Is Sustainability Important in the Commercial Real Estate Market?

Interest among our clients in sustainability in practice and environment has increased considerably in recent years. It’s good business to make the client’s priorities your own, and that holds true for sustainable practices and environmentally responsible methods. Given the choice between two offices with identical square footage,  the vast majority of tenants would consider energy efficiency and earth-friendly materials in their decision-making.

One reason for this uptick in consciousness is the fact that millennials (the 25 to 35-year-olds) have become the largest demographic in the U.S., eclipsing the baby boomers, and set to make up 75% of the workforce globally by 2025.  In the U.S., they show sensitivity to conservation issues, and actively seek energy efficient properties and those built with sustainable materials.

The current atmosphere in commercial real estate welcomes ideas that help properties appeal to this attitude. 89% of the millennials polled in this Brookings Institute study indicated that they were more likely to buy from companies that supported solutions to certain social issues. As a group they tend to be less interested in financial gain and more interested in a satisfying and worthwhile career.

In response to this interest in sustainability, commercial real estate development and refurbishing plans include more energy-efficient design, sustainable materials, and other features that make a property a better place to live or work.

Popular features that tenants are looking for in a commercial setting are:

  •         Natural light
  •         Rainwater catchers  
  •         Recycling collection
  •         Bike storage
  •         More paperless offices

Renewable materials and well-planned spaces help make the workplace more efficient and pleasant. They go along with the trend in the workplace toward more social spaces, break rooms, patios, and coffee bars. It’s all part of making the office a place where people like to spend time. Sustainable practices are a boon to employee retention because they feel good about where they work. Employers want it, so building owners are doing their best to provide it.

Sustainable properties help companies to save money and also to project the image of good corporate citizenship. They’re also finding that it has a positive impact on employee productivity and well-being.  Things like proper lighting and ventilation can make a big difference in employee health, which in turn can decrease downtime and lost productivity. This approach is really a win for everyone.

For the commercial real estate industry, the drive for sustainability should be a consideration for any development plan. Incorporating the best technology and techniques to enhance sustainability into design and construction will most certainly pay off. Building out spaces should incorporate these features to make the property more appealing to the majority of prospective tenants.

Despite some of the expense associated with sustainable building practices, it is a sound route for commercial real estate. From a marketing standpoint, it opens up a whole segment of potential tenants. From a management standpoint, maintenance can be greatly simplified, and from a community standpoint, it’s an opportunity to take leadership in a positive way.