GRESB 2015 Survey Points to Continued Improvement by Global Real Estate Sector

The Global Real Estate Sustainability Benchmark (GRESB) 2015 Survey results released Sept. 2 point to improved environmental performance by the global real estate industry.

Results from the 2015 survey indicated that, in the last year, the global commercial real estate industry achieved a 3.0 percent reduction in greenhouse gas emissions, a 2.9 percent reduction in energy consumption and a 1.7 percent reduction in water use. On-site renewable energy generation rose to 445 gigawatt hours (GWh), a 50 percent increase from the 2014 survey.

North American Participants Slightly Trail Global Market

The 2015 survey looked at data from 707 listed property companies and private equity real estate funds around the world. In total, the respondents’ portfolios cover approximately 61,000 buildings with an aggregate value of $2.3 trillion.

The assessment included 155 North American participants with a combined gross asset value of $813 billion, including 41 listed property companies and 114 private funds.

North American REITs and private equity funds slightly trailed the global market, with an average GRESB sustainability score of 44 compared to the global average of 46. GRESB noted in the report, though, that North American REITs are making demonstrable improvement.

In 2015, 88 percent of North American entities reported having sustainability policies. A growing portion of these policies include specific provisions addressing climate risk and resilience, or the ability to handle major environmental shocks, according to GRESB.

GRESB also noted that prolonged drought conditions across western North America have highlighted the importance of water conservation and sustainable water supply management. GRESB data shows that 86 percent of North American listed property companies and private funds implemented water efficiency improvements for standing investments within the last four years.

“The global property industry is taking sustainability issues seriously, making them a core part of business strategies. In North America, this is reflected in portfolio-wide efforts to save energy, conserve water and enhance resilience,” said Chris Pyke, chief operating officer at GRESB.

U.S. REITs Recognized

GRESB also recognized a number of U.S. REITs for their exceptional sustainability practices. In the hotel, residential and healthcare sectors, Host Hotels & Resorts, Inc. (NYSE: HST), Equity Residential (NYSE: EQR) and Ventas, Inc. (NYSE: VTR) were named global sector leaders.

Michael Chang, director of energy and sustainability at Host Hotels, said the company achieved several sustainability milestones in 2014. These included meeting 2017 energy and greenhouse gas targets three years early and investing in more than 100 sustainability projects.

Equity Residential president and CEO David Neithercut stressed that sustainability is a core value: "Throughout our organization we are committed to making ours a better and more sustainable company for the benefit of our communities, our residents and our shareholders."

Debra Cafaro, chairman and CEO of Ventas, underscored the importance of sustainability to the healthcare REIT.

“Sustainability is a key value at Ventas and we are delighted to be recognized as the sector leader by GRESB. It reflects the hard work of the Ventas team, which is continuously seeking ways to improve our portfolio, enhance our energy efficiency, reduce our carbon footprint and manage operating costs.  These efforts benefit all of our stakeholder groups - investors, our customers, and the patients and residents they serve, and of course the environment,” she said.

Meanwhile, Kilroy Realty Corp. (NYSE: KRC) was named a regional sector leader in the office category. Sara Neff, vice president for sustainability at Kilroy, noted that “a commitment to sustainability is the foundation of everything we do.”

GRESB’s Pyke pointed out that U.S. office REITs have made “outstanding progress” over the past few years, reaching overall performance levels that rival their top-scoring peers in Australia and New Zealand.