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Sustainable Real Estate Investing


Grant Alexander Wilson, Ph.D., Assistant Professor, Faculty of Business Administration, University of Regina

Jason Jogia, MBA, M.Fin., Chief Investment Officer, Avenue Living

Author Bios

Dr. Wilson is an Assistant Professor at the Hill and Levene School of Business, University of Regina. His research focuses on marketing, strategy, and innovation. He has published over 20 peer-reviewed articles in top management journals including Journal of Small Business ManagementResearch-Technology Management, and Journal of Business Strategy. His research has been featured in the National Post and by the World Economic Forum. Dr. Wilson is also a research consultant and contributor to Avenue Living Asset Management.

Mr. Jogia is the Chief Investment Officer at Avenue Living and has over 15 years of experience in real estate capital markets, originating over $10 billion in real estate loans and $1 billion in equity. He has extensive experience in real estate investment analysis and capital structure across various real estate classes. In addition to holding 2 Masters’ degrees in Finance, Mr. Jogia is pursuing his Doctorate of Business Administration and currently serves as an instructor at the University of Calgary, specializing in real estate finance.


In order for human society to survive in the ensuing years, we must operate sustainably (Lawrence & Weber, 2014). This means conducting ourselves, individually and collectively, in a manner that does not destroy or deplete natural resources for future generations. As Nidumolu et al. (2009) aptly state “there is no substitute for sustainable development.” Sustainable development refers to development that adequately meets the needs of today, without compromising future generations’ ability to meet their needs (International Institute for Sustainable Development, 2020). As such, the balance between environmental protection and economic progress is at the core of sustainable development (Lawrence & Weber, 2014).


The United Nations (2021a) created independent yet interrelated goals for sustainable development. “The 2030 Agenda for Sustainable Development, adopted by all United Nation Member States in 2015, provides a shared blueprint for peace and prosperity for people and the planet, now and into the future” (United Nations, 2021a). There are 17 priority areas for sustainable development including (1) no poverty, (2) zero hunger, (3) good health and well-being, (4) quality education, (5) gender equality, (6) clean water and sanitation, (7) affordable and clean energy, (8) decent work and economic growth, (9) industry, innovation, and infrastructure, (10) reduced inequalities, (11) sustainable cities and communities, (12) responsible consumption and protection, (13) climate action, (14) life below water, (15) life on land, (16) peace, justice, and strong institutions, and (17) partnership for the goals (Table 1). The final item, partnership for the goals, underscores the breadth of commitment required to achieve all objectives. Simply, achieving these sustainability goals is extraordinarily complex and it requires the participation of businesses, governments, civil society, and individuals (Lawrence & Weber, 2014).


“Business today is arguably the most dominant institution in the world” (Lawrence & Weber, 2014). As such, businesses are at the core of sustainable development and the traditional bottom-line measure of performance is no longer sufficient. Instead, Elkington’s (1997) triple bottom line is more appropriate, as it has been widely accepted as the optimal performance measure for over two decades (Elkington, 2018). The triple bottom line refers to a firm’s economic, social, and environmental obligations (Figure 1). It is based on stakeholder theory – the view that corporations serve to create value for all stakeholders, not just the stockholders – and argues that the responsibility and future success of enterprises will depend on their ability to make a profit, create value for people, and conserve the environment. According to Elkington (1997), sustainability is the intersection of the three perspectives.

“To some, adopting a triple bottom line approach may seem idealistic in a world that emphasizes profit over purpose. Innovative companies, however, have shown time and again that it’s possible to do well by doing good” (Miller, 2020). Triple bottom line does not value societal and environmental factors over economics, instead financial benefits are the long-term implications of this perspective. Narrowly focusing on short-term financial measures, impedes innovation and puts firms at competitive disadvantages in the long-term. Indeed, the triple bottom line perspective has grown due to its benefits and the importance of sustainability. The United Nations’ Sustainable Development Goals are forecasted to “generate market opportunities of over $12 trillion a year by 2030,” a sum so large no company can viably overlook (Elkington, 2018). While all industries will play a role in sustainable development, some will be more significant than others. An industry’s significance depends, in part, on the number of goal areas it impacts as well as its magnitude within these areas.


Sustainable development in real estate is highly salient, as real estate directly impacts many of these goals (e.g. poverty, infrastructure, cities, energy, etc.). Moreover, real estate’s influence on certain areas is second to none (e.g. carbon emissions and raw materials). According to the International Energy Association (2021), it is estimated that real estate accounts for “one-third of global final energy consumption and 40 percent of total direct and indirect carbon emissions.” According to Eichholtz et al. (2010), buildings are also responsible for 40% of raw material consumption. With population growth estimates, these conditions are likely to increase. However, with its challenges, there are also opportunities.

