As shown by our Green Building Barometer, the commercial real estate industry is steadily moving towards a more sustainable foundation. Almost half of California’s Class A office space is now green.

And while the recession has brought the construction of new buildings almost to a standstill, many owners of existing properties are conducting upgrades and efficiency improvements and achieving LEED or Energy Star certifications. The trend is being driven largely by tenants, particularly the large corporations that occupy much of the Class A space in the major metropolitan cities. These organizations are embracing sustainability throughout their business operations, and one outcome of that is increasing demand for greener office space.

When we look at California’s major markets, San Francisco continues to set the pace, with 63% of Class A space now either LEED or Energy Star certified. Orange County has the second-largest percentage, with 52% of Class A space being green, up from 24% in 2008. Sacramento has achieved the most impressive growth, with the proportion of green Class A space increasing from just 9% in 2008 to 29% today. Los Angeles and the East Bay / Oakland are also closing in on achieving 50% penetration of green building, while San Diego is further behind on 41%. The South Bay / San Jose (30%) and Inland Empire (20%) markets have the lowest proportion of Class A space recognized as green. 

For lower-quality office buildings, the amount of Class B office space that is certified as green has doubled over the past year, but the proportion is still low, with green space accounting for just 7.5% of all Class B buildings. Only in two major cities, San Francisco and Sacramento, is more than 10% of Class B space certified green. However, the low number does not mean that green improvements are not taking place in these types of buildings. The economics of these lower-quality and lower-rent buildings are such that it is often unrealistic for them to seek Energy Star or LEED certification. In practice, there are many incentive programs aimed at improving the energy efficiency of older and smaller buildings.