Investors Demand Sustainable Buildings
Today’s leading occupiers realize that environmental responsibility is not only essential to business operations, but can also enhance a corporation’s brand and customer appeal.
Sound Management and GRESB Are the Biggest Drivers
Global Real Estate Sustainability Benchmarks (GRESB), a private, European-based group, is the second-largest driver for sustainability measures, following business management best practices. The media and the environment tied as third-place drivers.
Large Occupiers Continue to Push Sustainability With Owners
Large multinationals typically have formal social responsibility programs in place to address the environmental concerns of their shareholders and employees.
Sustainability Performance Is a Significant Consideration for Investors
Investors are demanding real estate managers address sustainability in evaluating new investments, with 72 percent of those surveyed stating they have established policies at the fund level. Respondents also perceived sustainability performance to have a positive correlation to value.
Sustainability Is a Factor in Evaluating New Investments
While value varies from market to market, sustainability’s impact can be significant in making a property more competitive and assisting in a more rapid lease-up. While 72 percent of respondents say they evaluate the sustainability of an investment during acquisition, 53 percent of respondents admit that their methodology for doing so is inconsistent.
Sustainability Performance Is Less of a Factor For Already Owned Assets
While sustainability looms large in new acquisitions and development, that's not the case with established portfolios: 80 percent of respondents say they do not evaluate the sustainability of what they already own.
Sustainability Has a Positive Correlation to Value
The value difference between a sustainable and non-sustainable building is notable, according to 76 percent of the respondents.
Few Attribute Higher Rent Directly to LEED Certification
However, while the majority of respondents say that there is a value difference between sustainable and non-sustainable buildings, or LEED-certified and non-LEED-certified buildings, only 16 percent of respondents feel that sustainability contributes directly to rental premiums.
Energy Efficiency Contributes the Most to Value
Benchmarking and energy conservation systems are the top contributors to a sustainable property's value.
Energy Efficiency Contributes the Most to Value (2/2)
Sustainable building management initiatives like recycling, lighting and lowering carbon emissions matter as much as MEEP and security. Curiously, while cleaning and HVAC come in second, air quality is rated last, along with federal and municipal subsidies for implementing sustainability measures.
Poor Sustainability Performance Alone is No Reason to Dispose of an Asset (Yet)
If a sustainability building isn't performing well, should an owner sell it? Most owners say no (64 percent), but approximately a third (28 percent) say yes, while 8 percent aren't sure.
Europe Places Greater Emphasis on Sustainability at Fund Level
In 2012, corporate sustainability was being included at the fund level in 100 percent of European property owners; in 2013, American property owners still lag behind at 72 percent.
Europe Leads U.S. in Methodology Consistency
While 100 percent of Europeans had consistent methodology in underwriting in 2012, American respondents state that their methodology is inconsistent.
Europe Leads America in Implementing Minimum Performance Standards
By the end of 2012, 45 percent of European property managers had implemented minimum performance standards, compared with just 15 percent of American property managers in 2013.
