US Green Office Trend Reaches New Heights
- Nov 06, 2019
Office buildings are now the greenest they’ve ever been, according to the 2019 Green Building Adoption Index for Office Buildings by CBRE, Maastricht University and the University of Guelph.
The report concluded that 4,879 office buildings—accounting for 13.8 percent of the total stock of commercial office buildings across the country’s 30 largest office markets—hold a LEED and/or Energy Star certification. It’s a new record.
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Looking at square footage, 42.2 percent of the of nearly 3.7 billion square feet of office space in the 30 largest office markets is green certified, constituting a new high. While the figure is a staggering jump from the mere 5 percent logged in the inaugural 2005 index, it’s a more modest increase from the 41.9 percent recorded in 2018.
The change is linked to an increase in Energy Star certifications across most markets and a slight decrease in LEED certifications. The U.S. Environmental Protection Agency’s Energy Star program centers on a property’s energy efficiency and calls for annual renewal, while the U.S. Green Building Council’s LEED program takes into account sustainability as a whole and requires a one-time certification or a five-year recertification.
“Given the small change in adoption statistics, I would argue that the adoption of LEED certification stabilized across the 30 largest office markets,” Rogier Holtermans, assistant professor of real estate finance at the University of Guelph, told Commercial Property Executive.
“Since we apply a two- and five-year label window to Energy Star and LEED certification, we might start to observe some buildings that were LEED certified more than five years ago but did not renew their certification. One could also argue that whereas the USGBC continues to increase the requirements related to obtaining LEED certification, the EPA has not updated the labeling procedure for Energy Star to incorporate the (U.S. Department of Energy’s) newest Commercial Buildings Energy Consumption Survey. Therefore, it might be somewhat easier to obtain an Energy Star label as opposed to LEED certification, aside from a potential difference in upfront costs.”
The greenest of cities
Chicago continues to hold the title of the greenest city in the U.S., with 71.1 percent of its commercial office square footage carrying LEED and/or Energy Star certification, up from 69.8 percent in 2018. San Francisco maintained the No. 2 position but closed the gap with a year-over-year increase from 64 percent to 67.5 percent; the 3.5 percent increase in San Francisco and ninth-place Seattle marked the largest percentage gains from 2018.
Atlanta held firm in the No. 3 spot, with 59.3 percent of its office square footage being green certified. Minneapolis and Los Angeles switched positions—the Midwestern city edged out Los Angeles for the fourth spot with 57 percent, leaving Los Angeles rounding out the top-five list of greenest cities, with 56.6 percent. Washington, D.C., claimed the No. 10 spot and Portland was No. 20 with 46.7 and 30.2 percent, respectively. St. Louis was No. 30, with 7 percent of its office stock carrying green certification.
The nation’s top office market, Manhattan, is not the greenest, coming in at No. 7; however, it still stands out among the rest. “Manhattan’s performance over the last few years has been very strong, and this is something that may be overlooked. In terms of percentage of buildings certified, Manhattan has been topping the list consecutively for the last four years,” said Holtermans.
Approximately 35 percent of Manhattan’s office buildings are green-certified, compared to second-place Atlanta, where 29 percent of office buildings carry a green stamp.
“Given that most office buildings in Manhattan are large, it is challenging to reach adoption percentages as high as Chicago and San Francisco on a square footage basis. Nonetheless, [Manhattan’s] adoption of green-certified space has increased from 40 percent at the end of 2016 to 49 percent at the end of 2018, one of the strongest improvements we have observed,” Holtermans noted.
“This may perhaps be in response to the recently passed regulation on mandatory reduction of carbon emissions in buildings—40 percent by 2030.”