Sustainable real estate practices have become commonplace for any occupier that leases, owns, or operates corporate facilities. While the degree of emphasis placed on sustainability varies by organization, and is often tied to larger enterprise goals and objectives, a discussion about corporate social responsibility and being “green” is part of almost every occupancy decision made today.
A recent survey of leading US-based corporations provides interesting results and feedback on how corporate real estate organizations approach sustainability. Sustainability is no longer seen by the corporation as merely an image-boosting campaign. Over 90% of those companies surveyed reported receiving significant pressure from their shareholders to be green, with 75% reporting that pressure from shareholders has increased significantly over the last year. The reason for this appears to be two-fold. Being “green” is smart and the right thing to do. It is also strategic and can produce significant cost savings for the corporation. An overwhelming majority of occupiers feel that sustainable real estate practices, particularly those focused on energy efficiency and usage, can significantly reduce operating costs. They also feel that sustainability contributes directly to improved recruiting and retention of employees. In today’s competitive war for talent, recruiting employees, particularly those in the millennial generation, is essential to the long-term survival of the enterprise.
In order to make these tangible benefits a reality, CRE organizations must put in place policies that provide governance around sustainability. These policies must be tied to the company’s overriding goals and objectives pertaining to sustainability. What is it looking to achieve? Does LEED certification matter, or is it just the bottom line savings? What is the competition doing? And how important is it to be a leader in this effort? These are questions the corporation must answer before CRE can respond. Of the organizations C&W surveyed, 95% reported having a formal corporate sustainability policy that governs CRE. Also interesting to note is that 65% of those surveyed reported having formal policies in place for evaluating the potential sustainability return of new corporate sites.
The value proposition of sustainability will be evident in the market trends that develop in the coming years. Nearly 75% of those surveyed felt that a sustainable building yielded a high value, with 92% stating that they would build new sites to high sustainability standards.
While there is a general perception that sustainable properties cost more, LEED certification alone has yet to be directly correlated with a market premium; a number of other factors such as location, amenities and age also contribute. As buildings and tenant spaces become more energy efficient, it will be interesting to see if sustainability remains a distinguishing factor, or if it evolves to become common industry practice.