Sustainability, and the focus on collectively moving forward in society with greater care given to the environment is becoming an important element of every industry, but in a field like CRE, that deals so intimately with land and the buildings build upon it, sustainability has warranted a deeper focus.
As we look towards 2016 (yes, we regret to report that 2015 has already come and gone), we can also look towards a bright future of more sustainable CRE, and greener buildings.
Creating sustainable, green CRE was a major focus of the most recent Paris Climate Conference, with an entire Buildings Day dedicated to the topic. From the United Nations Environment Programme website, “More than 30 per cent of global greenhouse gas emissions are buildings- related, and emissions could double by 2050 if we carry on business as usual.”
The goal of the conference is to reduce global warming to below 2 °C (~36 °F) by 2100, and the Buildings Dayhighlighted the ways that more energy-efficient buildings can help in this effort. The conference highlighted the fact that reducing emissions from buildings is one of the most cost-effective ways to help the environment, and noted the strong financial argument for developers to focus on more sustainable building efforts with new and old construction alike. Not only are major financiers beginning to put a lot of funding (39 investors managing ~4 Trillion, supported the G20 Energy Efficiency Investor Statement) towards greener buildings, but there are also many tax credits to help ease the cost on developers working towards better energy efficiency.
This incentivization of energy efficiency, coupled with an ever-growing public demand for more sustainable behavior from companies should lead to continued growth in sustainable CRE in the coming year.
Old Buildings, New Roles
“Reduce, Reuse, Recycle,” is a theme of the green movement popularized by Natural Resources Defense Council, and it applies as much to our buildings as anything else.
In CRE, the term Adaptive Reuse has come to define the industry’s practice of repurposing old buildings for more modern uses. This practice is important for sustainability because it cuts out the tremendous amount of energy it takes to demolish a building and make new construction on the site. The aesthetically-minded among us also appreciate that adaptive reuse allows neighborhoods and cityscapes to retain their original character, while the function of the buildings change. The most common examples are old factories and schools that are converted to residential properties.
Lorne Polger, the senior-managing director and co-founder of Pathfinder Partners LLC said, in a recent interview with Globe St. that he expects to see up to 90% of new development in the next decade on existing buildings.
“With the recent surge in urban living, reuse of old buildings — especially in downtown areas — is especially popular.” — Lorne Polger
More Green for Green Loans
With The Federal Housing and Finance Agency announcing that while the GSEs (Government-Sponsored Enterprises) lending cap would be $31 billion, exclusions would be made for energy-efficient multi-family projects. This probably indicates that Fannie Mae will be increasing its lending to green, sustainable development in 2016.
The WELL Standard
If the LEED certification is about buildings paying more attention to the external environment in which they are built, the WELL Certification is about buildings paying more attention to the people who live and work in their internal environs.
The WELL Standard has seven guiding principles: Air, Nourishment, Water, Light, Fitness, Comfort, and Mind. These concepts aim to create a more natural and healthy environment for people in the building. Allan Skodowski, Director of LEED and Sustainability Services for Transwestern and former chair of the U.S. Green Building Council, told Building Design and Construction, “LEED certification is building-focused, while WELL certification is people-focused, so they’re designed to complement each other even though they were created by different entities.”
The program is still young, but if it follows the path of the LEED Certification, we can expect to hear a lot more about the WELL standard in 2016.
More sustainable, energy-efficient CRE will be good for developers (in both tax breaks and PR), tenants (higher quality of life), and for the planet at large — but the future of sustainable CRE is also exciting because new challenges will always require innovation. Establishing more sustainable practices, and creating new buildings that work with the planet — not just upon it — is the challenge of the day, and we’re excited to watch the CRE industry tackle it.
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