BASIC SUSTAINABILITY PRINCIPLES FOR REAL ESTATE

REAL ESTATE & SUSTAINABILITY

Basic Principles for
Sustainable Real Estate

Real estate plays a huge role in sustainability. Therefore, real estate professionals have a unique role to play in protecting the environment and advancing equity. Indeed, since they are working with a physical asset–namely the built environment–that uses natural resources in construction and operation, real estate professionals are perhaps the best positioned of all to make a positive difference.

However, in order to use real estate as a platform for positive change, students and professionals need both the fundamentals of commercial real estate and the new fundamentals of sustainability in real estate.

Sustainability in real estate refers to the industry’s environmental and social impacts, and the resulting risks and opportunities these impacts present.

This page provides a quick introduction to the basic principles of sustainable real estate and the most popular certification and rating systems real estate professionals should be familiar with.

Video (3:51) “Key sustainability trends influencing owners and occupiers of commercial real estate” Director of Sustainability for Australia, Simone Concha at JLL Commercial Real Estate Management

Climate Change and Commercial Real Estate

According to a Deloitte report Breakthrough for Sustainability in Commercial Real Estate, “commercial buildings account for 18.7 percent of energy usage, 40 percent of carbon dioxide (CO2) emissions, and 88 percent of potable water consumption in the United States.”

Considering the need to dramatically reduce greenhouse emissions and the use of limited resources, the way buildings are built and operated is of critical importance. The World Green Building Council’s (WGBC) Beyond Buildings report captures the challenge and opportunity with some startling numbers:

- - 40-50% of resources extracted for global materials are used for housing, construction and infrastructure
  - 75% of the infrastructure needed by 2050 still needs to be built, that’s 230 billion square meters of new buildings to be constructed, the equivalent of a city the size of Paris, every week
  - Green buildings will represent an $24.7 trillion investment opportunity in emerging markets by 2030

To protect the climate will require a transition to clean energy, highly efficient buildings made of high levels of (safe) recycled or repurposed materials.

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Human Health and Buildings

People spend a lot of time indoors. The materials, air quality, views, and other aspects of their surroundings impact their health. The Harvard T.H. Chan School of Public Health’s Center for Health and the Global Environment conducted research to measure the effect of conventional buildings and “green” buildings on one aspect of health and well-being: cognitive function.

The results? Cognitive function was better in green building conditions “across nine functional domains, including crisis response, strategy, and focused activity level.”

On average, cognitive scores were:

- - 61 percent higher in green building conditions
  - 101 percent higher in enhanced green building conditions CO2, VOCs, and ventilation rate all had significant, independent impacts on cognitive function

Due to the sheer number of people who spend 90% of their time in buildings, the Harvard researchers state that “these findings have far ranging implications for worker productivity, student learning, and safety.”

Similar research by WGBC, such as in its Health, Well-being and Productivity in Offices report, has concluded, “There is overwhelming evidence which demonstrates that the design of an office impacts the health, wellbeing and productivity of its occupants.”

Natural Resources, Waste and the Built Environment

You can’t build something out of nothing and this is certainly true for commercial real estate. The simple truth is that every building draws resources from a natural environment that is increasingly under pressure as population and consumption both rise.

According to research in Switzerland published in the journal Sustainability, the construction industry accounts for:

- - 50% of total primary energy demand and about 30% of total GHG emissions
  - 70 to 80 million tons of construction materials annually
  - 84% of total waste produced

The research goes on to say that “while 75% of excavated materials and about 70% of deconstruction materials are recycled, a substantial amount of deconstruction materials (over 5 million t/a) is still landfilled or incinerated.”

The US EPA provides resources for commerical real estate to cut waste while saving money and reducing risk, but the problem will persist until supportive policies and corporate investment combine to move the market towards practices and products that protect ecosystems and close the loop on waste, like the Circular Material Loop Initiatives in New York City.

Sustainable Urban Planning

Commercial real estate doesn’t exist in a vacuum of course. Office, retail, and residential buildings are part of neigbhorhoods, townships, municipalities and cities. After all, the important impacts noted here, on the climate, the environment and human health, are multiplied across buildings and the communities they are part of.

Key components of “sustainable” communities or urban planning according to a framework created by the Natural Resources Defense Council (NRDC) and US Green Building Council (USGBC) include:

- - Smart Location and Linkage
    - Brown remediation
    - Wetland conservation
    - Access to quality public transportation
  - Neighborhood Pattern and Design
    - Walkable Streets
    - Access to Civic and Public Spaces
    - Housing Types and Affordability
  - Green Infrastructure and Buildings
    - Certified Green Building
    - Water Use Reduction
    - Pollution Prevention

The above categories are part of the LEED certification for neighborhood development framework. Real estate professionals play a critical role in advancing the transition to sustainable cities. The World Economic Forum claims such a transition will require shifting trillions in investment: “it will take $5.2 trillion over the next decade alone to decarbonize the built environment.”

Sustainable Building Certification and Rating Systems

A long list of certification and rating systems have emerged to attempt to provide credible information and proof of responsible design, construction and management of real estate properties (Archtoolbox has a more comprehensive list of these systems with short descriptions).

Leading real estate students and professionals are aware of the most common systems and stay up-to-date as this market matures and grows.

Below are the five most common sustainable building certification and rating systems:

LEED

Leadership in Energy and Environmental Design (LEED) certification is perhaps the most popular sustainable building rating system in the world.

WELL Building Standard

WELL Building Standard focuses on occupant health and wellness that covers 10 aspects including air, water and thermal comfort.

BREEAM

Building Research Establishment Environmental Assessment Method (BREEAM) has focused on ecologically sustainable design and construction since 1990.

GRESB

GRESB develops benchmarks for environmental, social and governance (ESG) performance of commercial real estate and infrastructure.

Living Building Challenge

Regarded as the most difficult to achieve, Living Building Challenge is managed by the International Living Future Institute (ILFI) and focuses on environmental impact and health certification.

Learn about more sustainability concepts within this major.

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