Cortex Sustainability Intelligence, headquartered in Nashville, has issued a report detailing “four pressing predictions for sustainability in commercial real estate in 2022,” which are summarized below. The word “pressing” offers a clue that in terms of priories for commercial real estate owners and investors, decarbonization has moved up from the back burner. 

In summarizing the state of CRE sustainability, Bill Landis, co-founder and managing partner at Raith Capital Partners, says, “The regulatory climate of private equity real estate is changing at a brisk pace, which includes balancing an increasingly complex ESG landscape. It is important more than ever that firms keep pace with this shifting ESG landscape to ensure they remain compliant and sustainable.” 

The four commercial real estate sustainability predictions for 2022 include the following: 

Major Cities Will Continue Adopting Penalty-Based Net-Zero Goals  

“If you’re in the CRE industry, you undoubtedly know what Local Law 97 is – New York’s aggressive, penalty-based regulatory framework set to bring the city to 80% emissions reduction by 2050. With Boston recently following suit with hefty financial penalties for buildings that don’t hit carbon reduction targets in coming years, it’s predicted that other major cities across the U.S. will also introduce legislation to fast-track the introduction of their own penalty-based Net Zero goals.  

“If paying up to $1 million per year for noncompliance doesn’t fit in your budget, you need to start preparing now—even if these regulations haven’t hit your city yet.”  

Investors Will Prioritize ESG as a Stipulation to Receive Capital 

“Long gone are the days of decarbonization efforts played with the intention to score PR points. Now, there’s external pressure; the cost of that pressure is high, and it’s coming directly from investors.  

“In fact, according to a recent study from PwC, ‘49% of investors are willing to divest from companies that aren’t taking sufficient action on ESG issues. ‘ If that number doesn’t have you shaking in your boots yet, you’re not paying attention.” 

COVID Profoundly Changed Building Operations & It’s Only Becoming More Complex  

“When COVID hit in 2020, building operations unprecedentedly and fundamentally changed as occupancy fluctuated and tenants suddenly demanded what was once more of an afterthought: healthier buildings.  

“With highly unpredictable waves of COVID-19 strains continuing to impact the way businesses operate, including varying occupancy rates, this new standard of complexity and volatility in building operations has the potential to continuously and seriously impact the bottom line for those who are not responding strategically.” 

Data Will Become the Backbone of Building Decarbonization 

“While there are many methods that help reduce the carbon impact of commercial buildings, some methods have proven more effective than others when it comes to making decarbonization a smart business decision for your bottom line, too.” 

“What’s leading to some methods coming out on top, while others fall to the wayside? One word: Data.”