Green Real Estate Retrofit Funds Attract $3.5bn

Published: 23 November 2010

6 pages, 2 figures

Executive Summary

The number of investment funds focused on sustainable real estate is increasing. Once viewed as a niche within the real estate industry, increased understanding among tenants of sustainability’s co-benefits in terms of cost savings, employee productivity and corporate image have helped drive the issue. This surge of interest has helped investors and developers embrace sustainability, who view the value proposition through the lenses of risk stabilization, higher rents and increased capital values (although empirical data are scarce). The fear of regulatory changes and alienation of certain occupier groups making buildings obsolete is also driving the green future-proofing of the industry. Verdantix analysed data from the Responsible Property Investing Centre showing that 15 funds have been raised since 2001 in the US and the UK to invest in repositioning commercial building through green retrofitting, with committed equity of just under $3.5 billion.

TABLE OF CONTENTS

GREEN RETROFIT STRATEGY GAINS TRACTION IN THE MARKET
Shift In Demand And Supply Side Drivers Are Changing The Market
$3.5 Billion Of Green Equity Targeted For The US And UK Markets
Unproven Value Proposition And Sluggish Recovery Slow Market Growth
Pragmatic, Collaborative, And Engaged Institutional Investors Needed

TABLE OF FIGURES

Figure 1. Green Retrofit Strategy Maintains Traction Through The Recession
Figure 2. Take Up Of Green Retrofit Strategy Weighted Towards The US Market

ORGANIZATIONS MENTIONED

Aviva Life & Pensions, Bridges Ventures, CalPERS, CalSTRS, Citigroup, CoStar, Deloitte, Deutsche Bank, European Centre for Corporate Engagement, igloo Regeneration Fund, Lincolnshire County Council Pension Fund, Merseyside Pension Fund, PRUPIM, Responsible Property Investing Centre, RICS, South Yorkshire Pensions Authority, Teacher Retirement System of Texas, Threadneedle Low-Carbon Workplace Trust, University of California Energy Institute, West Midlands Metropolitan Authorities Pension Fund