Chicago Rises in Ranking of Green Office Space

Chicago has moved up in a ranking of the nation’s largest metropolises on a recent survey of sustainable office space. According to the 2016 Green Building Adoption Index, over 72% of the Chicago market’s qualified commercial space is certified green, up from 63% last year. And with nearly one-fifth of all commercial buildings in the area certified, Chicago comes in at second on the list of the nation’s 30 largest markets, right behind San Francisco.

A joint project of CBRE Group, Inc. and Maastricht University, the Green Building Adoption Index assessed a variety of metrics to determine the growth of ENERGY STAR- and LEED-certified space in the largest U.S. office markets. This year’s index also features map-embedded geocodes of each of the green buildings.

28131423133_5fe0cec130_k“We used the EPA and USGBC data as a sort of numerator, but the denominator here was the individual markets,” said David Pogue, CBRE’s Global Director of Corporate Responsibility. Combining information from the ratings agencies with CBRE’s own market data, the index focuses on liquid space, excluding government-owned, fully occupied and other buildings. This is a look at prime market, investor-owned space that would be attractive to a tenant seeking a green office environment.

The Chicago market’s rise from third in the rankings is especially remarkable because of its scale. “I think that Chicago is the most extraordinary example because of its size,” Pogue said, noting that San Francisco beat it out on the metrics, but in a much smaller marketplace. “Chicago has the confluence of almost every aspect that we think is important. It’s a first-tier city. It has a culture of high-profile occupants that are concerned about this, as are their stakeholders. There have been regulatory requirements. Chicago has all of the characteristics that would make a city pursue sustainability.”

While diverse factors may be pushing environmental responsibility in the Chicago real estate market, those same factors do play a role across the country. Aside from manufacturing, buildings are often the largest source of carbon emissions in every commercial industry. “Space becomes an important measuring stick for companies,” Pogue said. “More companies are using their real estate as a proxy for their commitment to sustainability and environmental action.”

Over time, other pressures have pushed the real estate market toward sustainability. Regulatory requirements, such as Chicago’s energy benchmarking ordinance, are now on the books in more than a dozen cities nationwide. For ownership, especially high-profile and institutional owners, their stakeholders and investors demand a higher level of transparency and corporate responsibility.

Nationally, there was no statistical change in the certification of the commercial building stock as the average this year was again a little over 12%. But overall certified square footage has increased, as the national average rose from 38.6% to 40.2%. This speaks to an overall trend of larger spaces opting for green building certification at a greater rate than smaller spaces. “This is still a big city, big building phenomenon,” said Pogue. “For the smaller stock, it hasn’t really registered at that level.”

This presents an opportunity, particularly in smaller markets with smaller buildings, for owners to differentiate themselves. Those that make a dramatic difference on their energy use can better present themselves to potential tenants. Not that it wouldn’t be challenging, as many smaller commercial buildings are short on resources. They are often the owner’s only real estate asset and few have on-site engineering.

There are paths to approaching those buildings and putting them on a path to sustainability. “In a city like Chicago, where you have an ordinance that requires disclosure, it’s one of those cities that has a better opportunity to identify the lower performers,” said Pogue. “But there are a lot of communities that don’t have any way of even understanding who those people are. And if you don’t understand who they are, then you certainly can’t make an approach.”

Plans for the 2017 Green Building Adoption Index include tracking disclosure requirements like the energy benchmark ordinance, to gauge their effectiveness. According to Pogue, next year’s report will also take a deep dive into the top performing cities, to catalog how, and by what different models, they outperform other markets. “We began tracking data from 2005, but in Chicago, this started 10 or 15 years prior,” he said. “So it would be instructive for us to understand how this happened, because it didn’t just happen overnight.”

Photo: Roman Boed

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