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The Top 20 Cities for Eco-Friendly Commercial Real Estate

In the early 2000s, energy efficiency was not of substantial concern to U.S. commercial real estate owners. Consider that in 2005, just 5% of commercial office space situated in the nation’s top 30 office markets was either LEED- or ENERGY STAR-certified, according to CBRE’s Green Building Adoption Index 2017.

That figure has snowballed to 38% today, CBRE says. Sustainability has come of age.

For its Green Building Adoption Index, CBRE teamed with Maastricht University and the U.S. Green Building Council to study the implementation and growth of LEED and ENERGY STAR certification for office properties located within the top 30 U.S. office markets.

Data from the report appear to suggest some correlation between energy benchmarking laws (passed as part Clean and Affordable Energy Act of 2008) and the rates of LEED and ENERGY STAR implementation.

CBRE reports that “a city having enacted a benchmarking ordinance is correlated with a 9-percent increase in ENERGY STAR- and LEED-certified buildings, and a 21-percent increase in ENERGY STAR- and LEED-certified square footage.” The commercial real estate services firm notes several cities have experienced escalation in the adoption of environmentally friendly building certifications after the passage of benchmarking and transparency laws.

Here are the top 20 cities harboring the most “green” (environmentally friendly) commercial space.

Tampa

As of fourth-quarter 2016, 5.4% of office space is ENERGY STAR certified and 1.8% is LEED certified.

San Diego

ENERGY STAR certification is met by 6.4% of San Diego office buildings. LEED certification is met by 3.3% of buildings. Starting 2018, commercial buildings totaling at least 50,000 sq. ft. must report their energy use annually to the California Energy Commission as a result of a 2015 energy benchmarking ordinance — as do all California-based cities.

San Jose, Calif.

In San Jose, 6.7% of office buildings meet ENERGY STAR certification, and 4.6% are LEED-certified. San Jose too must report its energy use.

Dallas/Ft. Worth

CBRE has found that 10.5% of office buildings in the Dallas/Ft. Worth Metroplex are ENERGY STAR-certified, and 3.5% are LEED-certified.

Portland

In Portland, 6.4% of office buildings meet certification requirements for ENERGY STAR, while 3.8% of office buildings meet LEED certification. The city passed its Commercial Building Energy Performance bill in 2015, requiring commercial buildings of at least 20,000 sq. ft. to benchmark and report energy use.

Miami

According to CBRE’s Green Building Adoption Index for 2017, 10.7% of office buildings in the Miami market are ENERGY STAR-certified and 4.4% are LEED-certified.

Boston

In Boston, 9% of office buildings are ENERGY STAR-certified, while 3.8% of office buildings are LEED-certified. Boston passed a benchmarking ordinance in 2013.

Orange County, Calif.

ENERGY STAR certification is met by 10.1% of Orange County office buildings, while 3.8% of office buildings in the city meet LEED certification

Walnut Creek, Calif.

CBRE says 7.2% of Walnut Creek office buildings are ENERGY STAR-certified and 4.2% of office buildings are LEED-certified.

Philadelphia

Philadelphia can count 12.3% of its office buildings as ENERGY STAR-certified, while 2.1% of office buildings are LEED-certified. The City passed its energy benchmarking ordinance in 2012 for office buildings spanning 50,000 sq. ft. and up, then expanded the ordinance to multifamily in 2015.

Manhattan

Manhattan rounds out the top 10 most energy-efficient office markets. In the city that never sleeps, 24.6% of office buildings are ENERGY STAR-certified and 11.4% are LEED-certified. Manhattan has led the way in office space going green, passing the Greener, Greater Buildings Plan in 2009 for edifices that are 50,000 sq. ft. or more. In 2015, it extended the Plan to apply for office buildings 25,000 sq. ft. or more.
“An estimated 2.8 billion sq. ft. of commercial space are required to benchmark every year, the largest of any local jurisdiction in the United States,” CBRE says.

Seattle

In Seattle, 6.9% of office buildings meet ENERGY STAR certification, while 4% are LEED-certified. The City requires office buildings spanning 20,000 sq. ft. or more to report energy consumption annually.

Washington, D.C.

CBRE calculates that 13.3% of office buildings in the District are ENERGY STAR-certified and 7.9% are LEED-certified. It passed an energy benchmarking ordinance in 2008.

Denver

Denver’s office market stands in seventh place for sustainability — 11.8% of its buildings are ENERGY STAR-certified and 5% are LEED-certified. Denver’s energy benchmarking ordinance passed in late 2016 and the first round of reporting is due this year.

Los Angeles

In Los Angeles, 14.9% of office buildings meet ENERGY STAR certification and 6.2% meet LEED certification. In late 2016, its City Council passed the Existing Buildings Energy and Water Efficiency Program. The Program requires all commercial buildings (including multifamily) of at least 25,000 sq. ft. to annually report energy consumption. About 900 million sq. ft. (MSFT) of space must comply.

Minneapolis

Minneapolis rounds out the top 5 “green” office markets — 18.6% of its office buildings meet ENERGY STAR certification and 5.3% of them meet LEED certification. Minneapolis passed its ordinance in 2015 for non-residential commercial buildings spanning 50,000 sq. ft. or more. The ordinance covers about 110 MSFT of commercial space across 625 buildings.

Houston

Believe it or not, 16.2% of Houston office buildings are ENERGY STAR-certified, and 9.6% are LEED-certified.

Atlanta

What behooves Atlanta’s third-place ranking? The ENERGY STAR certification for 24.4% on Atlanta’s office buildings, as well as the 6.6% that meet LEED certification. The City’s 2015 benchmarking ordinance requires all commercial buildings including multifamily of at least 25,000 sq. ft. to annually report energy use. That’s approximately 402 MSFT of space.

San Francisco

San Francisco ranks second for eco-conscious office space; 17.1% of buildings are ENERGY STAR-certified and 8.4% are LEED-certified.

Chicago

Chicago takes the crown this year for having the most “green” commercial office space. Last year, it ranked second place. According to CBRE, 16.3% of office buildings are ENERGY STAR-certified, while 6.8% are LEED-certified. Chicago passed an energy benchmarking law in 2013 for all commercial buildings including multifamily that are at least 50,000 sq. ft to publish their energy consumption scores annually. An estimated 900 MSFT must comply.

Diana Bell: