Daniel Neiditch is the CEO of River 2 River Realty, Daniel has grown his family’s business into a multi-billion dollar real estate empire.
Since the onset of the global pandemic, it feels as though the lion’s share of our time, energies and interests have been focused on fighting Covid-19. No industries are exempt from its reach; from tech to finance to manufacturing to, of course, real estate, we’ve all turned our attention to protecting our businesses and consumers during the pandemic. More than anything else, we want to return to normal, to restart our lives and businesses without fear of illness or economic damage.
It’s a worthy goal, but it can’t be our only goal. Over the last several months, we’ve understandably placed the fight against Covid-19 into the spotlight. However, in doing so, I fear that we may have inadvertently shuffled other important issues backstage. I’ve written before about how preparing commercial spaces for Covid-19 safety dovetails with sustainability; now, I want to talk more specifically about what real estate leaders should be doing to pursue sustainability goals.
More than ever, we’re in a unique position to pursue green building and examine the long-term practices that have been causing environmental damage, plus take immediate action on issues like how buildings are operated and managed.
Impact To The Global Environment
As odd a silver lining as it might seem from the outset, the pandemic appears to have been, at least preliminarily, good for the environment.
As shutdowns became widespread across the world in early April, daily global carbon emissions decreased by 17% compared to last year. As the BBC reported, “In China, emissions fell 25% at the start of the year as people were instructed to stay at home, factories shuttered and coal use fell by 40% at China’s six largest power plants since the last quarter of 2019. The proportion of days with ‘good quality air’ was up 11.4% compared with the same time last year in 337 cities across China, according to its Ministry of Ecology and Environment.”
This good news comes at an interesting time, because New York City was already in a relatively good place, environmentally speaking. Last spring, the city passed key legislation — the Climate Mobilization Act — to reduce the city’s overall carbon emissions by 80% by 2050. The Act “makes sustainability a major priority for New York’s built environment, targeting buildings that are among the biggest contributors to the city’s carbon emissions.”
Taken together, these factors would seem to point to a healthier post-pandemic NYC. But there’s one problem that we haven’t yet considered: the rebound effect.
The Rebound Effect
Unfortunately, our sustainability “silver lining” may ultimately oxidize as industries race to overcompensate for their quarantined inactivity.
The rebound effect will backtrack progress on sustainability, especially if we return to traditional means of construction. For instance, as factories attempted to make up for lost production time in early May, National Geographic reported, pollution returned to pre-coronavirus levels. “Meanwhile, provincial officials desperate for the economic boost that comes with any construction are giving the go-ahead to a raft of new coal-fired power plants, says Lauri Myllyvirta, lead analyst at the Helsinki-based Center for Research on Energy and Clean Air.”
These new plans that return to unsustainable construction and operation methods will only lock in big future health and climate issues, especially when the same infrastructure is used for many years, Corinne Le Quéré, lead researcher and professor of climate change at the University of East Anglia in Britain, warned.
Obviously, as real estate professionals, there’s only so much that we can do — we don’t have sway in coal mines or factories. But the risk of rebound does suggest that we do need to take action in real estate.
One approach to consider is how much of our energy supply we’re using. Owners can conduct checks to ensure that they are running them in the most cost-efficient and energy-efficient ways. That means turning down the heat or A/C and limiting using all the energy systems 100% of the time. In my NYC-based building, I included hallway sensors to limit energy use when no one is in the space.
There’s also the issue of where a building’s energy supply comes from. The installation of renewable energy infrastructure is a focus for many countries, and already, major global cities have jumped on the sustainability bandwagon. The World Economic Forum reported that Amsterdam, Netherlands, is implementing a new doughnut economics model that uses sustainable building methods, including circular building development through flexible zoning and regenerative designs for energy and water systems.
In New York, we can strive for the same. Getting involved in sustainable building isn’t as inaccessible as one might think, especially when considering the cost-savings and appeal. I myself have worked to create sustainable spaces by incorporating the highest array of solar panels on one of my residential skyscrapers. It reduces energy consumption by 15% and saves $120,000 per year.
The virus has also accelerated the synergy between green design and promoting health. Real estate pros improve their facilities by including natural materials, lighting and ventilation systems, which check the box for a sustainable and healthy building. But property managers can advocate for a more health-focused mindset by including more bike storage and showers in offices.
The Covid-19 pandemic is our opportunity to refocus our energy on our environment and residents’ public health. Besides, if real estate owners continue building with unsustainable features, then they are at risk of creating buildings that are obsolete before they even open. It’s vital that we adjust our long-term investment strategies for sustainable design, even with incremental sustainability targets, to create the foundations for a healthier reality as the world reopens.
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