The Future of Sustainable Development: Emerging Trends

Overview

As demand for environmentally responsible and energy-efficient buildings grows, understanding and adopting sustainable practices has become a strategic imperative. Given this demand, we remain committed to identifying and incorporating sustainability initiatives that add value to the projects we develop. Beyond environmental impact, sustainability in development is also an economic driver, offering opportunities for cost savings, higher property values and resilience.

Looking at the year ahead, we expect to see the following sustainability trends continue to reshape how buildings are developed, constructed and operated:

1. Concerted focus on embodied carbon: There is a growing focus on embodied carbon in real estate developments due to its significant contribution to a building’s overall carbon footprint. Stakeholders across the industry are paying closer attention to embodied carbon, which can be reduced seeking cost neutral strategies in development.
2. Continued importance of third-party certifications: Providing a credible verification of a project’s environmental performance through third-party sustainability certifications demonstrates a commitment to high standards of energy efficiency, resource conservation and occupant wellbeing. Investors continue to view these certifications as a means to ensure long-term value of a real estate asset.
3. Increase in local energy efficiency mandates: In a consistently evolving landscape, understanding new and existing building performance standards (BPS) and designing with energy efficiency in mind will be crucial for a project’s long-term success.
4. Incorporation of on-site solar: In markets where it is economically feasible, tenants and investors are incorporating on-site solar as a significant value-add, both from a financial and environmental perspective.

By staying informed on sustainability trends, developers, investors and other stakeholders can make more strategic decisions, reduce risk and contribute to a more resilient built environment. In this article, we will dive deeper into embodied carbon and why it remains top-of-mind for our long-term sustainability strategy.


Denver Water Operations Center | Denver, Colorado

Embodied Carbon: Shifting the Carbon Conversation

For the last 30 years, the key sustainability focus in real estate development was on energy conservation by reducing the amount of energy consumed to heat, cool and operate our buildings while decreasing emissions from fossil fuel sources which have historically dominated our energy grids. Examples of strategies employed included setting back the thermostat at night and turning off the lights and using daylight to supplement electric lighting when spaces are vacant. These types of strategies have become table stakes in building design and operations.

We also made massive headway in operational carbon technologies during this time, including more efficient heating and cooling systems, heat pumps, LED’s, increased on-site and grid-scale solar and wind energy generation and storage, better electric appliances and non- fossil fuel electricity generation systems that feed the grid.

Today, the script has flipped. Carbon emissions over a building’s lifetime now come primarily from the raw material extraction, manufacturing, transportation and installation of the products that go into our buildings, also called embodied carbon. The structural elements (steel and concrete) are the largest emitters. Hundreds of companies are currently searching for new solutions—using new materials, novel processes and alternative energy sources to reduce carbon emissions.

While the traditional business case for sustainability is easily understood with operational carbon (investments in energy efficiency result in lower utility bills and delivers a return on the investment), the case for embodied carbon is slightly more nuanced. Currently, most lower carbon building materials carry a premium and in the absence of a carbon tax or penalty, the traditional ROI story doesn’t play out as cleanly for embodied carbon investments.

Developers see that rather than a feel-good endeavor, pursuing lower embodied carbon materials on their projects is good business. As of 2024, about half of all Fortune 500 companies (including CBRE and TCC) have net-zero carbon goals with a committed deadline. These companies, in an effort to decarbonize their own operations and value chains, are sending strong demand signals to manufacturers to collaborate by providing lower carbon alternatives to support a net zero trajectory. This includes the physical spaces where they conduct their corporate operations. Owned and leased spaces are a large component of corporate emissions and an increasing focus of companies with corporate net zero goals. Development leaders in this space will ultimately be rewarded with a strong pipeline of business because they will have learned how to integrate low embodied carbon strategies into their assets, meeting the changing demands of our stakeholders.

While regulation at the federal level is trending toward a more hands-off approach to sustainability requirements, we see local and international carbon regulations either remaining committed or increasing. From a new embodied carbon code requirement in CALGreen in California to BuyGreen policies in Washington, New York, and others, these states are requiring certain low carbon materials on state-funded projects making embodied carbon part of the compliance landscape for building developers and owners.

Key Takeaways

• One of the drivers for building owners and developers to pursue low embodied carbon design and construction includes specific value creation and risk mitigation opportunities. TCC uses a future-looking climate-risk database to evaluate the potential for future physical damage and assesses mitigation measures that can forestall such damage and retain value.
• You can’t manage what you don’t measure. Carbon measurement is an important aspect of understanding the embodied carbon of a given asset. Select a tool (there are a lot of them out there) and start to measure your embodied carbon emissions. It will surprise you. Today, TCC performs a LCA on all new projects to begin the process of reducing our embodied carbon with smart material selection, and to educate our development teams and investment partners about embodied carbon emissions in general – as we focus on global warming potential (GWP) across both embodied and operating emissions spectrums.
• Because of the size of our in-process portfolio and pipeline at TCC (US $30+ B), we have a unique opportunity to move the needle. TCC requests environmental product declarations (EPDs) on all measured materials used in our projects through our embodied carbon measurement program, and we work with concrete suppliers to incorporate low-carbon cement blends wherever possible. These actions send a demand signal to industry that if you make low-carbon materials, we may buy them.

Conclusion

Not too long ago, low VOC carpet and paints were difficult to source. Today, they are ubiquitous. Developers, architects and contractors demanded these materials and manufacturers responded and they are de facto standards today—boosting occupant wellbeing and productivity. We are doing the same thing today, helping suppliers see the value of future-proofing their operations by creating lower carbon materials.

The embodied carbon space is evolving quickly. New innovations in materials, data collection and processes are coming to the market on a regular basis. We at TCC look forward to continuing to engage in the conversation with our value chain, peers and partners to deliver best in class, sustainable assets to clients and the communities in which we build.