Taking charge of urban sustainability

Sustainability is on the tip of nearly every major developer’s tongue as regulatory requirements, consumer pressure and investor demand are mounting for urban developers and asset managers to make considerable building adjustments to meet those mandates.

“All of the clients that we speak to are heavily focused on sustainability,” says Sandeep Davé, chief digital and technology officer at real estate investment manager CBRE. “Many companies have gone out and declared targets” for ESG initiatives, he adds.

That makes CBRE, like other major commercial real estate players and developers, also heavily focused on major investments in technology, data and data-driven insights within its global reach. With $144.2 billion in assets under management, and managing some 7 billion square feet of space for 90 of the top Fortune 100 companies, CBRE’s task underscores the critical role property asset managers and developers must play in tackling urban sustainability issues.

Consider this: there is only a portion of any city that has professionally-run buildings by large-scale asset managers such as CBRE, Blackstone or Brookfield Asset Management, for example. The rest of those buildings are owned and managed by smaller companies and mom-and-pop operators, many with tight budgets that are hard-pressed to take on sophisticated sustainability technologies.

“It is those [professionally run] properties that can have the greatest impact overall because they can function in a way the properties around them can’t,” says Jason Lund, managing director of Chicago-based broker JLL’s technology infrastructure. “They can really move the needle on the sustainability side of cities and towns.”

According to non-profit the World Green Building Council (WorldGBC), buildings are to blame for 39 percent of energy-related carbon emissions: 28 percent from operational emissions, or energy needed to light, heat, cool and power them; and the rest from materials and construction.

Reducing the carbon footprint on buildings is a key strategy in sustainability, and electricity usage for those operational emissions is among its targets. “If we are burning large amounts of electricity using the public grid, then we are by definition burning lots of carbon,” Lund says.

WorldGBC is pushing a 2050 deadline for when “all new buildings, infrastructure and renovations will have net-zero embodied carbon, and all buildings, including existing buildings, must be net-zero operational carbon.”

That is a tall order to fill when the global floor area in 2030 is expected to swell by about 15 percent, equivalent to the 61.24 billion square feet of North America today, according to the International Energy Agency. To reach the 2030 net-zero emissions goal for 20 percent of existing buildings, that means “the buildings sector needs to decline nearly five times more quickly over the next decade than it has in the past decade,” or consume 35 percent less energy than in 2022, according to IEA.

That is why it is incumbent upon major property asset managers and developers to take the reins on urban sustainability.

Up to the task

Managers and developers already have become a lot smarter about how they run buildings, with automated processes and sensors that can track where people are in the building to dim or turn off lights, control HVAC levels and harvest rainwater, Lund says. Software packages with predictive analytics can be installed, with features such as forecasting the weather over a three- to five-day period that will monitor the building’s heating and cooling.

The impact that large-scale asset managers can make when they take the lead can be staggering. In 2020, Blackstone acquired a pioneer in standalone energy storage containers, now called Aypa Power, that uses power forms including solar, wind, geothermal and marine, that are not connected to the electricity grid.

In the three years since, it has invested hundreds of millions of dollars in like acquisitions and has begun developing standalone systems in the US that many hope will ultimately remove skyscrapers and other mega developments off the grid entirely. That not only will allow major office, industrial and multifamily buildings to permanently remain sustainable; it will also leave electricity for other buildings in cities and will reduce overall power costs, as well as carbon burn.

CBRE passed a 1 billion-square-foot property milestone in September with its Smart Facilities Management Solutions, which uses an AI-based platform to capture data on HVAC systems that can move maintenance from reactive to proactive, cutting costs while conserving energy.

CBRE also formed a global partnership earlier this year with Deepki, which has an energy-dynamic cleaning intelligence platform that collects energy, water and waste consumption data to manage those buildings remotely and without having to dispatch a truck out to fix things, Davé says. The Deepki Ready platform is already in 20,000 sites, totaling more than 1 billion square feet.

“We are making substantial impacts on energy consumption and reducing the carbon footprint across our entire portfolio,” Davé adds. “If you think about the size of that portfolio and the scale of impact these can have, that can make a substantial dent in the carbon footprint.”

Unfortunately, not every major commercial property owner and occupier will be able to make those kinds of dents. In a challenging contradiction, regulatory policies and government buildings could be at odds. Some cities and municipalities are setting sustainability directives they may not be able to meet.

“The biggest challenges are government-owned property in urban settings,” says Lisa Stanley, chief executive of OSCRE International, a corporate membership group working on developing CRE sustainability standards. “We will call them mature buildings, but those historic buildings have significant challenges. In some cases, they haven’t had substantial updates in years. How much do you have to modify the building? It could be untenable.

“What happens to those buildings? Given the government oversight on sustainability, will the government police themselves?”

To that end, OSCRE members, many of whom are sustainability experts from major CRE firms, see the need for data standardization. “One of the biggest challenges is accurate and consistent data,” Stanley says. “If you can’t measure it, it is tough to figure out how to improve real estate’s impact on the environment.”

Energy data standards could go a long way in helping CRE industry players big and small connect the dots on where they need to be and how to go forward. Moreover, it could help chart the sustainability progress and the accountability consumers and investors are demanding, an undertaking many firms are now charged with handling.

“Increasingly, the customer, whether it is a tenant, owner or investor, is finding their voice and saying, ‘I need the information to look like this or to be available in a format that we can use to record and to make more informed decisions,’” Stanley says. “That is a major shift for the industry.”