The Business Case for Sustainability in Commercial Real Estate

Posted on July 18, 2018

Earlier this year ING issued a survey, which found that in the Americas, sustainability strategies have shifted from being a cost-cutting or brand reputation strategy to being a true revenue driver. This holds true for commercial real estate as well. The importance of sustainability in commercial real estate as a growth engine is now recognized by market participants both on the equity and on the debt side.

No longer limited to simply “doing the right thing,” market participants’ decisions to go green are based upon positive impact on revenues, reduction of operating costs and the reduction of capitalization rates, all leading to higher property values.

Asset owners lead the way

Brookfield Properties, an owner, operator and developer of office and multifamily assets, reports that its tenant survey results repeatedly indicate a strong interest of tenants in reducing the amount of energy used and waste generated at their buildings. As of 2016, at least 80 percent of Brookfield’s tenant survey respondents indicated sustainable building practices were important to them. Not surprisingly, Brookfield Properties have put sustainability at the core of its business strategy. Ninety percent of the firm’s eligible global office area has achieved a sustainability designation.

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