Sustainability in commercial real estate is defined as incorporating environmentally friendly development, materials, practices, tools and processes into the building process. In this article, we explore commercial real estate sustainability trends for new and existing commercial properties. If you're looking to grow your CRE business, it's good to understand what matters to businesses that emphasize sustainability and green practices.
Commercial real estate sustainability has become a critical element for property owners, investors, and developers. Far from being a buzzword, sustainability in real estate is important for the planet and the bottom line. Buildings account for nearly 40% of global energy-related carbon emissions, according to the Green Building Council. This is attributed to manufacturing building materials and construction activities along with the energy it takes for the building to be in use.
Real estate’s large carbon footprint clearly demonstrates why sustainability is an increasingly important topic in the industry.
What Is Sustainability in Commercial Real Estate?
Sustainability in CRE considers the types of materials that are used in construction, the way the environment is altered to prepare for the structure, and the energy it takes to construct, power, heat, and cool the building.
Sustainable real estate simply means that developers work to reduce the overall environmental impact of a property. This can include a large number of tactics such as selecting environmentally friendly building materials, reducing construction waste, and incorporating eco-friendly design elements and energy-efficient features throughout a project. It also includes using smart technology for continued energy efficiency throughout the life of the property.
Sustainability Trends in Commercial Real Estate (New Construction)
As businesses increasingly prioritize sustainability and environmental responsibility, commercial real estate is following suit with a range of sustainability trends. From sustainable materials and green building certifications to renewable energy integration, these practices are not only environmentally conscious but also financially beneficial in the long run.
Sustainability Trend 1: Using innovative and sustainable materials
Using eco-friendly, innovative building materials can have a significant impact on a building’s carbon footprint. There is a long and growing list of such materials including but not limited to bamboo, cork, reclaimed wood, precast concrete, laminated timber, cork, stone, and recycled steel. Ferrock, an environmentally friendly alternative to concrete, uses reclaimed materials and is stronger than traditional cement.
Sustainability Trend 2: Waste management programs
Commercial building demolition generates about 155 pounds of waste per square foot, according to one source. Construction and demolition (C&D) create a significant amount of waste, starting when a site is cleared of natural debris and previous structures and extending through the completion of the project. This makes minimizing construction waste an important part of any sustainability effort. Many materials can be kept out of landfills and recycled or even redeployed in projects to reduce overall construction waste. Materials like concrete, metals, plastics, and bricks can be recycled or reused (see the EPA's Best Practices for Reducing, Reusing and Recycling C&D Materials). Building materials such as windows or plumbing may be repurposed in new structures. And site debris such as dirt and rocks can be used instead of disposed of in landfills.
Sustainability Trend 3: Biophilic designs
Biophilic designs originally aimed to help occupants feel more connected to nature.
(The word biophilia comes from bio, which means life, and philia, which means "feeling friendly toward.")
The concept can improve the sustainability of commercial real estate developments. This type of design uses natural lighting, natural ventilation, natural materials, plants, and landscaping to create a structure that is more integrated with the environment. This naturally reduces the energy use required to operate the building without compromising the comfort of the occupants.
Sustainability Trend 4: Smart technology integration
Commercial real estate sustainability can be improved through the use of smart technology, which is quickly becoming more sophisticated and automates many areas within a property to reduce energy use. Energy-saving protocols can control lighting, heating, and cooling so that the space is comfortable when occupied. When unoccupied, energy use is reduced to eliminate waste and lower the cost of operation.
Sustainability Trend 5: Renewable energy integration
Renewable sources of energy can sometimes be integrated into a commercial real estate project. This can include sustainable on-site energy sources like solar energy but may include off-site clean power that is purchased to offset the development’s carbon footprint. This may include wind, hydropower, geothermal energy, and other green energy sources. Renewable energy integration is likely to grow as technology improves.
Sustainability Trend 6: Green ratings and certifications
Sustainability ratings are one-way organizations can measure the overall sustainability of buildings. By developing properties with these ratings in mind, developers can reduce the energy it takes to maintain and occupy a building while demonstrating their commitment to green construction.
Leadership in Energy and Environmental Design (LEED) standards are a well-known sustainability rating, but there are others. WELL certification, for example, is one of the newer programs having launched in 2013. These types of programs are likely to evolve in the coming years as sustainable building evolves. And as more green housing developments, shopping malls, office buildings, and other CRE become certified as "green" or sustainable, they'll seek to do business with vendors and service providers who hold the same high standards for environmental protection.
Here is a list of resources to consult for businesses that are looking to obtain green certifications:
US Chamber of Commerce, How to Become a Certified Sustainable Business
Green America, Green Business Network Certification
Green Business Bureau, How to Choose the Right Green Business Certification
(Listing these resources on Biscred's site doesn't suggest an endorsement of one sustainability certification over others. We share this information to help Biscred readers do their own research.)
Sustainability Trends in 'Green Rehabbing' (Existing Real Estate)
Real estate sustainability extends beyond the lens of new commercial developments. Existing real estate can be retrofitted to make older structures greener. Sometimes called “green rehabbing,” the carbon footprint of existing structures can be reduced by improving the energy efficiency of lighting, heating, and cooling systems.
Water conservation systems can help reduce water consumption, including reclaiming non-potable water for landscaping. Additionally, when renovations are required for either standard upkeep or to improve sustainability, eco-friendly building materials can be used. Renewable energy sources can also be used through onsite upgrades when possible or through purchasing clean energy to offset energy use.
Around 39% of global emissions result from real estate, including the production of building materials and the energy required to operate a building, according to a McKinsey report. This highlights why commercial real estate sustainability is such an important topic. By embracing sustainability trends such as these, commercial real estate developers, investors, and owners can have a significant positive impact on the environment. And as sustainability gains importance and green technology evolves, those poised to meet the demand for sustainable properties will be better positioned to meet the needs of the market.
Casey Development Ltd., "WHAT IS SUSTAINABLE REAL ESTATE DEVELOPMENT." Accessed 2023 April 19.
For Construction Pros, "Construction & Demolition Recycling: How Contractors Can Profit from Sustainable Work." 2021 September 17. Accessed 2023 April 19.
The Constructor, "What is Ferrock in Construction?" Accessed 2023 April 19.
Merriam-Webster, the definition of biophilia, accessed 2023 April 19.
McKinsey & Company, "Climate risk and the opportunity for real estate," 2022 February 4. Accessed 2023 April 19.