Best Practices

The Sustainability Trends Becoming Most Common in Commercial Real Estate


The TermSheet Team


Mar 5, 2024

The commercial real estate industry is undergoing a significant paradigm shift as sustainability becomes more than a buzzword — it's a business imperative. With an increasing global focus on reducing our carbon footprint and mitigating the effects of climate change, the real estate sector is stepping up to the challenge, integrating sustainability practices that not only benefit the planet but also yield long-term economic advantages. 

This blog post explores the sustainability trends that are reshaping the landscape of commercial real estate and how industry professionals can capitalize on these shifts to create a more sustainable and prosperous future.

What Is It & Why’s It Important?
Sustainability in commercial real estate embodies the principles of creating and maintaining properties that have a reduced impact on the natural environment, promote conservation, and seek to sustain and enhance local ecosystems. This means the properties have been designed, constructed, operated, and maintained in a resource-efficient manner, and they generate significant cost savings over time.

Sustainability is essential for commercial real estate for several reasons. First, it addresses the urgent need to reduce carbon emissions. Second, it aligns with the demand from corporate tenants for greener workplace solutions. Third, sustainable practices can result in reduced operating costs, increased asset value, and enhanced corporate image.

Trend 1: Energy Efficiency

Efficiency in energy consumption has never been more critical. With climate change concerns driving global policy and consumer activism, commercial buildings are now expected to lead in the reduction of their carbon footprint.

  • Emphasizing Energy-Efficient Design and Operations
    Adopting energy-efficient design principles from the outset of a new development or renovation is critical. Sustainable real estate now includes features like high-performance insulation, energy-efficient lighting, and smart building management systems that optimize energy use.

  • Benefits of Energy-Efficient Buildings

    The advantages of energy-efficient buildings are numerous. These structures offer lower operating costs, improved marketability due to reduced environmental impact, and a hedge against rising energy prices. They also often provide a superior tenant experience, which can lead to higher retention rates.

Trend 2: Green Building Certifications

Green building certifications are becoming a clear marker of a building's sustainability and can significantly influence tenant and investor decisions. Certifications such as LEED (Leadership in Energy and Environmental Design) and BREEAM (Building Research Establishment Environmental Assessment Method) are recognized worldwide for their rigorous sustainability requirements.

  • Attracting Tenants and Investors

    Achieving green building certification can help commercial properties attract and retain high-quality tenants who value sustainability. Additionally, they are increasingly a prerequisite for institutional and retail investors, who view them as a sign of responsible property management and a safeguard against future regulatory risks.

Trend 3: Renewable Energy Integration

The integration of renewable energy sources into the fabric of commercial real estate is expanding, with solar and wind power leading the charge.

  • Implementing On-Site Renewable Solutions

    Many commercial properties are now implementing on-site renewable energy solutions, such as solar panels on the roof or wind turbines in the vicinity, to reduce their reliance on traditional energy sources.

  • Advantages of Renewable Energy Adoption

    Renewable energy adoption can lead to significant long-term savings on energy costs, provide energy independence, and even create additional revenue streams through government incentives and energy sales back to the grid.

Trend 4: Waste Management and Recycling

Practicing effective waste management and recycling strategies is another important avenue for improving sustainability in commercial real estate.

  • Sustainable Waste Management Practices

    Optimizing waste handling, encouraging recycling, and implementing composting programs can dramatically reduce the environmental impact of commercial properties.

  • Benefits of Waste Reduction and Recycling

    Beyond environmental benefits, waste reduction and recycling programs can lower waste disposal costs, reduce reliance on landfills, create a positive image among tenants, and potentially generate income from recycling efforts.

Trend 5: Indoor Environmental Quality

While much of the focus of sustainability in real estate has been on energy and water conservation, indoor environmental quality plays a significant role in the well-being of building occupants.

  • Creating Healthy and Comfortable Indoor Spaces

    Commercial buildings are increasingly being designed and operated with a focus on providing a healthy and comfortable indoor environment. This involves strategies such as using low-VOC materials, enhancing natural lighting, and optimizing thermal comfort.

  • Benefits of Improved Indoor Air Quality

    Improved indoor air quality has been shown to boost productivity and employee satisfaction, leading to indirect financial benefits for commercial real estate owners and developers.

The incorporation of sustainable practices in commercial real estate is no longer an optional agenda item—it's a strategic business decision that can drive long-term value and resilience. By staying ahead of the curve and embracing these sustainability trends, real estate professionals can not only contribute to a healthier planet but also ensure their properties remain competitive in an evolving marketplace. As the industry continues to adapt, those at the forefront of sustainability efforts will be best positioned to reap the rewards of a greener future.

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© 2024, TermSheet, LLC. All All rights reserved.

© 2024, TermSheet, LLC. All All rights reserved.

© 2024, TermSheet, LLC. All All rights reserved.