Strategic Focus: Defining The Business Value Of Sustainable Real Estate

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Executive Summary

The real estate community is increasingly engaging with the sustainability agenda, following the emergence of CEO-led carbon reduction targets, tighter building regulations and new interest from financial markets in environmental, social and governance (ESG) criteria. This report analyses the broadening business benefits of sustainable real estate across four key stakeholder groups: investors, owner-occupiers, facilities services firms and C-Level business executives. Our research finds that sustainable real estate is starting to provide value across six core areas: reduced operating costs, employee well-being, reduced climate risk, increased portfolio performance, brand benefits and optimized borrowing costs. To seize the benefits at scale, landlords and occupiers need to deploy innovative strategies to overcome the tenant-landlord split incentive and to fund projects with long-term paybacks.
 

Table of contents

Sustainability Returns To The Agenda For Corporate Real Estate Executives  
Investor Pressure And Corporate Targets Make Sustainability Impossible For Real Estate Managers To Ignore
Firms Are Targeting A Widening Range Of Business Benefits Through Sustainable Real Estate

Four Persona Categories Clarify The Value Pools From Sustainable Real Estate  
1) Real Estate Investors Are Using Sustainability To Attract Funds, Access Capital And De-Risk Their Portfolios
2) Building Owners Benefit By Increasing Asset Value And Reducing Operating Costs
3) Facilities Managers Can Use Sustainability As A Business Winning Strategy
4) Business Executives Are Pushing For Sustainable Buildings To Differentiate Their Brands
Ambitious Real Estate Directors Must Navigate Multiple Hurdles To Capture The Benefits At Scale

Table of figures

Figure 1. Regulation And Stakeholder Pressure Are Squeezing Out Investment In Sustainable Real Estate 
Figure 2. Executives Are Targeting A Broadening Array Of Benefits From Sustainable Real Estate 
Figure 3. The Business Value Of Sustainable Real Estate By Four Persona Categories 

About the authors

Ben Hext

Analyst

Ben is an Analyst in the Verdantix Smart Buildings practice. His current agenda covers hardware and software solutions for energy management, on-site power generation, and COVID-19 mitigation management. He holds an M.Eng in Mechanical Engineering from Durham University,

Susan Clarke

Research Director

Susan leads the Verdantix Smart Buildings practice. Her current research agenda focuses on software solutions for real estate management including integrated workplace management systems and IoT platforms for buildings. Her research expertise also includes a broad range of energy management technologies and energy services. Susan has eight years of experience in technology research. She holds a MSc from the University of London in Sustainable Development.

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