Sustainability Breakthroughs in CRE, by Deloitte LLP

File Type: Free Content, Article
Release Date: June 2014
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Increasing use of technology and ambitious productivity goals are changing the nature of the demand for commercial real estate. As both office and industrial space occupiers adjust their physical space needs, many also are becoming more conscious of the environmental impacts of that space. “Breakthrough for Sustainability in Commercial Real Estate,” a new report from Deloitte LLP, offers insights into how sustainability is becoming increasingly important — and what that will mean for the future of commercial real estate.

The report notes that “the industry has made progress in increasing energy, water and waste efficiency. CRE players have begun to implement and report sustainability, with some also collaborating with stakeholders such as tenants, investors, and the government. However, we believe sustainability adoption tends to be narrow either in terms of aspects of sustainability (energy, water, waste) or localized to specific properties.” It then argues that developers and investors need to think more broadly about sustainability, to evaluate sustainability adoption in the context of a building’s (or a portfolio’s) environmental impact and the benefits for property owners as well as for tenants.

What “next issues” should CRE executives be thinking about when it comes to sustainability? The report suggests focusing on three areas that Deloitte believes “can help companies differentiate themselves in the marketplace:

  1. Embed environmental, social and governance (ESG) risk management into core investment processes to maintain stakeholder confidence;
  2. Improve measurement and reporting to manage sustainability risk; and
  3. Plan resource efficiency to enhance occupier satisfaction and investment returns.”