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Market Intelligence

Over the years, we’ve invested thousands of hours uncovering and analyzing the best green building, renewable energy and development research from across the United States and beyond.  Now, we’re sharing the best of what we’ve learned with you.

GREEN REAL ESTATE & CLEAN ENERGY INVESTMENT

Energy Efficiency and Real Estate: Opportunities for Investors
Mercer LLC and Ceres

Investing in energy efficiency has two intertwined virtues that make it particularly attractive in a world with a changing climate and a destabilized economy:  It cuts global-warming greenhouse gas emissions and saves money by reducing energy consumption.  Given that the built environment accounts for 39 percent of total energy use in the US and 38 percent of total indirect CO2 emissions, real estate investment represents one of the most effective avenues for implementing energy efficiency.

The Economic Benefits of Investing in Clean Energy
Political Economy Research Institute and Center for American Progress

The clean-energy components of the American Recovery and Reinvestment Act programs and the entire American Clean Energy and Security Act now before Congress are designed to transition our economy from its reliance on high-carbon fuels to one operating more efficiently on clean energy.  Understanding the specific features of ARRA and ACESA and how they will work in combination allows us to estimate the level of public-and private-sector investments in clean energy.  As we will demonstrate, the two programs together could create $150 billion a year in new investment and 1.7 million net new jobs a year—that is, 1.7 million more jobs each year than would be the case without a $150 billion shift in spending from conventional fossil fuels to clean energy investments.

Sustainable Property Investment Products
Journal of Sustainable Real Estate

This paper sets out a strategy for the development, implementation, and widespread dissemination of sustainable investment products (sustainable property funds) for the property industry.  This is seen as an additional and potentially powerful approach to stimulate demand for sustainable buildings.

Globalization and Global Trends in Green Real Estate Investment
RREEF Research

Recent years have witnessed an explosion in the creation of more sustainable buildings, through both new construction and retrofits to greener standards, though this activity has been highly concentrated in the wealthiest nations.  But even here, institutional investors have been slow to seize the opportunities – or recognize the risks of the changing landscape.

Living Building Challenge 2.0
International Living Building Institute

The Living Building Challenge is attempting to raise the bar.  It defines the most advanced measure of sustainability in the built environment possible today and acts to diminish the gap between current limits and ideal solutions.  This certification program covers all building at all scales and is a unified tool for transformative design, allowing us to envision a future that is Socially Just, Culturally Rich, and Ecologically Benign.

Do Green Buildings Make Dollars & Sense?
CB Richard Ellis and Burnham-Moores Center for Real Estate

An analysis of operating costs, worker productivity and the benefits of LEED Certification in a commercial office portfolio.

Value Beyond Cost Savings: How to Underwrite Sustainable Properties
Green Building Finance Consortium

Sustainable property financial performance is not a simple concept, and needs to be clearly defined and articulated when presenting financial performance evidence.  For example, when talking about sustainable property financial performance, you must first clearly specify whether you are talking about value or returns for the property overall, or the incremental rate of return or value contribution of incremental investments in sustainable features and strategies.

Metrics for Responsible Property Investing
Arup, Galley EcoCapital, and Responsible Property Investing Center

Responsible Property Investment [RPI] is an emerging investment strategy and discipline concerned with integrating environmental, social, and governance [ESG] data into investment decision-making.  Proponents point to increased regulatory risk, resource constraints, changing consumer preferences and demographics — all as they relate to the increased importance of environmental and social issues — as drivers of change in the real estate investment industry.

The Walkability Premium in Commercial Real Estate Investments
Responsible Property Investing Center and Benecki Center for Real Estate Studies

The purpose of this study was to examine the effects of walkability on property values and investment returns.  Walkability is the degree to which an area within walking distance of a property encourages walking for recreational purposes or functional purposes.  It is of particular concern to developers, investors and others interested in sustainable and responsible property investing because of its potential social and environmental benefits.

GREEN RETROFITS OF EXISTING BUILDINGS

Strategic Timing for Energy Benchmarking
Green Property Funds LLC

While most experienced owners and managers recognize the benefits of pursuing green building certifications such as LEED and ENERGY STAR, many prefer to take more of a step-by-step approach by seeking first to understand how their existing buildings consume and waste energy and water.  Properly timed utility cost benchmarking is an excellent strategy for getting started on the path toward greening your properties.  Four great benchmarking opportunities throughout the typical investment cycle are discussed here.

Energy Efficiency: Turning Negawatts into Marketable Securities
Equilibrium Capital

The biggest investment opportunity in this market is innovative financial instruments that can fund energy efficiency building retrofit projects on a large scale, turning negawatts, or saved energy, into marketable securities.  To-date, most of the revenue in this market has been generated in the public sector.  But emerging new business models and approaches for financing retrofits will dramatically increase progress in the commercial, industrial, and residential market segments.

