While international commercial real estate companies have generally been out in front of their U.S. counterparts in their green building and operating programs, domestic companies are beginning to make up ground, according to Mary Hogan-Preusse, managing director with APG Asset Management US.
Hogan-Preusse spoke with REIT.com during the 2012 NAREIT Leader in the Light Working Forum in Dallas about the need for sustainability benchmarking and shifting attitudes towards eco-friendly business practices in commercial real estate. APG has been one of the leaders in the development of the Global Real Estate Sustainability Benchmark (GRESB). Hogan-Preusse said the level of participation in GRESB among institutional investors has been encouraging. She also said GRESB has proven to have significant utility for investors.
“Having a science-based tool that we can use to evaluate sustainability is so helpful, because there are so many subjective things that go into the way many investors think about sustainability,” she said.
Hogan-Preusse noted that she believes early movers on environmentally conscious programs will have a competitive advantage in the marketplace. Using measuring sticks such as GRESB, companies will have the ability to tangibly demonstrate their sustainability performance to investors and tenants, according to Hogan-Preusse. They will also have a head start in terms of meeting eventual regulatory hurdles, she said.
As an investor, Hogan-Preusse said she hopes to see more listed real estate companies participating in GRESB. “That demonstrates to us that they’re thinking about this issue,” she said.
Hogan-Preusse also said APG isn’t looking for companies to go to extreme measures to improve their eco-friendliness.
“I think there is a common perception out there that we want all of these companies to have Platinum LEED-certified buildings,” she said. “That’s absolutely not the case. That’s really not feasible for many industries and many of the REITs. What we just want to see initially is awareness of the topic, and, ultimately, we want to see improvement on the topic.”
Hogan said instituting green initiatives and processes have yet to show significant income generation for companies, they are helping to cut their market risk.
“I think that’s a pretty early conclusion,” she said. “I think it will result in share performance over the long run, but we don’t have a lot of data yet.”