Real Estate Execs Land ‘Responsible Property Investing’ Strategy

25 07 2007

Real Estate Execs Land ‘Responsible Property Investing’ Strategy

WASHINGTON, July 5, 2007 — More than 80 percent of real estate executives said their organizations are committed to going beyond the minimum legal requirements to address social or environmental issues according to a recent survey, and 90 percent of respondents said pursuing responsible property investing (RPI) strategies are an increasingly important business strategy.

The survey, conducted by the Urban Land Institute, shows that the real estate industry, including investing companies and developers, is increasingly adopting a “triple bottom line” business approach that measures success in terms of economic, social and environmental value.

RPI is an outgrowth of socially responsible investing that started several years ago and has grown into a broad movement encompassing far more than the financing and development of buildings that meet energy efficiency standards, according to Stephen Blank, a research at ULI. “This goes way beyond buying ‘green,'” Blank said. “RPI is about making a conscious decision to conduct all business operations in a way that contributes to the long-term well-being of the community and environment.”

Blank said the survey reveals just how many in the real estate industry have concluded that they can “do well by doing good” in terms of property investment choices, and that RPI is bringing about a definite shift in attitudes.

A company applying RPI practices might be willing to invest in existing structures and retrofit them to cut energy use and reduce their environmental footprint; Blank said that a firm working along those lines would also be apt to encourage environmentally responsible and community minded behavior by employees and tenants.

In a report documenting the survey results, University of Arizona professor Gary Pivo writes, “(RPI) encompasses a variety of efforts to contribute to ecological integrity, community development, or human fulfillment in the course of profitable real estate investing. A sustainable and responsible investor seeks to be an employer of choice, to improve neighborhoods, to conserve natural resources or to promote a more just society.”

The survey responses show that conservation is the most widespread RPI management strategy now being implemented.. Fifty-seven percent of the participants said they are promoting energy conservation, water conservation or recycling in properties they own or manage; 47 percent said they are engaging stakeholders with some connection to the properties, such neighborhood organizations, labor unions or environmental groups. Forty-four percent include references to community, human resource or environmental issues in their values or mission statement; and 43 percent pay attention to social or environmental issues in their strategic planning.

The survey also found that:

  • 63 percent said they have invested in urban infill or redeveloped properties and 16 percent said they are considering such investments;
  • 53 percent have invested in transit-oriented development, and 15 percent plan to do so;
  • 36 percent have invested in green buildings and 31 percent plan to;
  • 33 percent have invested and 16 more percent are considering investing in brownfields;
  • More than 35 percent of the respondents said they are aware that RPI practices are beneficial in terms of increased efficiency and lower costs for overall business operations;
  • More than 30 percent view RPI as providing a potential competitive advantage and are pursuing these practices primarily as a wise business strategy.

According to the survey, some of the biggest motivators behind the growth of RPI are increased potential ROI for enhancing social and environmental well-being, gaining a business advantage over competitors, and fulfillment of a moral obligation.

The survey was conducted between November 2006 and January 2007 by Pivo. It was sent to nearly 1,500 chief executive or real estate investment officers of U.S. pension funds with real estate holdings, real estate investment trusts (REITs), real estate operating companies (REOCs), fund managers and development companies.

The full survey is available from the Urban Land Institute [PDF].





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