Sustainability may once have fallen under the niched purview of West Coast hippies and environmentalists, but it’s assuredly packed up its metaphorical bags and moved to the big city now. As millennials continue to enter professional industries, so too does their employers’ interest in sustainable real estate continue to grow. Younger companies – or even companies with a higher number of Millennial employees – want to know what they can do to cut costs and maintain an eco-friendly office. According to a 2010 McGraw Hill Construction-CBRE Report, a full 79% of surveyed commercial building owners believe that “green” buildings attract more tenants than traditionally-outfitted properties. But is this interest just a flash in the pan, or a real shift in the market? I tend to lean towards the latter. For those of us in commercial real estate, sustainability is more than a last-minute conversation point or novelty add-on to bring up at the negotiating table; it’s a real factor that stands to shape the future of our field.
This might seem like a bit of an exaggeration; after all, what difference might a few solar panels and energy-efficient taps do for an office building? Not much – but when we discuss green design, the creativity doesn’t stop with a few strategic installations. “Green” offices are designed with sustainability in mind: they rely on natural daylight to supplant fluorescent bulbs, open floor designs to optimize space usage, green plants to lighten the corporate atmosphere, and optimal ventilation to improve climate control and improve air quality. These may sound like small changes, but they make a significant difference; according to a study conducted by the World Green Building Council, simple sustainability measures like these “can […] have a dramatic impact on the bottom line by improving employee productivity and reducing absenteeism, staff turnover and medical costs.” Thus, the savings sustainable measures enable aren’t just in utilities, but also in revenue gained by greater employee engagement. With this in mind, we need to stop asking ourselves how much buying into the sustainability movement will cost us, and instead wonder how much we stand to lose in potential productivity if we don’t invest in green measures.
All this said, putting a sustainable philosophy can be easier said than done, especially for those in traditionally-built properties that lack the advantage new “green” constructions provide. However, these older properties aren’t completely out of options; landlords and tenants can agree to sign a sustainably-focused, or “green,” lease. These documents outline goals and sustainability expectations for both parties, and can serve as an easy way to integrate environmentally-friendly philosophies into daily practice. A 2015 IMT report estimated that if the whole of the U.S. office market implemented green leases, it could stand to save around $1.7 to $3.3 billion annually. That said, these do have their flaws: it can be difficult to retroactively add a sustainability clause into existing lease, and even harder to enforce expectations once the paper is signed.
Integrating sustainability is a task more readily within reach for investors and companies who want to build a campus from the ground up. Microsoft, for example, recently opened a sustainable campus in Silicon Campus that prides itself on having a net-zero wastewater system that leverages a minimal impact on the local ecosystem. Though most investors and smaller companies likely won’t go as far in pursuit of their eco-friendly goals, their example is certainly one to strive for – and take note of. Sustainability is here to stay; if investors stubbornly cling to traditional building modes and forgo eco-friendly measures, they may just find themselves outmoded and overlooked by a new class of sustainability-minded tenants.