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Sustainability Trends in CRE to Watch into 2023

Posted by RealNex on Jul 27, 2022 9:00:00 AM

Sustainability has been a major topic of discussion throughout the past few years, but it’s become top of mind for the commercial real estate industry in 2022. 

Corporate real estate is evolving to become more eco-friendly by reducing carbon emissions, leveraging new green technologies, and considering green certification for buildings among other sustainability-oriented action plans. 

Here’s a deeper look at some of the ways that commercial real estate is prioritizing sustainability, the driving force behind the industry’s transformation, and how it looks different across various CRE sectors. 

What’s Driving CRE’s Sustainability Trend? 

A global focus on sustainability has pushed commercial real estate to take action against climate change, pollution, and carbon emissions. 

With climate concerns at the forefront of many geopolitical conversations, commercial real estate has taken a strong stance against climate change since many leading companies have made sustainability pledges. 

This is coming into effect after leaders on a city, state, and country level have made pledges to reduce carbon emissions and create more sustainable infrastructures. The built environment plays a large role in the overall sustainability of a region, which quickly moved the spotlight onto commercial real estate firms. 

Besides political influences pushing commercial real estate to comply with new standards, sustainability has been incentivized by green lending. There are many state and local programs that reward building developments with grants and loans if they meet certain environmental criteria. 

In addition to the access to funding that sustainability can provide, investing in creating environmentally-friendly building environments can give building owners and operators access to continual financial savings. Reducing waste and improving the efficiency of a property can prevent excess spending on essential utilities, such as water and power. Establishing the infrastructure for renewable energy to feed the power supplies of the property can help generate additional savings. 

In general, sustainable buildings are healthy, efficient, and cost-effective. With all these benefits associated with sustainability, the commercial real estate industry has quickly become a major advocate for environmental action. 

Sustainability Across CRE Sectors 

Since different sectors have different operations, taking action on sustainability isn’t a one-size-fits-all venture for commercial real estate. Here’s a look at how three sectors are strategically driving sustainability. 

Office 

The office sector is becoming more sustainable by developing market-leading workplaces that are in alignment with the organization’s environmental policy. 

Many offices are taking simple steps, such as removing plastic cutlery and dishware from on-site break rooms and kitchen areas, prompting employees to bring their own. Other offices are investing in alternative energy sources, such as on-site solar panels. Many workplaces are making an effort to plant biodiverse plants on their building grounds, encouraging wildlife. Some offices are even installing beehives on their rooftops to help increase local bee populations. 

Retail 

On the macro level, retail is becoming more sustainable by seeking real estate properties that comply with state and local environmental standards. To achieve this, retailers are collaborating alongside commercial real estate professionals to locate the optimum assets in alignment with their sustainability goals. 

On the micro level, retail is deploying eco-friendly practices within the physical storefronts. For example, many retailers are no longer using plastic bags for purchased items. Other retailers are choosing to take action by raising funds and donating them to support environmental causes. 

On the e-commerce front, retail brands are paying attention to supply chain partners to try and lower emissions when delivering packages to consumers. 

Industrial 

The industrial sector is working to make warehouse facilities more sustainable by mitigating waste of electricity and water. The industrial sector is also analyzing the carbon footprint of associated vehicle fleets and strategizing ways to reduce emissions while transporting goods. Many warehouses are now using recyclable materials when shipping packages as they move away from packing materials that pollute the environment.

Sustainability Trends to Watch in 2023 

Expect to see more green leases in 2023. A green lease is a traditional commercial real estate lease that includes sustainability clauses in the contract. For example, a green lease may require that tenants comply with certain operational guidelines, such as strict waste management and recycling standards. These leases are attractive to tenants that prioritize sustainability and are on the market for an environmentally friendly property to align with organizational goals. 

Another thing to keep an eye out for is the development and rollout of new sustainability-oriented technologies. Technologies can help to streamline and automate the process of going green for commercial real estate property owners, operators, and tenants. 

Keep up with CRE’s latest trends with the RealNex Blog. 

Topics: CRE, CRE Tech, CRE Marketing, ESG, sustainability