2017 Better Buildings Summit Top Presentations: #4 Believe in Green: Investor-Oriented Sustainability Insights for CRE

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Better Buildings Beat Team
on
Aug 17, 2017

The 2017 Better Buildings Summit brought the best and brightest energy-efficiency experts to Washington, D.C., and this month, we're recapping our top-performing Summit presentations according to attendee feedback. Coming in at Number 4 is "Believe in Green: Investor-Oriented Sustainability Insights for CRE." The following is a Q&A with organizer Cindy Zhu, a Department of Energy Fellow who lead the presentation.

Beat Blog: Why was it important to talk about energy efficiency from an investor’s perspective?

CZ: Many of our BBC partners develop and/or own investment-grade real estate. Talk to executives at REITs or publicly traded companies, and they’ll say that their investors are asking more about sustainability and energy use. The great lever for these building owners to increase energy efficiency projects in their portfolios is if there is increased investment activity for energy efficient, high performing buildings.

There are now many avenues for investors to understand the sustainability of their portfolios-- including GRESB, the Global Real Estate Sustainability Benchmark. GRESB publishes annual data about the sustainability of real estate investment funds and portfolios, as reported by the building owners who manage and make decisions about them.

Beat Blog: What are the benefits investors can gain from energy-efficiency investments in commercial real estate?

CZ: Energy efficiency is often low-hanging fruit, with positive returns. Energy-efficient investments will lower a building's operational costs, increase revenue, and increase cash flow for the investor. A high-performing building will also have increased value at the time of sale, as technological improvements will decrease future maintenance requirements, and be more attractive for prospective tenants. High-performing buildings are also known to command a higher rental price.

Beat Blog: Can you explain more about Green Leasing and how it benefits CRE organizations trying to become more sustainable?

CZ: Green Lease Leaders, now in its fourth year, was established by IMT and the Better Buildings Alliance to set the bar for what constitutes a green or “energy-aligned” lease, and to recognize pioneering property owners and tenants who add energy and water-saving clauses to their leases that drive high performance in commercial, retail, and industrial buildings. IMT estimates that green leases can help reduce utility bills by up to $0.51 per square foot (11-22 percent) in U.S. office buildings alone, and if all leased office buildings executed green leases, the market could save over $3 billion in annual cost savings. Clauses in green leases range from energy management best practices for building systems to requirements concerning tenant spaces such as installing LED lighting, submetering utility data, and reducing plug loads with advanced power strips and ENERGY STAR equipment. This year’s application for landlords and tenants to become recognized as a Green Lease Leader will open soon!
 
Beat Blog: How does the current commercial real estate market benefit from organizations’ energy efficiency investments?
 
CZ: Organizations making energy efficiency investments now, considered early adopters and early leaders in the market adoption curve, are sharing case studies of lessons learned and best practices, decreasing risks for others, and contributing to the pool of market leaders that are steadily raising the bar for the baseline of commercial office buildings.
 
Stay tuned for more 2017 Better Buildings Summit Presentation recaps throughout the month of August on the Better Buildings Beat Blog.