Sustainability has become a major buzzword. Industries across every sector of the market are bringing discussions of sustainability into their everyday conversations and strategies. One of the first industries to bring sustainability to the forefront of industry discussions was the building materials and construction industries. This makes sense because, in the United States alone, buildings account for 70 percent of electricity consumption and 39 percent of carbon dioxide emissions. Because of this push for better energy efficiency in buildings, commercial building owners and real estate leaders have been investing in – and seeing the financial benefits from – more energy efficient buildings.

First, let’s define sustainability, for our purposes:

To us, sustainability can be summarized into a brief phrase: “efficiency and proper use of”. When it comes to buildings, we’re primarily talking the following:

  • Efficient construction practices – Including using sustainable and environmentally responsible building materials whenever possible.
  • Proper use of building materials, energy, and the environment- For every type of building and every type of tenant.

This means using technologies, advancements in materials, and other solutions to create built environments that are livable, comfortable, safe, and productive.

So what’s stopping commercial real estate owners from creating sustainable buildings?

Despite mounds of evidence and case studies to support a clear ROI and short break-even period of sustainability practices to their properties, many building owners hesitate to apply these solutions. As a result of most commercial leases, one of the primary barriers facing commercial real estate owners is the issue of  “split incentive”. The most common type of commercial leases, modified gross leases and net leases, make the property owner entirely responsible for the cost of capital upgrades. On the flip side, energy costs, being a common operating expense, are most often paid by the tenants. Further, many commercial buildings aren’t individually submetered by tenant, so all tenants pay for energy use collectively based on their square footage usage. So tenants have little incentive on their end to change their energy usage, especially when their energy costs are inherently tied to other tenants potential energy waste.

This means, you as the property owner make the investment to improve the building and the tenants alone see the bulk of the reward via reduced energy expenses. This also means that commercial real estate owners have little financial incentive to upgrade their buildings in the interest of being more sustainable and energy efficient.

The truth is, your return on investment from sustainability may not be seen right away. However, over time, by reducing the building’s energy usage, you are reducing tenant overhead, which means you can attract higher profile tenants and be able to increase rents. We won’t go into all the details, but we recommend you spend some time with this financial benefits report from the International Facility Managers Association. It includes case studies and research that shows the clear financial benefit of investing in sustainability.

How can we create more sustainable buildings?

  • Optimize Site Potential – Start with proper site selection, but you should also consider rehabilitation or reuse of existing buildings. If you’re planning on expansion in the future, be sure to work placement, orientation, and landscaping into your expansion plans for minimal environmental impact.
  • Optimize Energy Use – The demand on fossil fuels seems to be ever-increasing, with it comes concerns about energy security and the impact on the planet. It’s essential for modern building owners to find ways to reduce energy loads and maximize renewable energy usage
  • Protect and Conserve Water – In many parts of the US, fresh water is scarce. Buildings can often change the hydrological function of an area, especially on land that has not yet been built on. To remain sustainable, a building needs to reduce its impact on this ecological function, AND utilize (or even recycle) water resources effectively.
  • Optimize Building Space and Material Use – A sustainable building is constructed to use intelligent materials that reduce “upstream” pollution and reduce natural resources used. In addition, a sustainable building is designed to utilize those materials in the most productive way over the building’s life cycle.  
  • Enhance Indoor Environmental Quality (IEQ) – The indoor environmental quality (IEQ) of a building encompasses influences on occupant health, comfort, and productivity. A sustainable building maximizes the usage of natural light and thermal properties, has appropriate ventilation and moisture control, avoids the use of materials with Volatile Organic Compounds (VOC) emissions. IEQ also emphasizes occupant control over systems such as lighting and temperature.
  • Optimize Operational and Maintenance Practices – How will the building be used? Proper consideration of a building’s operating and maintenance needs, especially during the preliminary design phase, will contribute to improved interior environments, better productivity, as well as reduced energy and resource costs.
  • Resilient Building Design – According to the Resilient Design Institute, resilient design is defined as “the intentional design of buildings, landscapes, communities, and regions in response to vulnerabilities to disaster and disruption of normal life” For more information on resilient design, see our Resilient Building Design blog.

Ready to focus on sustainability? Here are some next steps you can take:

At NAC, we LOVE buildings; and to us, there’s nothing sweeter than helping to create more sustainable buildings for future generations. We know we’re a bit biased being consultants ourselves, but we truly believe hiring a sustainability consultant to advise you on best practices for your commercial real estate is the best investment you can make.

If you have some time to tell us a bit about your property and how we might be able to help you make the most out of it, we’d love to hear from you! In the meantime, don’t take our word for it, do your diligence and take a look at the additional resources below.

More Resources:

CODES AND LAWS

STANDARDS