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The Importance of Environmental Sustainability in Commercial Real Estate

Posted on: March 7, 2019

Sustainable Real Estate

Sustainability is a trend that’s been on the rise for the last decade or so, but has really begun to count in the last few years. Now, it’s no longer considered a socially responsible choice, but it’s considered a good business decision, too. From cost-cutting to reputation boosting, purchasing or building with the environment in mind has all sorts of benefits for those looking to invest in commercial properties.

Here’s why to go green when it comes to commercial real estate:

It Can Help Cut Costs

Ensuring your building is environmentally sustainable can actually help cut costs, both short- and long-term. Generally, buildings that are more efficient in their use of electricity and water have significantly lower operational costs. While additions like green roofs and solar panels are more expensive up front, the long-term savings are limitless. As well, governments are now offering tax credits and incentives for commercial buildings that meet federal, state, or municipal standards.

It Can Help You Meet Increasing Tenant Demands

With corporate responsibility, social and environmental, almost a requirement these days, companies want to be able to say their building is “green,” as it helps with both reputation-building and marketing. Having an eco-friendly building can also serve to boost your own reputation. This trend in tenant demand will only increase in years to come, so now might be a good time to consider sustainable commercial buildings as an investment opportunity.

It Offers Favorable Conditions for Financing

While historically the commercial real estate landscape hasn’t received much appreciation from lenders, this is slowly changing. Sustainability is now mainstream, and sectors across the spectrum are getting on board, including lenders and investors. Recent studies indicate that commercial buildings that are sustainable certified subject to a reduction in default risk and better loan terms in general. There is still a lot more research to be done on green loan performance, but there is indication of a relationship between the energy efficiency of a building and likelihood of defaulting.

At the same time, there’s a growing trend in sustainable investing, which seeks to promote social and environmental impact as well as financial gain. Responsible investing is expected to grow as millennials’ portfolios grow.

Before you start to consider your options in the area, speak with a South Florida commercial real estate attorney. Do you look for a building that’s already meeting sustainability performance standards or do you build or renovate a space? This is the kind of question a real estate lawyer can help you address. Work closely with our team to determine the best way to invest your time and money in commercial real estate.