Jones Lang LaSalle on Trends in 2012

Dan Probst, Chairperson, Jones Lang LaSalle


The green economy is reaching beyond individual buildings, creating new demands on cities for long term strategies.The first trend is that we see energy and sustainability being taken to a greater scale.

By Maryruth Belsey Priebe

We see a big focus on buildings -- when you look at the carbon footprint of a city, buildings are one of the biggest emitters. Cities are looking at things to improve performance of city-owned buildings and what they can do to encourage private owners to improve their performance as well. We're seeing a lot more activity at a city or community level, or with colleges and universities. So instead of just looking at improving one building at a time, we are seeing a lot more interest, particularly at the city level, with initiating efforts to improve environmental performance on a larger scale. Indications are that being a greener city helps to attract business, which usually involves better transportation systems, water system, waste systems, and so on. CDP Cities is one driver. This is a carbon disclosure project that allows cities to have a framework and format that enables them to measure their current performance and benchmark that performance. That reporting, if the cities allow, can be made public, and so this drives the transparency in terms of environmental friendliness of a city. There has been an increase in reports that rank the performance of cities in terms of the environment.

Studies would indicate that people and businesses -- when thinking about relocating -- will consider how green a city is. So green may be a criteria that is on the list with other of factors that influence those kinds of decisions.

Chicago is one city doing a lot of work to improve environmental performance. They're creating new green space, planting lots of trees, having green rooftops, encouraging green buildings, designs and retrofits. Lots of cities are looking at creative ways to reduce their own energy consumption, such as using LEDs for street lights and traffic signalling. People are supporting biking through bike lanes and parking, and encouraging people to use bikes daily with shared bike programs.


We're also seeing focus on adaptation -- cities are working to avoid the negative consequences of climate change. Cities in low-lying coastal areas are planning for the protection of coastal developments. So activity and thinking in these areas are impacting the city-level environmental emphasis.

Smart Buildings

Technology -- specifically smart buildings -- improves efficiency and operations, and can dramatically cut costs. Smart systems collect information and route it back to a centralized operation, where it can be continuously monitored, controlled and fine tuned for operational performance. This is a whole area we're seeing a lot of activity.

Regulatory Activity

There is little if any activity at the federal level: most is occurring at state and city level. More and more cities are requiring building owners to measure and report energy and environmental performance of their buildings. New York City was the first city to begin such a program. In fact, this is the first year certain building owners were required to report, and next year they will have to make that report public. This is positive because transparency will drive the market and cause owners of corporate buildings to improve their performance. San Francisco, Seattle, Washington DC, and Austin, all have some kind of legislation. Most of the city legislative changes are similar to the New York program. The things that we're seeing repeating over and over are some form of reporting and measurement of current performance. Then, like in NY, they are requiring periodic building audits or building retro commissioning to take it a little bit further. If you're doing retrofits on a certain scale in a building, sometimes the retrofits will trigger other requirements for other upgrades like lighting.

For our clients that have national portfolios, the fact that the legislation is primarily occurring on a state or local level is frustrating. They would prefer this would happen at the federal level. For owners of large portfolios, the fact that reporting requirements aren't always identical from one city or state to the other makes reporting more onerous.

Some have pushed for federal level legislation, and out of frustration and gridlock at the federal level, they are moving their policy advocacy activities to the state and local level. State and local level legislation is happening more to fill the void that people were hoping to have at the federal level. Local and state programs are good, but not ideal. To overcome this problem, some portfolio managers are adopting ENERGY STAR as a foundation, which we think is good. It's been out there for a long time and is creating a standard many are using anyway, so if they point to that as a basis for other disclosure, that helps.

Regulation & Financing

The other regulatory activity that facilitates green building improvements is financing for building retrofits. In San Francisco, they are reintroducing commercial PACE (Property Assessed Clean Energy) financing -- a property tax mechanism that enables owners to get financing for building retrofits.

Large Scale Renewables

More activity is also being seen in renewable energy: a lot more on the large scale. This is mostly via utility-grade solar, wind and biomass plants. The key driver is that utility companies all have mandatory requirements to have certain percentages of their supply to be sourced through renewables, called renewable energy portfolio standards. So the clock is ticking and is starting to have an impact on the renewables market. This doesn't usually involve putting solar on rooftops, but utilities are going to need to do some big scale installations, and you're starting to see that happening. California has a lot of this, but you're starting to see it happening in more places. For building owners, the economics for installing renewables aren't quite there in most places, and the places where it makes economic sense, for building owners, is the places where there are incentives in place. That's been bit of a moving target. Right now in the US, New Jersey has some state incentives that help to put economics over the finish line to put solar on the roof of a building and have a reasonable payback. But for most locations in the US, it's just not there yet. It's getting closer. Panel prices have come down substantially in the last few months, partly because of the drying up of the European market, which flooded the market with panels. But we expect the panel prices to continue to come down and get more attractive for building owners.

Adoption of Green Building Standards

We're definitely seeing continued increase in things like LEED. In the US, there's not a lot of activity in new buildings, but buildings that are being built usually have LEED certification incorporated into their plans. We're seeing a fair amount of activity on the existing building front. A couple of years ago for the multi-tenant office building market, we didn't see a lot. Now we see more activity and find that tenants are beginning to ask questions about the environmental performance of a building, and some are incorporating that into their shopping criteria. The General Service Administration (, one of the biggest tenants in the US, won't lease space in buildings that aren't at least LEED Silver, for instance.

So if you want to be competitive, more and more building owners are seeing that it is necessary to improve energy and environmental performance.