How Green Office Buildings Are Growing
In our 3rd Quarter Newsletter we mentioned how the U.S. Environmental Protection Agency has been encouraging the development of energy efficient real estate for the past several years.
Recently the 2017 National Green Building Adoption Index Report was released. The Report surveyed the 30 top office markets in the U.S. and measured the change in energy efficient office space.
Simply put, the growth of LEED, EPA Energy Star, and green certified commercial office real estate over the past several years has been nothing short of amazing.
Green Office Buildings Continue To Grow
Over the past 12 years the increase in the amount of green certified, LEED, and EPA Energy Star certified office property has increased nearly eight-fold.
Back in 2005 the overall percentage of energy efficient office space stood at less than 5% across the 30 largest U.S. office markets. As of mid-2017 that percentage now stands at 38% – an incredible growth of over 33% in just a dozen years.
This growth in green office space is due in part to the EPA, but also from an increasing awareness from both tenants and office building investors of the financial benefits of leasing and owning energy efficient space. Some government and environmental organizations even anecdotally claim that green office buildings command a higher rent than do their less energy efficient competitors.
California Is Going Green
The 2017 National Green Building Adoption Index notes that California is home to seven of the top 30 green office markets in the country:
- San Francisco #2
- Los Angeles #6
- Walnut Creek #12
- Orange County #13
- San Jose #18
- San Diego #19
- Sacramento #22
When looking at office buildings larger than 50,000 square feet, the percentage of energy efficient office space in some of these markets is pretty impressive. For example, in San Francisco over 20% of the larger office buildings are rated as green energy efficient buildings.
Green Office Space Isn’t A Fad
The growing amount of green office space in California and the U.S. isn’t just a passing fad.
Several years ago, promoting energy efficient space to an office tenant may have been considered a niche offering. In today’s market, both professional real estate investors and Class A office tenants put the availability of green office space at the top of their must-have list when searching for space.
California also employs a push-pull strategy to encourage the growth of green office space in the state. A recently enacted law requires owners of larger, privately-held commercial buildings to measure and benchmark the annual change in energy usage of each property, and to publish those results to the public.