Climate change, sustainability and the real estate industry

The Saint ReportEnergy, Environmental Planning, saintblog0 Comments

(Ellen Sinreich, green building strategist, attorney and president of Green Edge LLC, is a guest columnist who has written about the sustainability of green building)

By Ellen Sinreich, President, Green Edge LLC

ellen sinreichAs we transition from 2009 to 2010 and the start of a new decade, there are a few things to take note of with respect to sustainability and real estate.  Most important, from my perspective, is that over 200 countries are taking part in the United Nations sponsored climate change talks in Copenhagen. Although it is unlikely that a comprehensive climate change treaty will be hammered out at the Copenhagen talks, there is widespread consensus throughout the world that man made climate change is real and that we need to do something significant about it in order to preserve the habitability of our planet for generations to come. 

What does this mean for the real estate industry?  It means that business as usual from a sustainability point of view will put companies, portfolios and individual properties at a competitive disadvantage as market forces and regulatory forces increasingly demand “green”.  Here’s a good year-end example of what the future holds. 

On December 9th, New York City’s City Council passed the “Greener, Greater Buildings Plan” or “GGBP”. Consisting of four distinct pieces of legislation, the GGBP will require private sector building owners to take a variety of measures to benchmark the energy performance of their buildings, upgrade the lighting in their buildings to energy efficient lighting, submeter tenant electrical consumption, perform energy audits and finally, retrocommission electrical and mechanical systems to identify problems. 

These measures will apply to private sector residential and commercial buildings with over 50,000 square feet: approximately 22,000 buildings that account for about half of the built environment in New York City.  While the original legislation introduced by Mayor Bloomberg in the spring of 2009 called for comprehensive energy efficiency upgrades (if indicated) for these buildings, the commercial real estate sector, hard hit by the current downturn, effectively lobbied against passage of the more comprehensive retrofit requirements.  

GGBP will also require private owners to publicly reveal the energy consumption in their buildings, akin to the easily comparable gas mileage consumption that car manufacturers reveal and the energy consumption labeling that we see on household appliances such as refrigerators.  Buildings that incorporate energy efficient systems and processes can’t help but be at a competitive advantage vis-à-vis their less efficient “peers”.  Intuitively, this should result in lower vacancy rates, lower turnover rates, higher occupancy rates and ultimately higher rental rates, each of which will result in greater asset value for energy efficient or greener buildings.

The ultimate goal is a public/private win-win. NYC reduces its carbon footprint and moves closer to meeting the mandates of PlaNYC 2030: a 30% reduction in New York City’s carbon footprint by 2030.  Private sector owners and tenants enjoy greater efficiencies and profitability. That’s a New Year gift that I can live with. 

Ellen Sinreich is president of Green Edge LLC, a Green Building consulting/law firm that provides strategic sustainability services to businesses and governmental entities. email ellen@greenedgellc.com  web www.greenedgellc  phone  212-828-3840  212-828-3840           

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