Commitments to ESG goals drive demand for certifications
Interest in the ESG topic has been growing among investors and owners of corporate buildings and industrial and logistical warehouses. The term ESG refers to a set of practices that have a positive impact in three areas: environmental, social and governance. Green is Good revealed that 80% of investors intend to incorporate ESG into their strategies by 2023.
With the growing demand for the sustainability theme, some questions arose: do these assets perform better compared to non-certified ones? Is it possible to quantify this difference?
Of the three ESG categories, investors and owners focused mainly on environmental issues, mainly due to the existence of metrics: simple reports to the applicability of new sustainable technologies.
Sustainability strategies include very broad issues, such as energy and water efficiency, waste management, materials and others. Certifications prove the efficiency of these strategies, and among them, LEED (Leadership in Energy and Environmental Design) is one of the main ones when it comes to the real estate market.
The Green is Good study analyzed LEED-certified buildings delivered over the 2010-2020 period, compared them to non-certified ones, and found that on average, LEED-certified buildings received higher rents and had lower vacancies.
LEED-certified buildings vs non-LEED-certified buildings
• LEED-certified buildings have higher rents
• Achieving ESG commitment through certifications has been the main strategy
• LEED-certified assets better weather downturns
• Assets with LEED certification tend to have lower vacancy
• LEED-certified assets had a 21.4% increase in average sales price per m² during the last three years.
Sustainable corporate buildings represent opportunities
Investors and building owners who choose to make sustainability their main strategy find a market with growing opportunities. The considerable number of non-LEED assets on the market suggests that there is opportunity to transform and build more sustainable portfolios. Assets committed to ESG can attract tenants with similar strategies, creating a win-win scenario for landlords looking for higher rents and occupiers looking to achieve their ESG goals.
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