When It Comes to Green Building, Size Matters

Jake GlavisThe CBRE Group, Inc, working in collaboration with Maastricht University, released their second annual National Green Building Adoption Index report for the 2015 year. One of their most interesting findings is the significant gap in green adoption between large and small office buildings. In fact, 61.5% of large office buildings in the United States now qualify as green, compared to the less than 4.5% of small office buildings. That’s a huge difference.

For the purposes of this study, “large” buildings were designated as those greater than 500,000 square feet and “small” buildings were those less than 100,000 square feet. To qualify as “green” they must holding either an EPA ENERGY STAR label, U.S. Green Building Council (USGBC) full-building LEED certification, or both.

Even though there’s an increasing demand for green building by homeowners, and a clear trend of large buildings in major cities integrating more green materials and standards, it seems that when it comes to offices, the little guys haven’t been as quick to hop on board the green movement. According to David Pogue, CBRE’s global director of corporate responsibility, “Our 2015 study confirmed that green building adoption has been primarily a big building, first-tier city phenomenon.”

While this isn’t great news from an environmental standpoint, it is an opportunity for small building owners to set themselves apart from the pack. We know that green buildings are good for people, which in turn is good for employers, and good for business. “It would appear that many smaller buildings in the majority of large markets still have an opportunity to be ‘best in class’ among their peer set by achieving these certifications,” says Pogue. If smaller building owners are looking for an edge, this is it.

Looking at the top cities for green buildings, Minneapolis came out ahead for the second consecutive year, with 70.4% of all office space currently qualified as green, though they are down from 77.0% in 2014. San Francisco came in second place for the second time, but they also made a big dent on closed the gap between themselves and Minneapolis. They came in at 70.0% green, up from 67.2% in 2014. Chicago came in third at 63.4%, Atlanta was fourth at 57.8%, and Houston was fifth at 52.9%. While there were some minor changes and movement within the top 10 from 2014, all of the cities featured on the top 10 in 2014 made it to the list again in 2015. We aren’t seeing an underdogs pulling into the top this year.

Large American cities have continued to show interest in green building standards and practices, but growth is proving to be slow and sometimes inconsistent. At the end of 2014, 13.1% of the commercial building stock had an ENERGY STAR label, LEED certification, or both. Unfortunately, that is down a bit from the 13.8% we saw at end of 2013. The amount of certified commercial space also decreased from 39.3% in 2013 to 38.7% in 2014.

There are a few explanations for these drops. According to Dr. Nils Kok, associate professor in Finance and Real Estate, Maastricht University (NL), “This decrease does not imply that buildings are starting to perform worse than before. Rather, it reflects the fact that only a certain fraction of the building stock can obtain a green or energy-efficiency certification. Additionally, it appears that some of the buildings that were previously certified did not renew their certification in 2014. This does not necessarily mean that the energy use of these buildings has changed, but that some owners and managers choose not to spend the time or expense to reapply for certification every year.”

This is only the second release of this annual report, but the Index is able to demonstrate the growth of ENERGY STAR- and LEED-certified space for the 30 largest U.S. office markets over the previous 10 years, both in aggregate and in individual markets.

If you’d like, you can read the report in full here.