Sustainability was a key focus in the commercial real estate sector throughout March 2024, with increasing demand for energy-efficient and eco-friendly buildings. Green building certifications, such as LEED and BREEAM, became more important for tenants and landlords alike as both groups prioritized environmental responsibility alongside cost-efficiency.
Key Moments:
In March 2024, New York’s financial district saw the completion of a 1.1-million-square-foot office tower that earned LEED Platinum certification. This high-performance building integrated renewable energy systems, such as solar panels, along with state-of-the-art HVAC systems designed to reduce energy consumption. Similar trends were observed in Chicago and San Francisco, where older office buildings underwent significant retrofitting to achieve higher sustainability standards.
Many tenants also began incorporating sustainability as a core part of their corporate social responsibility (CSR) strategies, driving the demand for green-certified office spaces. The U.S. Green Building Council (USGBC) reported a 15% year-over-year increase in the number of commercial real estate projects seeking LEED certification during Q1 2024.
Impact on Tenants and Landlords:
For tenants, the increased demand for sustainable office spaces offered both financial and environmental benefits. Buildings with green certifications typically had lower operating costs due to energy efficiency, which made them more attractive to companies aiming to reduce their carbon footprint. Additionally, working in sustainable buildings aligned with corporate sustainability goals, which was increasingly important to both employees and consumers.
For landlords, sustainability provided a competitive advantage in attracting high-quality tenants. Properties that offered LEED or BREEAM certifications typically commanded higher rents and experienced lower vacancy rates, as tenants prioritized sustainable buildings. As a result, landlords who invested in green retrofits or newly constructed sustainable properties were able to secure long-term leases with major corporations focused on sustainability.
The long-term effect of this trend will likely see sustainability becoming a standard feature in commercial real estate, with eco-friendly buildings expected to increase in value over time.