The 2030 Challenge Stimulus Plan: The CRE Solution
Architecture 2030

Because the private building sector represents 93% of total U.S. building stock, and building construction alone accounts for approximately 10% of the U.S. GDP, the private building sector is the key to reviving the U.S. economy.  Investing $192.47 billion ($96.235 billion each year for two years) in the private building sector to provide a “housing mortgage interest rate buy-down” and a “commercial building accelerated-depreciation program” for buildings that meet the energy reduction targets of the widely adopted 2030 Challenge will create, in just two years, over 9 million new jobs and $1 trillion in direct, non-federal investment and spending while opening up a new $236 billion renovation market that could grow to $2.6 trillion by 2030, and over $5.47 trillion by 2069.  This Plan pays for itself annually through the new tax base created and can be implemented quickly through existing federal programs.

USGBC Green Jobs Study
U.S. Green Building Council

The results of this study show that the economic impact from green building construction is significant and will continue to grow as the demand for green buildings rises.  Green construction spending currently supports over 2 million jobs and generates over 100 billion dollars in gross domestic product and wages.  By the year 2013, this study estimates that green buildings will support nearly 8 million jobs across occupations ranging from construction managers and carpenters to truck drivers and cost estimators.  USGBC also supports job creation and economic activity.  LEED-related spending has already generated 15,000 jobs since 2000, and by 2013 this study forecasts that an additional 230,000 jobs will be created.

Greentowers – Setting a New Global Standard
Deutsche Bank

Deutsche Bank’s Head Office, its prominent 155-meter twin towers in Frankfurt am Main, Germany, are undergoing Europe’s largest building renovation to become one of the most environmentally friendly skyscrapers in the world – “Greentowers”.

A Landmark Sustainability Program for the Empire State Building
Rocky Mountain Institute

This context underscores the extraordinary nature of the commitment that Anthony E. Malkin of Empire State Building Company has made to establish the Empire State Building as one of the most energy efficient buildings in New York City, and arguably the world’s most environmentally conscious office tower built before World War II.  Just as extraordinary as Malkin’s commitment to retrofitting the Empire State Building was his decision to make the process transparent so that other building owners–particularly those with pre-WWII or landmark properties–would have an example to follow in pursuing their own green projects.

New Tools. New Rules.  Climate Change, Land Use and Energy 2010
Urban Land Institute

In a world looking toward investments in energy efficiency to help solve intractable economic and environmental problems, markets and policy alike turn an eye to buildings.  Residential and commercial buildings together consume nearly 40 percent of energy in the United States.

The occupancy of the nation’s approximately 5 million individual commercial buildings makes up about 18 percent of total annual energy consumption in the United States.  Lighting, space heating, and space cooling represent the three largest building operations that consume the most energy.  Taken together, these “big three” account for roughly half of overall commercial-building energy consumption.  The total energy bill for all commercial buildings amounts to about $170 billion per year.

PACE FINANCING: PROPERTY ASSESSED CLEAN ENERGY

Innovations in Green Real Estate Finance: PACE
Green Property Funds LLC

Worldwide, “Black Swan” events are causing well-informed building owners and managers to recognize the value in implementing aggressive energy and water management strategies in their investment properties.  Currently, however, the traditional means of funding real estate capital improvements that facilitate long-term cost savings, and that mitigate risks inherent in energy price volatility and climate change, are hard to come by.

Recovery Through Retrofit
Middle Class Task Force Council on Environmental Quality

The Property Assessed Clean Energy (PACE) financing programs enable the costs for energy efficiency retrofits to be added to an owner’s property tax bill as part of a municipal property tax assessment, which takes the same priority as traditional property tax liens and assessments.

PACE programs are designed to overcome several barriers that may otherwise impede property owners from making energy investments.  These barriers include:  (1) limited access to capital;  (2) high transaction costs;  (3) lack of information on the part of home buyers that leads them to undervalue efficiency investments; and  (4) potential downstream home sale, all of which may dissuade property owners from taking on debt that might not be fully recovered by energy savings before the property is sold.

Unlocking the Building Retrofit Market: Commercial PACE Financing
Institute for Building Efficiency

New energy efficiency financing models have enormous potential to catalyze demand from both owners and lenders for clean-energy investment in buildings.  Property assessed clean energy (PACE) financing is a model administered by local governments to allow property owners to undertake energy efficiency, renewable energy, and water efficiency projects without large up-front payments.  Just as other land-secured financing districts are used to fund public purpose projects, PACE districts allow local governments to deploy capital for energy and water improvements in buildings.  The outlay for projects is secured by a property lien and is repaid by the owner as a voluntary special assessment on the property tax bill over a 5- to 20-year term.