How green is your city’s commercial real estate? CBRE knows

by Dan Rafter

No major U.S. city has a greener commercial real estate stock than Minneapolis.

That’s the takeaway from the latest National Green Building Adoption Index released by CBRE.

cbre green 1The index – in its second year of publication – charts how much of the commercial square footage for lease in the country’s 30 largest markets could be considered green. CBRE considered commercial real estate green when buildings attained LEED certification or ranked in the top 25 percentile of ENERGY STAR scores in a market.

Based on this, Minneapolis topped CBRE’s list. It is the second consecutive year in which CBRE ranked Minneapolis as having the greenest stock of commercial real estate for lease.

David Pogue, global director of corporate responsibility in the San Jose, California, office of CBRE, said that having so many green commercial buildings is a positive for Minneapolis.

“More and more, LEED certification is becoming a proxy for quality,” Pogue said. “If you have a high percentage of buildings that are LEED certified, that gives the overall impression that more of your commercial buildings are high-quality ones. For cities to be vibrant, they need good places for their businesses to work. I’d argue that green buildings are better places for people to work. More of the companies seeking commercial space understand this, too. To maintain a strong business community, it helps to have real estate with LEED certification or green characteristics.”

According to CBRE’s data, 70.41 percent of the commercial real estate square footage up for lease in Minneapolis is considered green, ranking it at the top of the company’s list. San Francisco ranks second, with 70.02 percent of its available commercial square footage considered green. Chicago came in third, with 63.41 percent.

cbre green 2Other Midwest cities didn’t rank as highly. St. Louis ranked 23rd, with 21.51 percent of its available commercial square footage considered green. Detroit ranked 25th, with 16.07 percent, and Kansas City ranked last – 30th – on the list with 10.91 percent.

Pogue said that he doesn’t expect Minneapolis’ green score to rise much in the coming years. That’s because cities reach a point in which their commercial real estate stock can’t get much greener.

“There is almost a natural cap to these rankings,” Pogue said. “Buildings have to either get a LEED certification, which is expensive and complicated. Not all buildings can be LEED certified. And ENERGY STAR recognizes the top 25 percentile of peer-set buildings. We are beginning to see in some markets, and Minneapolis might be one of them, where you hit a natural cap. The goal for these cities is to stay there.”

What Pogue does expect to see are the green scores of the country’s bottom markets to improve during the next several years.

It’s important that commercial — and residential — buildings be green. According to CBRE’s study, in 2014 the commercial and residential real estate sectors accounted for 45 perent of the total energy consumption in the United States. The Energy Information Agency predicts that from the years 2012 through 2040, residential electricity consumption will increase by an additional 21 percent while commercial electricity consumption will jump by 27 percent.

The CBRE report said that at the end of the fourth quarter of 2014, 13.1 percent of the commercial building stock in the country’s 30 largest markets had an ENERGY STAR label, LEED certification or both. That, though, is down from 13.8 percent at the end of 2013.

When measured by size, the amount of green commercial space available also dropped slightly, from 39.3 percent of the commercial space available for lease in these markets at the end of 2013 to 38.7 percent at the end of 2014.

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This entry was posted in Chicago Commercial Real Estate, Detroit commercial real estate, Illinois real estate, Kansas City commercial real estate, Michigan commercial real estate, Minneapolis commercial real estate, Minnesota real estate, Missouri commercial real estate, St. Louis real estate and tagged , , , , , , , , , , , , , . Bookmark the permalink.

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