The Leader - January/February 2009 - (Page 31)

G lo bal Tre nds i n s us Tai nable re al e s TaTe : Co rp o raT e p e rs p e C T ive s catering to water stress areas such as in Australia and southern European and Asian countries – is broadly implemented at just 24 percent of companies, although 45 percent said they were engaged in this strategy on a limited basis and 17 percent are pursuing a pilot program. Other key findings from the survey:  Three-quarters of companies consider energy and sustainability issues as a “major or “tie-breaker” factor in making location decisions  Corporate tenants report an increased scarcity of green space that meets their needs  CRE executives are increasingly interested in measuring the benefit of sustainability but are not fully satisfied with current metrics The findings reveal a global challenge for the real estate industry: to identify and implement strategies whose benefits outweigh the financial cost, either because they require little or no upfront cost to implement, or because there is a measurable and achievable return on investment. This analysis is reinforced by respondents’ comments in a space provided with the survey. “Our organization is practical enough to know that going green still needs to have some tangible financial benefit for us to engage heavily and spend capital to pursue,” one wrote. Another summed it up this way: “The ROI is difficult to determine.” The survey was distributed at a time when global financial markets were declining sharply, and to the extent that national and multi-national companies are affected by economic weakness, the emphasis on cost containment and financial justification for sustainability is more likely to increase than decrease. Supporting the survey results, LEED accredited professionals in the field note that the economic decline has caused companies to look at the cost versus the financial benefits even more closely than they were previously. But rather than backing off from their commitment to sustainability, companies are embracing strategies that help them meet that commitment without adding to their financial challenges. reports on sustainable buildings in major markets and trends on premium percentage for sustainable buildings.” Measuring success In addition to cost-saving strategies, many CRE executives are engaged in helping to measure their companies’ progress in sustainability. Forty-three percent collect data on energy and sustainability, 34 percent attempt to calculate their companies’ carbon footprint, and 33 percent contribute to formal sustainable reporting efforts—all strategies that require time and effort but no significant investment capital. The search for space Tenants have serious doubts in their ability to find green building alternatives, as 72 percent cited limited or minimal availability in most markets. For most corporations, sustainability is a fundamental component of their long-term business strategy and an important environmental and humanitarian business goal. Unfortunately, the challenges of the turbulent national and global economies coupled with limited green options for tenants continue to create pressure. Tenants are finding it more difficult to locate green space in 2008 compared to 2007. In fact, less than 1 percent felt that there was plenty of available green space available for rent today, compared to 4 percent who had this perception in 2007. Another 27 percent this year thought supply was good in some markets, down from 38 percent in 2007. Those who believe availability is limited in most markets rose from 37 percent in 2007 to 51 percent in 2008, while those who see minimal or no available space increased from 9 percent to 22 percent. The drop in confidence is largely a matter of demand outpacing supply. While many new developments gained LEED certification in the past 12 months, few existing buildings did. At the same time, a flood of “green lease” requests hit the market. The fact that many tenants have been unwilling to pay a premium for the sustainable space they seek adds to the gap between supply and demand. In addition, it is possible that respondents in 2007 had not yet researched space alternatives, and were reacting to extensive media coverage of a relatively small number of sustainable buildings. If availability of sustainable space for lease is a significant obstacle, it is not the only one that CRE executives face. Asked to rate the difficulty of various challenges on a scale of 1 to 5, a number of respondents gave Energy management strategies can have a very favorable financial return for very little cost, and strategies such as recycling programs may be cost-neutral while creating goodwill among employees. Seventy-three percent of respondents cited energy costs as a vital metric in managing the sustainability of their workplace. In addition, 82 percent stated that they consider green building ratings/certifications an important component in administering their portfolio. But many expressed frustration with a lack of verifiable data. “Tangible results with accurate data from initiatives still remain at an infant stage of development,” reported one respondent. Another wrote: “It would be good to know more about acceptance and implementation of sustainability efforts by landlords, 2 0 0 9 Th e le ade r 31 January / February

Table of Contents Feed for the Digital Edition of The Leader - January/February 2009

The Leader - January/February 2009 Contents Leadership Message from the CEO Real Estate in the News Mergers and Aquisitions Assessing Green Building Performance Measuring Space You Actually Use Global Trends in Sustainable Real Estate Whirlpool’s Lee Utke Northmarq’s Kevin Farrell Plastics: Hoping for Resiliency in Resins Regional Profile: Heartland Holding Strong Industry Profile: Ascendas Brings New Age Business Space to Asia-Pac Industry Tracker From the Applied Research Center Discovery Forum Findings Capital Corner Career Development Young Leader Economic Development in the News Learning Spotlight Connect With CoreNet Global Index of Advertisers A Look Ahead In our Next Issue Calendar of Seminars

The Leader - January/February 2009

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