Jones Lang LaSalle (JLL) provides real estate and investment management services, as well as property and facility management services, to its global portfolio of approximately 2.6 billion square feet. JLL’s real estate services extend beyond property ownership and management, and include, but are not limited to, leasing services, investment management, capital markets and hotels, advisory and consulting, and energy and sustainability services.
Impacts and Opportunities for REITs
Building Energy Consumption
The International Energy Agency (IEA) and the United Nations Development Programme reported that buildings are the largest consumers of energy worldwide, using 2794 million tons of oil equivalent in 2010. Under current policies, the IEA estimates that global building energy demand will grow by an additional 30% by 2035 compared to 2010. ((International Energy Agency and United Nations Development Programme. “Modernising Building Energy Codes to Secure our Global Energy Future,” 2013. Accessed June 27, 2014. http://www.iea.org/publications/freepublications/publication/PP7_Building_Codes_2013_WEB.pdf))
Jones Lang LaSalle recognizes that the greatest contribution it can make to mitigate climate change is to “work with our clients to help them reduce their energy and carbon-generating activities.” To this end, JLL’s Energy and Sustainability Services helps clients develop energy management programs with measurable savings and results. In 2012, JLL reduced 913,000 metric tons of carbon dioxide equivalents for U.S. clients, which resulted in $176 million in energy savings.
As energy costs continue to rise, the energy efficiency or “greenness” of a REITs’ portfolio will influence its competitiveness and financial well-being. Pike Research forecasts that green building certified space will grow from 6 billion square feet in 2010 to 53 billion square feet in 2020. In 2020, commercial buildings will likely represent 80% of green building certified space. Leadership in Energy and Environmental Design (LEED) and Building Research Establishment Environmental Assessment Method (BREEAM) certifications will likely continue to dominate the North American and European green building markets. ((Pike Research. “Green Building Certification Programs – Executive Summary,” 2010. Accessed June 27, 2014. http://www.navigantresearch.com/wp-content/uploads/2010/05/GBCP-10-Executive-Summary.pdf))
In 2012, Jones Lang LaSalle enabled better sustainability performance in 1,351 buildings. Additionally, in early 2013 JLL became the World’s Top Employer of LEED Accredited Professionals and Green Associates. Although a relatively small percentage of the company’s total square footage has green building certifications, JLL has revised corporate office standards to improve occupancy strategies and reduce building greenhouse gas emissions per rented square foot and rented square feet per employee.
REITs have direct impact stemming from their managed or owned real estate assets. To minimize direct environmental impact, common initiatives include tenant engagement to minimize waste, water, and energy usage. Policies on brownfield redevelopment, supply chain transparency, and building location are key to decrease the total impact of a REIT’s asset portfolio.
In 2012, 34% of Jones Lang LaSalle’s leases contained environmental conditions such as capital expenses, renewable energy, or recycling. Additionally, in 2012, JLL partnered with the Ethisphere Institute to develop a questionnaire that rates the ethical character and quality of suppliers. The survey was sent to more than 8,000 suppliers and the findings of the survey will be used to develop JLL’s future supplier engagement strategy.
Areas for Improvement
Green leases are considered any lease with at least one environmental condition such as capital expenses, renewable energy, or recycling. In 2012, 34% of JLL’s leases contained green language. Portfolio 21 has asked the company to establish a goal to increase the number of green leases.
Waste Generation and Water Consumption
JLL does not provide metrics on water usage or waste generation from its properties, other than its own facilities. Water and waste management tend not be a high priority, compared to energy, because there are not strong regulatory or cost drivers. Portfolio 21 has requested JLL improve the tracking and reporting of waste generation and water usage within its portfolio.
Country: United States
To the best of our knowledge the above information is accurate and was obtained from sources we believe to be reliable. Neither the information presented above nor any opinion expressed shall be construed as an offer to sell or a solicitation to buy the security. The views expressed are those of portfolio management as of 7/31/14 and may not reflect current opinions or subsequent events.