A new report from the Urban Land Institute’s (ULI) Greenprint Center for Building Performance shows that the commercial real estate industry is making significant progress in reducing energy consumption, carbon emissions, water usage and waste disposal.
The Greenprint Center, which is part of ULI’s Center for Sustainability and Economic Performance, comprises an alliance of the world’s leading real estate owners, investors and financial institutions who are committed to improving environmental performance across the global property industry.
In light of the recent Intergovernmental Panel on Climate Change (IPCC) report documenting worsening impacts of climate change, methods to optimize energy usage and reduce environmental impacts are becoming more urgent. Volume 9 of the Greenprint Performance Report™, which tracks, benchmarks, and analyzes the performance of nearly 8,000 properties globally owned by Greenprint’s members, demonstrates a 3.3-percent reduction in energy consumption, a 3.4-percent reduction in carbon emissions, and a 2.9-percent reduction in water use between 2016 and 2017.
In a statement accompanying the release of the report, Lynn Thurber, Immediate Past Chairman of the Sustainability Center’s Advisory Board, pointed to the correlation between improved building performance and improved investment returns over time. “Nine years in, Greenprint continues to expand its value proposition by working with its members to develop market solutions that will further reduce environment impact and increase asset-level net operating income,” said Thurber, who is a former ULI Global Chairman and Chairman of JLL Income Property Trust.
Globally, buildings account for more than one-third of global climate-changing carbon emissions. The results from the new report indicate that Greenprint members are on track to exceed Greenprint’s target of a 50-percent emissions reduction by 2030, which is in line with the goals of the IPCC and ratified by the Paris Climate Accord. This marks the eighth consecutive year that members have experienced improved building performance, in terms of energy consumed and emissions reduced. The reduction in emissions in 2017 are the equivalent of 1.5 million trees planted, 12,600 cars taken off the road, 6,300 homes consuming no energy, and 136,000 barrels of oil not consumed.
“The ULI Greenprint Center for Building Performance continues to help its members take demonstrable and meaningful action to create high-efficiency buildings,” said ULI Global Chief Executive Officer W. Edward Walter. “Greenprint demonstrates how owners and developers can efficiently conserve water and energy and be part of the solution to climate change. The results that the Greenprint members achieve are inspiring a broader movement within the real estate sector to improve building performance.”
The report reflects the results of hundreds of practices Greenprint members have undertaken to reduce energy consumption and carbon emissions. Examples include:
Installation of high efficiency equipment and controls – The most common project in the Greenprint portfolio was the installation of high efficiency HVAC equipment and controls. One example that the report cites is from Tishman Speyer, which installed a chiller replacement and thermal ice storage project at 45 and 50 Rockefeller Center. Energy use dropped by 2.3 million kilowatt-hours, and demand declined by 45 percent from the storage tie-in. The payback on the system took only seven years.
Waste reduction projects – Greenprint members reported 147 waste-reduction projects, including better understanding the waste streams, new recycling containers to better organize waste rooms, and tenant training on waste. PGIM Real Estate, a Greenprint member, undertook a campaign to replace older trash containers with 105 solar-powered compacting bins. This resulted in an average 23.7 percent recycling rate and a five-year payback, in addition to a 13.3 percent annual return on investment.
Installation of high-efficiency lighting equipment – High-efficiency lighting in buildings in the Greenprint portfolio was the most effective practice for reducing energy consumption, with a total of 351,553 megawatt-hours in expected annual savings and achieving payback in less than one year.
Reducing water usage – Efforts to reduce water consumption included the use of green infrastructure systems. For example, at Jamestown’s Larkspur Landing Office campus in Larkspur, California, over $1 million was invested to renovate the landscape, including adding drought-tolerant and native plants, along with retrofitting the irrigation system to employ drip irrigation.
Tenant engagement – Numerous members reported engaging their tenants at a zero-dollar investment. The report states that “tenants who feel engaged, and can see evidence that their space is sustainable, could also be more likely to renew their lease.”
The report identifies several industry trends related to the reduction in energy consumption and carbon emissions, including:
Investing in innovations – As technologies evolve, so too does the real estate industry. Keeping up with the latest trends and innovations can enhance both the cost savings and the return on investment of implementing them. In order to identify successful early-stage technology companies, real estate owners and developers are starting to partner with technology incubators such as Fifth Wall and MetaProp.
Changing utility relationship – As utility grids become more stressed, utilities are looking for ways to help real estate firms reduce consumption and demand through incentives; and they are seeking to collaborate on distributed energy resources such as renewables and battery storage.
Expanding the definition of sustainability – Building tenants and investors are increasingly considering health, wellness, and resilience to be part of sustainable building practices. Certifications such as WELL and Fitwel are becoming increasingly popular as a way to attract tenants and improve asset value. Extreme weather events are further encouragement for buildings to implement design and operations strategies to improve building resilience.
The 7,950 properties owned or managed by Greenprint members included in this report’s analyses are located across 28 countries and account for nearly 2 billion square feet of building area. The value of real estate assets under management by Greenprint members exceeds $760 billion, which is almost 4 percent of the value of high-quality commercial properties globally. Future Greenprint initiatives will continue to grow engagement with real estate leaders globally, with heightened attention in the Europe and Asia/Pacific markets.
The data used in the report was submitted to the Greenprint Center by its 33 members and affiliated partners. Greenprint’s real estate members include: Berkshire Communities; BlackRock; CalPERS; Clarion Partners; CommonWealth Partners; DWS; First Washington Realty, Inc.; GID; GI Partners; GLL Real Estate Partners; Granite Properties; Heitman; Hines; Howard Hughes; Invesco; Jamestown Properties; Jones Lang LaSalle; Kilroy Realty; LaSalle Investment Management; Morgan Creek Ventures LLC; Parkway Properties; PGIM; Prologis; Rudin Management Company, Inc.; Savanna; Sonae Sierra; Tishman Speyer and The Net Group.