When it comes to the fight for a sustainable future, commercial real estate is front and center.
Commercial real estate accounts for 40% carbon dioxide emissions and 88% of potable water consumption, according to a 2015 report by the US Department of Energy. It’s readily apparent that, for a sustainable future to work, real estate is going to have to be a part of progress. Not only does reducing emissions and waste affect the environment, it also affects long term property valuation.
However, many realtors are finding that it isn’t worth costs just to be able to certify themselves as green developers. As a result, sustainability often becomes a tertiary priority after job growth and good land costs. In order for green real estate to become the future industry standard, developers will have to find a way to strike a balance between costs and long term value.
That said, the industry has already made progress in reducing both emissions and the costs associated with sustainability. Organizations such as Leadership in Energy and Environmental Design (LEED) can certify builders as green. LEED issues certifications based on a variety of factors, including efficiency, materials used, location, and innovation. LEED certifications have become more common among developers that see the value in building sustainably.
Meanwhile, the struggle among developers has been retrofitting older buildings to comply with green standards. As only 1.8% of commercial buildings are new construction, developers will have to consider past construction to promote sustainability. In many cases, these retrofits are impractical despite the value they can provide.
It’s clear that sustainability has a lot of long term value, given its added appeal to tenants along with lowering operating costs. Millennials in particular value companies and developments that they feel hold some moral value. The question is whether the shaky short term returns are worth the extra investment. To redress these concerns, the industry has shifted its focus to energy management systems (EMS). Though energy certification is valuable, EMS helps property managers track energy usage and identify areas that are in need of improvement.
Using cloud computing, EMS can shift from reactive to proactive, anticipating problems and providing predictive analysis. They can be paired with building management systems to create optimum levels of energy and generate savings over time. EMS data can also inform future projects and create a cycle of sustainability.
Green development has also been spurred on by government regulations. Every state has varying environmental codes for buildings as well as regulations to make new construction more sustainable. In fact, tax incentives are common for facilities that put measures in place to better conserve energy or water. Freshwater shortages have become a problem in many states as of late, such as California and Arizona. This has lead to water becoming even more tightly regulated; future projects will need to proceed with these limitations in mind.
Though many developers do not wish to invest in sustainability, changing regulations and environmental constraints make it necessary for the industry to learn and implement green energy practices, and fast. Innovators have the chance to start working towards change now, before they face obsolescence due to tenant aversion and lack of governmental support. Additionally, the Internet of Things will offer further support, with EMS data optimizing energy consumption and allowing people to adjust their homes accordingly.
When the world changes, professionals in the real estate industry need to as well. Changing environments, resources, and regulations make it so that any developer should start considering the ways that they can make sustainability part of their projects.