Green Services Help Grow Sustainable CRE
In the stark light of climate change data, all industries are grappling with their role in a sustainable future, and commercial real estate (CRE) is not exempt. In fact, we can play a leading role in nurturing cleaner cities and low-impact development.
Already 70 cities worldwide have pledged to achieve carbon neutrality by 2050, and – according to Urban Land – 31 US cities have set their energy benchmark policies for buildings, a critical step since buildings are the source of some 70% of a city’s emissions.
These are all push factors behind green buildings and green CRE services, which include assisting with the development of “green leases” that specify the responsibilities of both tenant and owner. We spoke to NAI Global Business Director – from NAI Romania – about this burgeoning and important trend.
NAI Romania, he says, has been a partner of the Romania Green Building Council since its inception, working on green building policy advocacy, the promotion of green leases, researching the state of the local green building market, and delivering training on behalf of the organization. Additionally, NAI Romania is leading a national and international discussion on the benefits of green finance for all building types.
Driven by demand
This isn’t just a scientific and ethical imperative; it is also what the market increasingly demands as a new generation of investors age into their influence and buying power. Energy efficiency now tops the list of consumer preferences, according to a survey of home buyers conducted by the National Association of Home Builders (NAHB) in 2020.
“Younger workers and homebuyers are seeking ‘wellness’ and environmental stewardship of the planet from their actions and the buildings they occupy, rent, and purchase. This will continue driving up the demand for buildings designed to ensure occupant health, comfort, and productivity while minimizing any negative environmental impact from the building process,” Andrei says.
Q. What green CRE services tend to be most impactful?
Firstly, advocacy for government incentives to reward green performance, for example proposing property tax reductions for buildings achieving ambitious green building performance. And secondly, providing advisory services to assist property developers, building owners, and tenants to obtain internationally recognized green building certifications.
Q. What are some ways to reduce the carbon footprints of large developments, or otherwise make them more efficient?
Ensure there is “sub-metering” of energy, water and other resource use, to align utility costs with those using the resources; giving the user an incentive to minimize/optimize resource use. We also recommend “bio-climatic” improvements in the design of new construction or retrofitted to existing buildings. These can include cool or green roofs that use light colors and/or vegetation to add insulation and reduce the need to artificially warm or cool the building. Additionally, improving the mechanisms used to block the summer sun and allow in the winter sun to provide natural cooling or heating for the appropriate season.
Q. How can you measure the impact of green services?
The tracking of energy costs and usage, as well as other resource usages, will provide a good measure of the climate impact of a building in its operational phase. Then you’d look at how green the energy grid is. This means whether energy provided to the building mostly comes from fossil fuels or green sources. Together, you can determine the actual climate impact of the building.
For new construction and renovation projects, a "Lifecycle Assessment" (LCA) approach at inception can help design and construction teams minimize the climate impact of the materials and other solutions used.
Q. What are the reported benefits for those working in greener buildings?
There is strong evidence that natural lighting, better acoustics, and better indoor air quality lead to healthier and more productive occupants. The same qualities contribute to better sales for green retail buildings.
Q. What is the investment case for going green?
Better design and construction lead to optimization of the space, less construction mistakes, and higher building values over time. Often green buildings deliver savings even before the construction phase is complete, such as when a design team uses solar orientation modeling and bio-climatic strategies to reduce the heating, ventilation, and air conditioning (HVAC) needs of a building. Furthermore, this results in ongoing savings once the building is occupied.
Q. What kinds of return on investment (ROI) – financial and otherwise – flow from greener business?
Greener business can mean better productivity and health of occupants. We often see reduced repair and maintenance costs due to a better design, better materials, and strategies to increase the durability of the building with regard to climate impacts. Furthermore, it often means better optimization of the space through thoughtful design and construction. The amount of square meters may be reduced, but the rent revenue per square meter is increased.
Q. Finally, where can people get resources or learn more about green services?
For the residential market in Romania, investors, developers, homebuyers, and banks can review comprehensive toolkits created by the Romania Green Building Council. They also provide extensive information on various initiatives such as a property tax reduction mechanism for green buildings.