The Green Revolution In Commercial Real Estate Has Been Waged And Green Real Estate Has Won

To view CBRE’s Green Building Adoption Index full report, click here. 

Editors’ Note: In early October, an engaged council of architects and designers gathered at NAREIM’s Architecture and Engineering Meeting in Chicago to consider problems and debate new ways real estate may adapt to keep up with the functional and cultural needs of human life. Dave Pogue presented on how environmental considerations are having a measure impact on real estate investment industry. 

At the turn of the century, there was little if any focus on sustainability in the commercial real estate field. In the year 2000, not a single foot of space was LEED certified, fewer than 500 buildings nationwide had earned an EPA Energy Star label, no cities had enacted any level of energy disclosure requirements, and GRESB was nearly a decade away. On the corporate side, the year 2000 also marked the first year for firms responding to GRI, CDP was formed but not yet used, and no firms were recognized as EPA Partners of the Year.

How times have changed. And how quickly! This relatively conservative, and very fragmented industry has dramatically embraced sustainability broadly and energy efficiency specifically in a way inconceivable 15 years ago. In an effort to understand the impact of this shift, CBRE sponsored a comprehensive study last year to measure the amount and geographic diffusion of green buildings in the top 30 US markets. The study, part of the CBRE Real Green Research Challenge, was led by Professor Nils Kok. Working with a team of researchers from Maastricht University, and supported by EPA Energy Star and USGBC, Dr. Kok and his team created the Green Building Adoption Index which was released earlier this year.

To conduct the study, we first identified the top 30 markets by the amount of space available for lease. The market boundaries and property size and quality characteristics, including minimum building size in each market, were determined by CBRE market experts. Publicly owned and corporate facilities were excluded. The markets included in the study contain more than 3.5 billion square feet of space and represent more than 34,000 buildings. To be considered “green,” a building must have earned either an EPA Energy Star Label or full building LEED certification. We gave a five year life to a LEED certification and a two year life for Energy Star if not renewed. The first year reviewed was 2005 and the study looked at certifications earned through December of 2013.

The results were surprising to even those of us who work directly in this area and have witnessed the momentum first hand. It was no surprise that the numbers in 2005 were very low. There were a few buildings that had pursued Energy Star recognition but the practice was still not widespread or prevalent. Approximately 1.3% of all buildings were EPA labeled, representing a total of 5.5% of the total space. Even at this early date certification was primarily a large building phenomenon. LEED certification, on the other hand was barely noted. LEED EB was not yet a factor, so nearly all LEED certifications were for new buildings. Only one tenth of one percent of all buildings in the 30 cities reviewed held any type of LEED certification in 2005.