Last year, Nuveen Green Capital financed $28M in sustainability measures for its own NYC headquarters, the TIAA Financial Services Building, located at 730 Third Avenue in midtown Manhattan. The state-of-the-art, energy-efficient building, which was renovated with a twist on mid-century style, is LEED Gold, Energy Star, Wired Score and Fitwel certified.
Green certifications – a badge of good
And what they mean for commercial real estate
As people whiz through lobbies, hallways and elevators for meetings or appointments, they may take little notice of the decals, seals or framed certificates that adorn the walls of commercial real estate properties.
But take heed, these green certifications mean something – and they are becoming more of a focus for commercial building owners as tenants are placing a premium on sustainability, and as ESG and net-zero targets become more prevalent. The World Economic Forum reports that “Meta analysis by Dalton and Fuerst of 42 studies between 2008-2016 showed that green building certifications yielded a rent premium of 6% and a sales premium of 7.6%.”
Additionally, according to the Green Business Bureau, “The benefits of green certifications go well beyond a rating, a seal or certificate of proof. The process itself becomes a journey to create a greener business and more eco-friendly business environment.”
But with so many (90+) green certifications available, it can be a challenge for developers to know which make the most sense. As JLL Real Estate UK’s Head of Sustainability Kristy Draper recently said, “When choosing certifications, it’s not about the number, it’s about the relevancy. Developers and investors need to consider the asset class and the local market and ask whether it will make the building more appealing to an occupier or buyer. They should align certifications to complement each other, while avoiding duplication.”
So, given the sea of acronyms, certifications, and combinations of certifications available, what is the best way for CRE developers to proceed with pursuing LEED, GBB, Energy Star, BREEAM, RFO, EPC, Passive House, or NABERS certificates, or a combination thereof?
A national leader in commercial real estate financing solutions, Nuveen Green Capital offers a creative, long-term, low-cost, fixed-rate financing mechanism for property owners who invest in sustainability measures. C-PACE financing can help property owners and developers implement energy saving measures in a cost-effective way to achieve these green certification standards.
“Normally during the construction process, the sustainability initiatives will dictate which certifications will be available. We are seeing property owners are prioritizing these ‘badges.’ said Graham Higgins, CEM, LEED AP BD+C, Transaction Manager for Commercial Energy Efficiency at Nuveen Green Capital. He added, “These sustainability-focused design certifications typically reflect reduced energy and maintenance related operating costs, which are becoming increasingly cost effective. Properties that target such certifications are also typically eligible for increased C-PACE proceeds, promoting further accretive financial benefit. Developers and design teams that focus on sustainable design from the onset are maximizing economic and environmental returns.”
Beyond this, as sustainability measures become more crucial and anticipated aspects of commercial real estate projects, C-PACE (Commercial Property Assessed Clean Energy) financing is an invaluable solution for owners and developers as they seek to acquire these certifications. The program offers some of the least expensive capital available for implementing these sustainability initiatives.
Saving Energy is Smart Business.