To overcome the barriers to greening California’s leased office space, the Alliance’s Advisors recommended the following market transformation strategies.
Encourage organizations that lease significant amounts of office space to establish and adopt green lease criteria, sending a clear signal to building owners and real estate investors that their properties will not be eligible unless they meet these specifications.
Very large tenants such as the State of California and Fortune 500 companies play a significant role in market transformation. If enough large tenants specify LEED®, ENERGY STAR or other types of green buildings to be a precondition to a leasing decision, developers will take steps to assure that their buildings meet these criteria so that these tenants are not precluded from leasing in their building.
Green Large Portfolios
Leverage the collective market power of large owners and large tenants to accelerate transformation of the state’s inventory through whole portfolio approaches.
Green building market transformation will be led by a handful of market leaders that collectively hold significant market power. Both very large owners and very large tenants have the power to alter the supply and demand dynamics of the state’s green real estate market.
Employ Incremental Strategies
Enable large owners and large tenants to immediately commence greening portions of their portfolios, developing realistic criteria for various segments of their portfolio.
The path to greening a building can be incremental – the important thing is to begin and commit to the process. Key market participants should not wait until they can perform whole building or whole portfolio retrofits. They can start with modest measures while building the capacity to launch a more comprehensive initiative. Buildings that are difficult or costly to retrofit should consider starting by adopting green operating practices. Importantly, even buildings of fairly recent vintage can achieve significant incremental energy efficiency benefits.
Leverage Ancillary Markets
Increase the green building value proposition by finding and creating value in ancillary markets.
The role of ancillary markets in precipitating green building market transformation should not be overlooked. For example, the green building decision may be significantly impacted by the ability of both owners and tenants to reduce their operating risks and access reduced insurance premiums for green buildings, materials and operating practices.
Demonstrate the Green Building Value Proposition
Reinforce the links among green building design and measures, green building market values, owner and tenant operating costs, and tenant workforce comfort, productive and health.
The direct link between energy and water efficiency retrofits and reduced utility costs is well understood. However, while there is increasing evidence that green buildings are deemed to have higher market values, documented evidence of the full economic benefits of green buildings – through higher capitalized values, lower vacancy rates, and lower operating costs – remains lean. The higher value of green buildings needs to be continually documented and widely communicated throughout the market transformation process.