Green Buildings in Green Cities: Integrating Energy Efficiency into the Real Estate Industry

The commercial real estate sector accounts for over a quarter of the energy consumption in the United States. This paper examines how characteristics of the commercial real estate industry and structural attributes of US cities affect the goals of improving energy efficiency and sustainability of buildings, and improving pollution and emission levels in US cities. We build a detailed picture of the factors involved in integrating energy efficiency into commercial real estate planning, design, finance and construction, and look at the interplay of the institutional and contractual structure of commercial real estate, the urban organization of space, and urban transportation patterns in producing “green” real estate. The research draws on a thorough review of academic and trade literature on the topic and describes the findings from detailed interviews of professionals in the real estate and real estate finance industries. We use data from COSTAR, Building Owners and Managers Association, Departments of Energy and Transportation, and the EPA to examine factors underlying energy efficiency improvements. We find that energy efficient and other green improvements are most likely to be found in large, newer, class A and B buildings in more productive metropolitan areas, but outside of downtown areas. Evidence of “learning” effects from a culture of green communities is mixed, with some factors significant in the expected direction (e.g. high transit use), a few in unexpected directions (e.g. some air pollutants and residential density), and many factors lacking significance. The paper draws from research funded by the US Department of Energy, Assistant Secretary for Energy Efficiency and Renewable Energy, Building Technologies Program