The Real Estate Sector Learns Sustainability Is Key
The path to net zero has taken another step forward as one of the world’s highest carbon emitting sectors says it is increasing its focus on sustainability and decarbonization. We know the scientific reasons for the global advance towards decarbonization: The process minimizes the entire greenhouse gas emissions largely through the use of low-carbon energy sources. This is critical to curbing climate change and offers a compelling business opportunity for property owners, residents and investors, according to a new survey.
The real estate industry, especially the construction industry, is responsible for 38 percent of global CO2 emissionssays at least one poll. Key players in the industry respond in the same way: Global commercial real estate services company JLL recently published a survey that found that real estate executives are now more focused than ever on sustainability. By and large, they have accepted the reality that climate risk is a financial risk. Additionally, the COVID-19 pandemic has increased the sense of urgency to take risks of climate change while ensuring the safety of the buildings that the real estate industry builds, sells and leases. Meanwhile, citizens are demanding safer and more sustainable spaces in which to live and work.
“People are starting to see buildings again as agents of change and a force for good rather than a cost, but that is exactly what has to happen for all of these commitments to be met,” said Robbie Hobbs. JLL’s global product group leader for sustainability and workplace management, during a recent interview with TriplePundit.
The economic benefits of decarbonization
As the Interest and demand For sustainable real estate growth, there are a few options left for industry leaders to make their assets more attractive and remain competitive. Upgrades can be made to the existing infrastructure. For this alternative, Hobbs stated that new technology and the promise of a competitive return on investment (ROI) support the additional costs required to make the real estate industry resilient over the long term.
In addition to upgrades, decarbonization tactics are another option. According to JLL’s research, investors believe that decarbonization creates value and competitive advantage for them. Hobbs addressed three options within the decarbonization process that investors can rely on. These are: Renewable energy on site, the purchase of renewable energy off-site and compensation payments. These steps allow investors to differentiate their asset beyond the standard factors like location and square footage.
Such options, along with prioritizing progress towards the net-zero economy, can help companies ensure they can continue to thrive in a competitive real estate market. Hobbs pointed out in his interview with 3p the business opportunities that arise from the increased focus of real estate companies on sustainability and decarbonization for the tenants of their buildings.
One such opportunity for the customers of these companies is the ability to attract and retain talent, as the next generation of employees often make their career decisions based on a desire to work for companies that match their values. The real estate industry’s commitment to the construction and retrofitting of buildings for long-term resilience is critical as climate change is often considered one of the of five biggest worries of Millennials and Generation Z.
Enable sustainability in real estate
An increased focus on sustainability, defined by bold, long-term commitments to climate protection, is not enough; Companies need to be able to show their progress if they want to seize future economic opportunities while increasing their brand reputation. Real estate developers and investors claim to be aware of this. For example, the survey suggests that they understand that any current ambitious climate change plans need to be turned into goals. In fact, 81 percent of stakeholders surveyed by JLL believed that strong partnerships between cities and their industries can help drive net zero action plans.
“We need property owners, investors and city governments all working together to drive regulation, drive investment and bring supply development up to the required level,” Hobbs said. Collectives are powerful and can drive change because they have more lobbying power, he added. On the other hand, governments also have an obligation. Hobbs made this point by stating that clear guidelines and regulatory frameworks provided by cities can encourage proper behavior across the real estate industry.
Currently, real estate industry leaders are increasingly focusing on new technology, data collection and measurement. These three priorities can bridge the digital void in this industry and enable net-zero plans, according to JLL data. For property owners and users in particular, technology is at the fore of investments; critical as it can provide opportunities for improvement, analysis, and decision-making. Despite the immense potential of the technology in helping the real estate sector make strides in protecting the climate, nearly half of those surveyed by JLL say their current data systems are in the works, according to the survey.
The current attitudes of executives in this industry are clear. Owners, users and investors have no choice but to meet the increasing demand for sustainable real estate to support their livelihoods. Committing to a net zero or even low carbon economy is the obvious way forward as it can lead to higher returns while averting climate change.
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