Energy Efficiency in Real Estate Includes Transportation
April 11, 2024
Bill Gates' Breakthrough Energy breaks down sustainability in simple, easy to understand terms. "The Five Grand Challenges of Climate Change are 1. How We Plug In, 2. Make Things, 3. Grow Things, 4. Get Around, and 5. Keep Cool and Stay Warm.” Tackling these challenges cannot be done in siloes. In fact, real estate touches all of these categories. "How We Get Around," is the #1 emissions producer in the US (Source: EPA). Couple Transportation with Buildings in the US and developed countries, then you get a whopping 67% of emissions (Source: UN).
Transitioning to electric vehicles is a crucial part of the equation. EV charging stations are now a must-have amenity for all types of real estate assets - multifamily, office, retail, mixed-use, parking, campus, etc. For the growing number of people that already made the switch to an EV, they value charging points at the places they live, work, shop, gather, and play. Going beyond early adopters, seeing more charging points boosts consumer's comfort level to make the switch.
Accommodating the growing market demand of EV owners helps, but it does not solve the problem that we have with single occupancy vehicles (SOVs); an electric car is the same size as a gas powered car. "Energy efficiency" is what dominates the conversation on the topic of sustainability in real estate. Cars, no matter whether they are electric, gas, or hybrid, are very energy inefficient. SOVs lead to increased traffic congestion, sprawling land use, pavement and concrete to build more parking; particulate matter pollution from tires, and a growing raw material supply needed for EV batteries. To put it into perspective, the raw materials and electricity to power 1 sedan EV is equivalent to ~100 electric bikes.
Real estate developers can take more of a Transportation Demand Management (TDM) approach, by looking at ways to reduce car trips and vehicle miles traveled (VMT). They can make it a goal to shift trips to more sustainable modes, reducing their emissions to and from buildings (scope 3 emissions). For large real estate companies, these indirect, scope 3 emissions will need to be reported in California starting in 2027. Many states are likely to follow, regardless of the SEC expanding their reporting and disclosure requirements to include Scope 3.
New laws on reporting transportation emissions from real estate or not, it's simply good business to give more thought and care to active transportation in the design, implementation, and marketing of a building, no matter what type of real estate asset it is. Case in point - parking garages. In my new role as Growth Advisor and Consultant to Ridy, Inc., I learned that they have partnered with a parking garage to provide private micromobility solutions for their customers. Specifically, shared e-scooters are embedded into Millennium Garage in Chicago (below "The Bean" at Millennium Park), the largest underground parking facility in North America, with 9,100+ spaces. The pilot has been running for 2 years now and is a part of the Department of Energy's Smart Mobility 2.0 program, which focuses on "energy efficient mobility systems."
Rather than viewing a private micromobility fleet as an expense, they and many real estate owners view it as an investment to future-proof their assets. 25-40% of traffic congestion in city centers is due to people looking for parking spots. They wanted to encourage parking once, with the goal of reducing congestion and emissions. An e-scooter for the day could connect them to more places, and remove the need to go back to their car.
For developers that want to be at the forefront of this mode shift, there are a wealth of opportunities abound like this. Positioning bikes and micromobility as an essential part of modern, urban living aligns a real estate asset with tenants that value health, wellness, and sustainability. TDM strategies encourage multimodal trips, prioritizing transit, biking, and walking, which aligns with many local city guidelines and policies for mode shift. This is exactly what energy efficiency looks like.
Must-have transportation amenities go beyond EV charging stations now. Planning, implementing and promoting active transportation amenities, programs, and services is crucial too. Depending on the property and location, that could mean a higher quantity of bike parking or a dedicated space for safe parking and charging of e-bikes and e-scooters. It could be a fleet of e-bikes and e-scooters for those don't want to deal with the hassles of owning, storing, or maintaining their own bike or scooter. All of these options that improve the tenant experience are also more energy efficient transportation options. Lets make sure we plan and build with this in mind.
