This case study was published in the 2022 REIT Industry ESG Report, which details the REIT and publicly traded real estate industry's environmental, social, and governance (ESG) performance and features 32 case studies showcasing REIT leadership and ESG innovation from a variety of sectors. The report serves as a practical tool for shareholders and stakeholders to assess the scale and impact of the REIT industry's ESG commitments and initiatives. Applicable footnotes and/or citations for this case study are available in the full report.
Facilitating a Path to Decarbonization with a Technical Playbook for the Commercial Real Estate Industry
New York City-based Empire State Realty Trust, Inc. continues to prioritize the decarbonization of its portfolio as New York State and New York City pass Local Law 97 (LL97), which commits the grid and the built environment to a carbon neutral future. To address this need, Empire State Realty Trust, in partnership with the New York State Energy Research & Development Authority (NYSERDA), began the development of its decarbonization roadmap and playbook in February 2020.
The Roadmap
To reach the company’s goal to reduce emissions by 80% at the Empire State Building by 2030 and throughout its entire portfolio by 2035, Empire State Realty Trust first developed a calibrated model to assess the impact of projected energy efficiency and emissions reductions measures at the Empire State Building. From there, the company conducted technical analyses of the potential for energy and carbon reduction, followed by a financial assessment of individual and groups (“packages”) of energy and emissions conservation measures in the context of an evolving thermal and electric grid.
“We maintain our industry leadership position with proven paybacks on actions taken toward a more sustainable future. The free, online playbook demonstrates the case of how to achieve 75% to 90% emissions reductions with a payback of four to eight years through a combination of building system upgrades with a renewably sourced grid.”
-Anthony E. Malkin, Chairman, President, and CEO, Empire State Realty Trust, Inc.
Empire State Realty Trust has completed this analysis at five of its properties and identified energy and emissions conservation measures to be implemented over a 10 to 15 year period in each building. Through these conservation measures, the company targets an 80% reduction of operational carbon from a 2007 baseline and will offset any remaining carbon emissions.
The Playbook
Empire State Realty Trust recognizes that many building owners are unsure of how to make their buildings compliant with the emissions caps established by legislation in New York City and other major cities, countries, and territories. To address this, the company leveraged its industry-leading work at the Empire State Building to create a playbook that could serve as a resource for building owners and operators, their brokers, and design and engineer teams who want to capture the economic benefits of energy efficiency and to decarbonize the operations of their buildings. Developed in partnership with NYSERDA, and supported by the Clinton Global Initiative and four New York City- based landlords, the free, online playbook outlines the step-by-step process for existing commercial buildings to create a pathway to carbon reduction with proven returns on investment.
In the year ahead, Empire State Realty Trust plans to complete energy retrofit analyses at all of its New York City properties. The company will report on progress against its goals annually to document completed projects, financial and emissions savings, and new technologies successfully deployed. As plans evolve in response to technical innovation and economic, legislative, and market changes, Empire State Realty Trust will also continue to share lessons learned with the real estate community through its reporting and updates to the playbook. Empire State Realty Trust will receive no fines from LL97 in 2024, and the company is on track to receive no fines in the future because of this groundbreaking work.
Empire State Realty Trust, Inc. owns and manages a well-positioned property portfolio of office, retail, and multifamily assets in Manhattan and the greater New York metropolitan area. Owner of the Empire State Building, the “World’s Most Famous Building”, Empire State Realty Trust also owns and operates its iconic, newly reimagined Observatory Experience.