Real estate accounts for 40% of all carbon emissions. As businesses and consumers become more aware of climate change concerns, there’s a big push to lower emissions in the real estate sector.
Suneet Singal is a serial entrepreneur in the real estate and energy sustainability sectors. He’s currently the Chairman at First Capital. He believes that zero carbon footprint real estate is the industry’s future.
What Does Zero Carbon Footprint Real Estate Mean?
Zero carbon footprint means that the emissions produced equal the amount removed from the atmosphere. This means reducing emissions as much as possible while offsetting any unavoidable emissions.
The Benefits of Net Zero Real Estate
The most obvious benefit of net zero carbon real estate is reducing carbon emissions, which can reduce climate change.
Climate change poses a real risk to real estate as severe weather becomes more commonplace. 1/3 of all real estate trusts are exposed to these hazards.
Sustainable buildings also enjoy better performance. Office buildings with the top level of sustainability certification receive 10% higher rental premiums.
Suneet Singal states that these buildings also enjoy lower vacancy rates, and a 14% reduction in operating expenses. According to Harvard, green buildings increase employees’ cognitive performance by 26%.
The Three Rs of Reducing Emissions
The three R’s of emission reduction for the real estate sector are renewables, retrofitting, and responsible ownership.
Renewables involve using renewable energy whenever possible. This applies to new construction, and existing building operations.
Retrofitting is essential, because 80% of the buildings in operation in 2050 are already built. Retrofitting allows existing buildings to become more energy efficient and environmentally friendly. Retrofitting can involve installing Automatic Meter Reading devices, plumbing replacement, and passive solar heating.
Responsible ownership also involves getting tenants involved in lowering emissions, according to Suneet Singal. This can include collecting data on sustainability and tenant behavior and guiding remodeling activities.
Challenges and Concerns
Financial concerns are one of the biggest challenges faced by investors. The United Bank of Switzerland has partnered with the World Economic Forum to recommend ways to close the “climate finance gap.”
Competition within the real estate sector is often fierce. Companies that don’t seek to reach carbon neutrality may fall behind. Several benchmarks can be used to rank investors’ progress in reaching zero carbon.
These include the Global Real Estate Sustainability Benchmark, or GRESB, at the portfolio level. Leadership in Energy and Environmental Design, or LEED, is a prestigious benchmark at the building level.
The final challenge that real estate professionals should consider is government regulations, which are consistently becoming harder to meet.
Suneet Singal has been a successful entrepreneur for more than 20 years. He is currently the chairman of First Capital. He’s the former Chairman and CEO of an equity REIT. He is a former acting CEO of a Business Development Corp and the previous CEO of a real estate operating company traded on Nasdaq.
He specializes in deal structure, acquisition, negotiations, investment, and complex financial structuring.