Among the many Rs of sustainability are reuse and repurpose. The continued use, renovations, and upgrades of existing rental stock for the future are of critical importance. Based on data from Canada, nearly 90% of the 2,126,060 residential rental properties were built before the year 2000 (Figure 2). This data shows that existing rental properties serve as the industry’s foundation. Although new sustainably-build properties are important, conservation and sustainability initiatives for the existing residential stock are arguably more important.

Retrofitting existing residential properties in an effort to improve energy efficiency is a core element of the United Nation’s (2021b) Global Alliance for Buildings and Construction. Upgrades to 30-year-old furnaces have been shown to increase efficiency, reducing energy waste, by as much as 40% (FortisBC, 2020). McGrath et al. (2013) also found that retrofits had energy performance benefits over existing and new builds. Specifically, McGrath compared pre-retrofit, post-retrofit, and new build scenarios over an 80-year period. Their results showed that pre-retrofits used 21,430 KWh/m2, post-retrofits used 6,250 KWh/m2, and new builds used 10,000 KWh/m2 (Figure 3).

In addition to the energy efficiency, retrofitting produces less construction waste as compared to new builds. In McGrath et al.’s (2013) study of the environmental performance of retrofit and new properties, it was found that retrofits significantly outperformed new builds in the assembly and operational stages. The authors showed that retrofits reduced raw material usage and were overall more environmentally friendly scenarios.

Despite the many sustainability benefits, retrofits can have tenant displacement implications. The term renoviction, used by many Canadian provinces, refers to large-scale tenant eviction in order to renovate or repair a rental property (British Columbia, 2019). In fact, renovictions impede many of the United Nations’ (2021a) Sustainable Development Goals. Ideally, the retrofitting process should be undertaken without displacing individuals and families. Balancing the undertaking of renovations and maintaining residential stability is complex but necessary for the fulfillment of all sustainability objectives.


A mix of sustainability criteria in for-profit enterprises’ agendas, thus a triple bottom line, has not been shown to diminish competitiveness, but rather maximize performance (Porter & Kramer, 2006). Sustainable real estate is no different. According to Botosan (1997), “sustainable real estate in a broader sense improves the business position and competitiveness of firms.” Moreover, there is a large body of empirical evidence that suggests sustainable initiatives and triple bottom line perspectives enhance financial performance (Budzik-Nowodzińska, 2020; Cajias et al., 2012; Eichholtz et al., 2010; Fuerst & McAllister, 2010; Newell, 2009; Westermann et al., 2018). These findings span all areas of the world and demonstrate the multi-faceted financial benefits of sustainable real estate.

Westermann et al.’s (2018) reviewed empirical findings related to sustainable initiatives and real estate performance. The authors found general support for the link between corporate social responsibility and enhanced performance of real estate investment trusts (REITs). Specifically, sustainability “strategies have been a reaction to the changing environment REITs are operating within” (Westermann et al., 2018). REITs have adopted measures, targets, timelines, sustainability ratings, and reporting systems for regulatory compliance. As a result of its measurement and reporting, sustainability is strategically managed. After all, “what gets measured, gets managed” (Drucker, 1954).

Others have looked at specific areas of the world (Europe, UK, and US) when examining the importance of sustainability. Cajias et al. (2012) examined European real estate firms based on their differing levels of sustainability intensity and explored their agendas with performance. According to the authors, there was a positive relationship between sustainability strategies and performance. These sustainable commitments were also found to enhance employee attitude and morale, having long-term organizational benefits. Cajias et al. (2012) concluded that sustainable commitments were both altruistic and financially viable. Similarly, Newell (2009) found that property companies operating in the UK that practiced sustainable development enjoyed higher risk-adjusted returns as compared to their competitors. Eichholtz et al. (2010) and Fuerst and McAllister (2010) found that there were selling price premiums for sustainable properties. According to Eichholtz et al. (2010), the “variations in the premium for green office buildings are systematically related to their energy-saving characteristics.” Based on the results of the explored US properties, there was an 18:1 ratio of property value increase to energy savings, achieved through efficiency investments (Eichholtz et al., 2010). Fuerst and McAllister (2010) found further support for this in their study of US commercial real estate assets, as eco-certified buildings yielded rental and sale price premiums.


Sustainability is the only viable path for the future. Individuals and institutions need to commit to the United Nations’ Sustainable Development Goals, as they are the actionable steps required to meet the needs of today without jeopardizing the needs of the future. Sectors, like real estate, have large roles to play, based on the number of areas they impact and the degree to which they impact these goals. New real estate initiatives must be approached with a sustainable development perspective. Furthermore, there is a tremendous opportunity to engage in sustainability initiatives with existing real estate properties. Ultimately, these initiatives should not be met with opposition, but instead with optimism due to their long-term and multi-dimensional performance benefits. In short, empirical evidence suggests real estate companies do well by doing good.


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This commentary and the information contained herein are for educational and informational purposes only and do not constitute an offer to sell, or a solicitation of an offer to buy, any securities or related financial instruments. This article may contain forward-looking statements. Readers should refer to information contained on our website at for additional information regarding forward-looking statements and certain risks associated with them.

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