The Impact of Carbon Reduction Mandates on CRE

No video selected

Select a video type in the sidebar.

[Published on January 5th 2024]

City and state laws on carbon emissions are having tangible impacts on commercial real estate, making it more important than ever for companies to stay ahead of the regulatory curve, according to panelists at iGlobal Forum’s webinar on carbon emissions and CRE.

The regulatory landscape in states like New York, California and Washington has been changing for years. From emissions caps to incentives for green infrastructure, companies need to know how environmental legislation is impacting their assets, says David Amerikaner, special counsel at Duane Morris and a member of its real estate practice group.

“It’s a dynamic field and it's important to track it to know what’s coming,” said Amerikaner.

For example, the requirements to access commercial property-assessed clean energy (CPACE) financing are often aligned with legislation local governments institute to encourage green construction and retrofits, said Rachel Davis, senior vice president of partner management and originations at Petros PACE Finance.

 

Duane_Morris_Logo_300x250_Dec2023

 

Plus, owners are looking to maximize CPACE capital to fund projects amid a challenging interest rate environment, forcing them to meet stricter building requirements, Davis added.

“Folks are looking at this really seriously and saying, ‘maybe we need to reconsider our design so we can maximize that [financing],’” Davis says. “We're seeing that in numerous markets across the country.”

Energy efficiency upgrades also impact the value of a property—and whether or not it will sell. Madison International Realty’s ESG Manager Katie Cappola recalled attempting to sell an asset to a buyer who paused the deal to wait for the results of the building’s energy audit and decarbonization plan.

“I think that was something that made this all very real for our deal teams and asset management, to see a buyer come back and say that there’s going to be an adjustment here,” Cappola said.

And office tenants are turning to buildings with special certifications—such as Fitwel and WELL—putting pressure on owners to provide healthy, eco-friendly properties, said Scott Lemoine, lead ESG advisor for North America at Measurabl, a ESG data analytics, measurement and reporting platform for the real estate industry.

“Tenants, corporate tenants and corporate occupiers are pursuing specifically certified properties and certified spaces,” Lemione said. “We're seeing an uptick more than ever.”

About the Author
Duane Morris LLP, a law firm with more than 900 attorneys in offices across the United States and internationally, is asked by a broad array of clients to provide innovative solutions to today's legal and business challenges.

Evolving from a partnership of prominent lawyers in Philadelphia a century ago, Duane Morris' modern organization stretches from the U.S. to Europe and across Asia. Throughout this global expansion, Duane Morris has remained committed to preserving its collegial, collaborative culture that has attracted many talented attorneys. The firm's leadership, and outside observers like the Harvard Business School, believe this culture is truly unique among large law firms, and helps account for the firm continuing to prosper throughout changing economic and industry conditions.

Related Blog Articles

Q&A Spotlight: Nick Russell of Tuckerman Capital

We sat down with Nick Russell, Managing Partner of Tuckerman Capital, to explore key issues like future middle-mark...
Read More

6 Ways Independent Sponsors Can Help Institutional Private Equity Funds Expand Reach & Diversify

Institutional private equity funds wield substantial resources and expertise in navigating complex investment lands...
Read More

Q&A Spotlight: Andy Silverman of Parkway Capital

In this speaker Q&A session with Andy Silverman of Parkway Capital, we explore the cutting-edge innovations tha...
Read More

Specialization & Creativity: How Independent Sponsors Are Disrupting Private Equity

The independent sponsor market is exploding, with more individuals launching firms, sophisticated strategies, and c...
Read More

We connect people better through our Brand Promise:

At iGlobal Forum we deliver tangible and measurable outcomes that directly contribute to the success and growth of clients. With our commitment to excellence backed by our Risk-Free policy, we guarantee your satisfaction.

Copyright @2023. iGlobalForum.com All right reserved

Our Location

6 East 43rd St
19th Floor
New York, NY 10017

Tel: (212) 752-7760

info@iglobalforum.com