Famously, New York is the city that never sleeps, but over the past century, the Big Apple has been ‘sleepwalking’ towards a climate crisis. Of course, New York City is not alone in the fight against global warming, but neither is it immune. With around 600 miles of coastline, NYC is a sitting duck for extreme weather events, which have become increasingly commonplace over the past 20 years. Hurricanes Henri and Ida in 2021 not only soaked New York but caused dangerous flash floods that put countless lives at risk. Given that NYC is the most densely populated place in the United States, at 27,747 people per square mile, this type of extreme weather is particularly concerning.
And yet, that same density also holds the key to fighting back against climate change. Over 70 percent of New York’s greenhouse gas emissions come from its estimated one million buildings. Lowering carbon emissions across the city’s real estate would be as close to an environmental silver bullet as anyone can get. Many think achieving such an ambitious goal across such a large class of fragmented ownership might seem impossible.
Local Law 97
The good news is that Gotham’s leaders have attacked the problem head on. The most significant result of this legislative push is Local Law 97, one of a growing tranche of regulations aimed at supporting an ambitious national goal to reduce greenhouse gas emissions by 30 percent from 2005 levels by 2025, and 80 percent by 2050. Increasing scrutiny from legislators, investors, and institutions is beginning to improve standards and drive positive change across New York’s real estate market.
Under Local Law 97, most buildings over 25,000 square feet will be required to meet new energy efficiency and greenhouse gas emissions limits by 2024, with stricter limits coming into effect in 2030. The ultimate goal for Local Law 97 is to reduce the volume of emissions produced by the city’s largest buildings by 40 percent by 2030 and 80 percent by 2050. Failure to comply with this regulation and submit reports on energy consumption will see building owners face significant penalties and fines from 2025 onwards. Failure to meet annual emissions targets will also result in sizable penalties: up to $268 for every carbon unit the building exceeds its limit.
Not only is Local Law 97 an important step on the road to transforming New York’s real estate industry and achieving long-term net zero targets across the United States but there are significant upsides for building owners themselves. By taking meaningful action to improve carbon emission outputs, owners can dramatically lower operating expenses, resulting in improved profitability.
The potential financial benefit doesn’t stop there. By implementing effective energy management strategies, building owners can achieve increased asset value and marketability. We are already beginning to see a clear link between those buildings that can demonstrate long-term sustainability and overall asset value. With Socially Responsible Investing (SRI), ESG, Low Carbon, and Clean Energy indices outperforming non-sustainable benchmarks over the last five years, investor demand is also increasing for buildings able to demonstrate carbon efficiency.
As the tenant community becomes more discerning, sustainable buildings are also more likely to appeal to the occupier community. In May 2023, vacancy rates in Manhattan hit an all-time high of 22.7 percent and are set to continue at a similar rate for at least the remainder of this decade. With tenants paying more attention to the green credentials of the environments in which they live and work, demonstrating a commitment to sustainability could well be the difference between a full building and an empty one.
Where to start?
The benefits of complying with (even exceeding) Local Law 97 are numerous, but the question for most building owners remains: where to start? We believe technology holds the key at every stage.
First off, action stems from understanding. Data platforms are critical in helping owners to measure current performance, set appropriate goals, and understand where short, medium and long-term improvements can be made. This level of detail far surpasses generalist certifications and allows owners to set a clear benchmark against which change can be measured. I have heard Matt Ellis, CEO of popular building data platform Measurabl, speak a few times and he makes the important point that you can’t manage what you cannot measure. Data solutions that measure performance have to be the starting point.
From here, building owners have a clear picture of where change can and should be made. Of course, this will look different on a building-by-building basis, but some technologies are ubiquitous. Predictive maintenance, for example, can be used to improve efficiency and sustainability. Analytics software that offers diagnostics and fault detection can provide live, prioritized alerts of underperforming equipment and potential causes. Making sure equipment is running efficiently, as well as only running when actually required, is a surefire way to reduce waste, meet Local Law 97 targets, and achieve cost savings almost instantly.
For most buildings, working with tenants is also a critical means of achieving new targets. Utilizing IoT technology to better understand busy days and quiet days, means utilities can be adjusted accordingly depending on the volume and location of people in a building. Communicating with them appropriately may also be the best way to conserve energy. Informing them of new policies across the building and creating a clear building-wide culture geared towards sustainability is best achieved through tenant engagement software.
For New York City, the pressure is on. Local Law 97 is looming large for building owners—change needs to happen now. And yet, by embracing new innovations and technologies, change is achievable. From measuring current performance to setting future goals, implementing change to tracking progress, there are incredible technologies and methodologies out there for every step of the process, helping New York City’s building owners play their part in better caring for the planet.
Whether as a result of external pressure or not, the city that never sleeps has woken up to the great environmental challenge facing us all. As a native New Yorker, I believe the realization of a sustainable concrete jungle is possible. I think eventually the rest of the world is going to follow our lead and make create similar building efficiency legislation. As the great Frank Sinatra sang, “If I can make it there, I can make it anywhere.”
Disclaimer: The opinions in this article are solely those of the author and do not represent the official position of Propmodo or its editorial team. We value diverse perspectives and aim to encourage open discussions. The information presented here is the author’s own and does not reflect our stance on the subject.