Sustainability, or “going green,” in commercial real estate has always proved to be a tricky subject. While proponents of the practice assert that it saves money over time, others wonder if the initial costs of sustainability will lead to a boost in future profits.
Well, executives at some of the country’s largest REITs seem to think so. At a recent NAREIT conference, that organization spoke with professionals who agreed that the costs of sustainability, at least for certain programs, will mean future payoffs.
Kimco, one of the largest owners of strip shopping centers in the country, received a NAREIT award for its efforts. During his video interview, Will Teichman, director of sustainability at the firm, said that while Kimco has had energy efficiency programs in place for a while, the REIT has stepped up its game as of late and is putting solar energy and waste-recycling programs in place.
It is also working with tenants to make sure their interior spaces are more sustainable, which is a challenge for landlords because retailers typically dictate a lot of what goes on in their shells.
So what is driving these initiatives? Teichman says that some of the reasoning behind it has to do with investors in Kimco showing increased interest in sustainability efforts.
GGP, the second-largest mall owner in the United States isn’t as far along in the process as Kimco. The retail real estate giant is just getting its program off the ground. However, it is telling that this major REIT is making a push now.
Currently GGP is collecting data on energy, waste, water efficiency, says Marti Smith, the firm’s sustainability program manager, in a video interview. Like Kimco, she says that shareholders of the REIT are interested in sustainability initiatives.
Though these are only two examples, REITs, especially the strong ones, are a good benchmark when examining issues in the commercial real estate industry. After all, they are outperforming the stock market right now, and investor interest is high.
What are your thoughts on sustainability in the commercial real estate industry? Will the expenditures be worth it down the road, or are CRE landlords simply throwing their money away with these types of programs?
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