Sustainable Practices In Commercial Real Estate

Sustainable Practices In Commercial Real Estate

Inna Radford | 8th June 2024 | 10 minute read

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Going green is becoming the golden standard in commercial real estate. Sustainable building practices not only benefit the environment, but they also make good business sense.

This article dives into three key ways commercial properties are getting eco-friendly: LEED certification, energy-saving strategies, and government programs that support green building.


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What is LEED Certification?

LEED: The Green Building Badge

LEED (Leadership in Energy and Environmental Design) is like a gold medal for sustainable buildings. This globally recognized program, created by the U.S. Green Building Council, helps design, build, and run buildings that are good for the environment, people, and your wallet. It covers everything from offices to homes, making it a versatile tool for all types of construction.

Why Go LEED?

  • Eco Hero: LEED buildings use less energy and water, which means less pollution and a lighter footprint on the planet.

  • Save Green, See Green: While upfront costs might be higher, LEED buildings pay you back in the long run. Lower energy and water bills mean more money in your pocket. Plus, LEED buildings often rent faster and for more, making them a smart investment.

  • Healthy and Happy: LEED promotes clean air, natural light, and fewer toxins inside. This keeps people healthier and more productive, which is a win for businesses.

  • Green is Good for Business: LEED certification shows you’re serious about sustainability, attracting eco-conscious tenants, investors, and partners. It’s a smart way to stand out from the competition.

Requirements for LEED Certification

LEED Scores: How Green Are You?

LEED doesn’t just hand out gold medals; it awards points based on how well your building meets its eco-friendly goals. These points come from different areas, like:

  • Location Champions: Close to public transport, bike-friendly, and uses less space for parking.

  • Site Stewards: Manages rainwater, reduces heat buildup in the city, and protects natural habitats.

  • Water Wise: Uses less water inside and out with efficient fixtures and appliances.

  • Energy All-Stars: Runs on less energy, uses renewable sources like solar power, and keeps coolants in check.

  • Material Masters: Uses sustainable building materials, cuts down on waste, and encourages recycling.

  • Air Aces: Provides clean air to breathe, plenty of natural light, and keeps everyone comfy inside.

  • Innovation Instigators: Goes above and beyond with new eco-friendly ideas.

The more points you earn, the higher your LEED rating. There are four levels: Certified, Silver, Gold, and Platinum. Platinum is the ultimate badge of green building glory!


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Energy Efficient Technologies

HVAC Systems: Modern heating, ventilation, and air conditioning (HVAC) systems are designed to be highly energy-efficient. Technologies such as variable refrigerant flow (VRF), energy recovery ventilators (ERVs), and smart thermostats help optimize energy use while maintaining comfort.

Lighting: LED lighting has become the standard for energy efficiency in commercial buildings. LED lights use significantly less energy than traditional incandescent or fluorescent bulbs and have a much longer lifespan. Additionally, smart lighting systems that utilize sensors and automated controls can further reduce energy consumption by adjusting lighting based on occupancy and natural light availability.

Building Automation Systems (BAS): BAS integrate and automate various building systems, including HVAC, lighting, and security. These systems use sensors and advanced algorithms to optimize energy use, improve operational efficiency, and provide real-time data for facility managers.

Renewable Energy: Solar panels, wind turbines, and geothermal systems are increasingly being integrated into commercial buildings to harness renewable energy. These technologies reduce reliance on fossil fuels and lower greenhouse gas emissions.

Energy Efficient Practices

Building Envelope: Enhancing the building envelope (walls, windows, roofs) improves insulation and reduces energy loss. High-performance windows, reflective roofing materials, and proper insulation can significantly enhance energy efficiency.

Water Conservation: Implementing water-efficient fixtures, such as low-flow faucets and toilets, and using drought-resistant landscaping reduces water consumption and associated energy use.

Energy Audits and Retro-Commissioning: Regular energy audits identify inefficiencies and areas for improvement. Retro-commissioning ensures that building systems are operating as intended and optimizes their performance, leading to energy savings.

Tenant Engagement: Educating tenants about energy conservation practices and encouraging their participation in sustainability initiatives can lead to significant energy savings. Providing real-time energy usage data and incentivizing energy-saving behaviors are effective strategies.

Federal Incentives

Government Green Grants

The government wants to give buildings a high five for going green! Here are some ways they help:

  • Tax Breaks for Solar & Wind: The Investment Tax Credit (ITC) gives you a tax break for installing renewable energy systems like solar panels and wind turbines. This can make those upfront costs much easier to swallow.

  • Deductions for Energy Efficiency: The Energy-Efficient Commercial Buildings Tax Deduction (Section 179D) lets building owners deduct the cost of eco-friendly upgrades, like new HVAC systems, lighting, and better insulation. It’s a win-win for your wallet and the environment.

State and Local Incentives

Many states and cities offer their own green perks to encourage sustainable buildings:

  • Property Tax Breaks: Some places give tax breaks to buildings that are super energy-efficient. This lowers your operating costs and makes going green even more attractive.

  • Grants and Rebates: Cash for going green! States and cities sometimes offer grants and rebates to help pay for energy-saving upgrades, renewable energy systems, and even LEED certification.

  • PACE Programs: This stands for Property Assessed Clean Energy. Basically, PACE lets you finance eco-friendly improvements through your property taxes. It’s like a long-term, low-interest loan that makes those upfront costs more manageable.

Federal Incentives

Utility companies are also on board with the green movement! They offer:

  • Efficiency Upgrades on a Budget: Rebates and incentives for things like switching to LED lights, upgrading your HVAC system, or installing a building automation system. These programs help make energy-efficient improvements more affordable.

  • Get Paid to Save Power: Demand Response Programs give you money for reducing energy use during peak hours. It’s a win-win – you help the grid and save money on your bill.


Green is the New Gold in Commercial Real Estate

Building green isn’t just good for the planet, it’s smart business. LEED certification makes buildings more attractive to tenants, while energy-saving technologies slash costs and keep occupants happy. Government programs offer a helping hand financially. The bottom line? Sustainable practices are the key to a thriving future in commercial real estate. By embracing green building, you’re not just helping the environment, you’re future-proofing your investment.