Discover how slow adoption of energy efficiency tech and occupancy trends are impacting CRE plus industry insights in this week’s Core Texts.
CRE trends: Energy efficiency and tech adoption
💡 What you need to know: A new report from Building Engines assessing property management practices in 2024 shows that commercial real estate professionals are increasingly prioritizing energy efficiency and sustainability. In fact, 64% of property managers see energy efficiency improvements and expense reduction as top priorities in 2024. This reflects a rising demand for sustainable spaces from tenants, recent energy cost increases, and office owner’s internal sustainability goals. 📈 🍃 ⏰
Despite acknowledging the need for advanced technology solutions to improve utility management and ESG reporting, the report revealed a notable hesitancy to adopt sustainability project software: 81% of property teams are currently either uninvested in or unsure about relying on this technology. Still, 97% of respondents plan to either maintain or increase their CRE software spending in areas like building operations, energy management, and tenant experience over the coming months. 🔜
⚡ Why it is important: ️This report points to a growing recognition among CRE professionals that they must incorporate tech offerings into their daily practices to further optimize their operations and facilitate cost-efficient, sustainable outcomes. But, property managers remain hesitant. Their questions about how these systems work, what they can deliver, and how to measure their success has slowed adoption. 🤔
There are a broad range of energy management solutions in the market. Property managers can narrow the field by defining who will be using the solution, the data they need, the outcomes they hope to achieve, and success metrics at the outset. A recent Nexus Lab’s Buyer’s Guide dives into just this.
New office occupancy data entreats reform 📊
💡 What you need to know: New office occupancy data reveals that the return to office has plateaued at about 50% of pre-pandemic levels, with 80% of employers embracing hybrid work models and allowing employees to choose their work locations on most days. John Arenas, CEO of Serendipity Labs, recently highlighted that the role of the office is shifting towards a space for specific needs such as collaboration and in-person connections, rather than a corporate hub demanding daily attendance. Advanced technologies and online collaboration tools have diminished the traditional necessity for a centralized office space. Access card data from Kastle Systems, adjusted for pre-pandemic attendance rates, suggests that actual office utilization might be as low as 35%, indicating a significant shift in how office spaces are valued and used. 😬
⚡ Why it is important: ️The office landscape is undergoing a significant transformation as hybrid work models reshape how and where we work. This evolution necessitates a fresh approach to office space management and design, prompting building owners to innovate and adapt to new tenant expectations and preferences. 🔍 👩🏻💼 🛠
Buildings that are not modernized, energy efficient, and future-ready will not succeed in today’s market. In response to Kastle Systems’ new report, Tony Malkin, CEO of Empire State Realty Trust (ESRT), recently told CNBC that he attributes his firm’s 90% portfolio-wide occupancy rate to ESRT’s investment in spatial upgrades. While the average office in the New York City metro area is 43.2% occupied, ESRT’s properties are nearly full because Malkin and his team have chosen to invest over $1B to improve their properties’ sustainability, energy efficiency, and amenities. Given tenants’ recent ‘flight to quality‘ and growing preference for green spaces, this has empowered ESRT to consistently beat the market. 🙌
More news and notes 📌
💰 SL Green plans to raise a $1B NYC debt fund.
🥶 NYT noted that electric utilities are straining to keep up during the winter.
🗓 SEC will now release its final emissions disclosure rule in April 2024.
🗄 Engie reported effective internal governance is key to decarbonization.
💡 NYT wrote about the paradox holding back the clean energy revolution
🤖 BNN described how AI is transforming environmental governance’s future.
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