The facts — and science — don’t lie. Climate change is accelerating. Since the 1800s, increased carbon dioxide emissions and other human-driven activities have increased our planet’s average surface temperature by 2°F (1°C). Much of this warming has occurred over the past four decades, with the last seven years being the hottest ever and 2024 “winning” as the northern hemisphere’s warmest on record in 175 years.
Global sea ice is melting rapidly and affecting the global ocean conveyor belt. Glaciers are retreating, the ocean is warming, sea levels are rising, and extreme weather events have increased dramatically.
Construction remains a significant contributor to global warming — adding 37% of total carbon emissions — but there are solutions, including $1.8 trillion in market opportunities for green construction.
Keep reading to learn more about the value of green buildings to owners, tenants, and the planet.
Benefits of going green
Green buildings don’t just use specific products that are better for the environment. These structures embody sustainable, healthy, and energy-efficient living spaces. Architects, designers, and managers integrate sustainability throughout a building’s lifecycle, from design and construction to operation, maintenance, and demolition. This holistic approach minimizes environmental impact while prioritizing human health and well-being.
Despite potential upfront costs, green buildings offer long-term value. Many owners recognize the benefits across economic, environmental, and social dimensions. This value proposition extends to building owners and developers. Increased property values and operational efficiencies associated with green buildings make them attractive investments.
Let’s break it down a little more.
Environmental benefits
Green buildings need less energy for cooling, heating, lighting, and other operations. The U.S. Green Building Council predicts these buildings will reduce energy use between 50% and 60% by 2050, and the World Green Building Council has launched an initiative to ensure new buildings are “net zero” by 2050.
Decreasing reliance on fossil fuels and incorporating solar, wind, and other renewable energy sources will help reduce greenhouse gas emissions. The Global Status Report for Buildings and Construction’s annual tracker suggests green buildings can reduce global CO2 emissions by 84 gigatons by 2050.
Green construction promotes using sustainable resources and materials in various ways. Using recycled steel, aluminum, and wood reduces the need to extract and process virgin materials, conserving natural resources and reducing energy consumption. Incorporating renewable materials like bamboo and cork provides sustainable alternatives to traditional materials.
Sourcing materials locally minimizes transportation emissions and supports local economies. Using sustainably harvested timber ensures responsible forest management, maintaining biodiversity and preventing deforestation.
Materials with high insulation properties and energy-efficient windows reduce energy consumption for heating and cooling, lowering a building’s environmental impact. Paints and finishes with low volatile organic compounds (VOCs) improve air quality and reduce harmful emissions. Installing water-efficient plumbing fixtures reduces water consumption.
Economic benefits
According to the American Institute of Architects, green buildings can sell for 16% more than conventional buildings. Leadership in Energy and Environmental Design (LEED)-certified buildings boast a 4.1% higher occupancy rate than non-certified buildings, and Energy Star buildings have a 3.6% higher occupancy rate. While building green costs 1% to 12% more than conventional approaches, these buildings and renovations yield an increased asset value of 9%+.
Building owners and tenants see substantial long-term savings because buildings are engineered to optimize energy efficiency and reduce maintenance requirements. Utility costs decrease with more energy-efficient lighting, HVAC systems, and building automation. Repair and replacement costs decrease when durable, low-maintenance materials and efficient water fixtures are used.
Many green buildings incorporate innovative technologies like rainwater harvesting and greywater recycling systems, lowering operational expenses. One report showed savings of 10.5% in the first year of a green building’s operation and another 16.9% in savings over five years.
Social benefits
Architects design green buildings to have a high-quality indoor environment with better air quality, more natural light, and lower exposure to toxins. A study conducted by the Healthy Buildings Team at Harvard’s T.H. Chan School of Public Health found that tenants of green-certified buildings:
- Scored 26.4% higher on cognitive tests than non-green building tenants
- Had 6.4% higher sleep quality scores than non-green building tenants
- Reported 30% fewer symptoms than non-green building tenants
Green real estate is also crucial in promoting and supporting sustainable urban development. By integrating community-oriented features, green buildings contribute to the creation of vibrant, livable, and walkable neighborhoods. Sustainable building practices often incorporate elements like:
- Public green spaces, with parks, gardens, and green roofs enhancing air quality, reducing urban heat island effects, and providing recreational spaces for residents.
- Pedestrian-friendly designs that prioritize walkability via sidewalks. Bike lanes and accessible public transportation options encourage active lifestyles and reduce reliance on cars.
- Mixed-use spaces combining commercial, residential, and retail spaces within a single development to promote convenience, foster a sense of community, and shrink commuting distances and time.
- Social amenities like community centers, co-working spaces, and fitness facilities to encourage social interactions and also support and cultivate community-building.
Green buildings can raise awareness about sustainable living strategies. These buildings can inform and inspire the public, professionals, policymakers, and others about green design benefits. By showcasing innovative technologies, efficiencies, and environmentally friendly practices, these buildings can spark interest and encourage widespread adoption of sustainability methods.
Decarbonizing the building sector
Transitioning to sustainable building practices will drive growth and value creation across the building sector. Companies with exceptional sustainability performance have lower ESG risk and higher market values, according to Deloitte. LEED-certified buildings also command higher asset values and a more competitive market edge.
Energy efficient systems save everyone money. Advanced energy management and high-efficiency HVAC systems and passive building designs significantly reduce energy and material consumption and reduce operating costs.
Embracing sustainable practices empowers value chain players to differentiate their offerings and attract environmentally conscious clients. These players also benefit from public financing incentives and potential carbon trading opportunities to counteract initial investment costs and improve financial viability.
Benefit from — and contribute to — the growing market
All stakeholders in the commercial real estate chain can benefit from adopting a strategic, collaborative approach to the rise of green building construction. The World Economic Forum recommends:
- Embracing global standards and measurement that “encompass net zero, nature-positive, resilient, and well-being-oriented outcomes.”
- Adopting best practices and championing “flagship projects to inspire broader adoption and help set new industry benchmarks.”
- Developing policies and incentives like subsidies and grants to “encourage sustainable practices and strengthen the financial viability of green solutions.”
- Supporting research and development and “collaborating with innovators to accelerate green technology breakthroughs, such as net zero building materials.”
Hitting that net-zero emissions goal isn’t a dream but a necessity. The green buildings market, which surpassed $515 billion in 2023 and will pass $565 billion in 2024, can lead the charge, leveraging newer technologies and practices to design and deliver green buildings for today — and the future.
Are you a commercial real estate investor — or looking for a specific property to meet your company’s needs? We invite you to talk to the professionals at CREA United: an organization of CRE professionals from 92 firms representing all disciplines within the CRE industry, from brokers to subcontractors, financial services to security systems, interior designers to architects, movers to IT, and more.
