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OUR COMPANY AFFILIATES

CBRE GROUP

CBRE Group, Inc. is the world’s largest commercial real estate services and investment firm, with 2018 revenues of $21.3 billion and more than 90,000 employees (excluding affiliate offices). CBRE has been included in the Fortune 500 since 2008, ranking #146 in 2019. CBRE offers a broad range of integrated services, including facilities, transaction and project management; property management; investment management; appraisal and valuation; property leasing; strategic consulting; property sales; mortgage services and development services.

INVESTMENT SERVICES

CBRE Global Investors, combined with CBRE Clarion Securities and CBRE Caledon, is one of the world’s leading real asset investment managers with $113 billion in assets under management.

Built up over more than 40 years, our unparalleled platform is focused on real assets, giving our institutional clients access to real estate and infrastructure in the Americas, Europe and Asia Pacific. Our clients benefit from a complete range of investment solutions including equity and debt, direct and indirect, and listed and unlisted strategies.

Trammell Crow Company, founded in Dallas, Texas in 1948, is one of the nation’s oldest and most prolific developers of, and investors in, commercial real estate.The CBRE Global Investors and Trammell Crow Company platforms make up the Real Estate Investments division of CBRE Group.

The Real Estate Investments division is led by
Mike Lafitte, Global CEO, Real Estate Investments.

BLOGS

Regularly released content on the state of the real estate and infrastructure industry are produced by our subject matter experts and shared on their blogs. A selection of them can be found below.

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EUROPE WATCH

It’s that time of year again: policymakers, politicians, business leaders and journalists descended upon the snowy peaks of Davos in Switzerland for the World Economic Forum (WEF). The theme of this year’s conference was “Stakeholders for a Cohesive and Sustainable World,” with high-profile speakers including President Trump, Chancellor Merkel, and Greta Thunberg, the teenage activist who has been calling for urgent environmental action. A recently produced global risks report from the WEF highlighted that for the first time in its 10-year publication history, the top five global risks were environmental, with the focus on challenges harming our ecology and economy. Tech giant Microsoft announced plans to become carbon negative by 2030 and to go further still by removing all the carbon it has emitted since its foundation in 1975. Central banks also vowed to incorporate climate change into their economic analyses and business strategies. So, as Davos focused on sustainability, we see an increased corporate accountability response. But according to the UN, carbon emissions must be halved by 2030. Is this deliverable? This month’s Europe Watch takes stock of progress to date and what it means for real estate.

THE HOUSE IS STILL ON FIRE

“Our house is on fire”, Greta Thunberg told delegates at last year’s World Economic Forum. Echoing this stark warning, the renowned naturalist and broadcaster David Attenborough this year told the BBC that the “moment of crisis has come” in efforts to tackle climate change, referencing the devastating bushfires that have ravaged large parts of Australia. In the 2015 Paris Agreement, most nations committed to keeping the increase in global average temperature to less than 2.0C (3.6F) above pre-industrial times. Scientists say current emissions levels are not on line with this target. Clearly companies’ investment decisions play a key role in mitigating climate warming. The Governor of the Bank of England, Mark Carney, has warned of financial collapse linked to a climate emergency. So, unless immediate action is taken to curb global warming, scientists warn of ‘catastrophic’ consequences.

FEBRUARY 2020

3,640.91

2.8%

Euro Stoxx 50

0.00%

=

ECB Policy Rate

-0.432%

25 bps

10-yr. German Bond

$58.16

11.9%

Brent Crude

Data points through end of January 2020. Change represents month-over-month change.

REGIONAL CLIMATE CHANGE: EUROPE
PRINCIPAL CONTRIBUTORS:
 
Raphael Rietema
Karine Woodford
ROBUST GOVERNANCE WILL BE CENTRAL TO SUCCESS

Government policy will be one of the key drivers to change corporate behavior in response to climate change. The real estate sector’s footprint is huge. Real estate and the built environment currently contribute 30 to 40% of the EU’s CO2 emissions. As such, the built environment has a crucial role to play in developing and implementing solutions, with technology, investment and robust governance all central to success. To date the property industry’s response has been patchy. However, environmental certifications are moving up corporate agendas. Certifications vary by country, with some focused on operational or design performance. We expect performance measurement standards and benchmarks to become more important to investors, particularly as this a step towards quantifying the benefits of green buildings. In a study carried out by CBRE GI last year on the impact of sustainability on investment returns, we found lower performance for properties with lower Energy Performance Certificate (EPC) labels.

COMMERCIAL REAL ESTATE SUSTAINABILITY
RATINGS FIRST INTRODUCED

Source: Green Street Advisors

LEADERS AND LAGGARDS

In Europe, the Netherlands, Sweden and Denmark are the standard bearers of the green agenda. The Netherlands wants to raise the European target for 2030 by reducing emissions by 40-55% from current levels, in line with its ambition to achieve climate neutrality by 2050. Germany has recently also unveiled sweeping measures to combat climate change including the introduction of a carbon price for major sectors and a €54bn spending package to encourage companies to reduce emissions. But Germany remains the biggest producer of brown coal, which could result in the country missing EU targets on energy in 2020 and receiving huge fines. Growing concern over global warming in Germany has seen the Green party rise to record popularity in polls and made a Green chancellor a real possibility. Understandably, the share of certified buildings in many European cities is growing rapidly as new construction/refurbishment certifications have been integrated into planning permission requirements. Paris has jumped from 0 to 9% since 2007.

PERCENT OF CERTIFIED STOCK

Sources: CBRE, University of Maastricht, MSCI

IS GREEN REAL ESTATE THE SOLUTION?

In a recent study showing investors’ most desirable property characteristics, ‘Green’ certification ranked 2nd, up from 10th in 2006. Green real estate can play a key role in helping cities cut their carbon footprint and regulation will have a huge impact on the future of green real estate around the world. Following the Paris agreement, sustainability regulations are becoming increasingly relevant to global real estate investors. Many EU cities are aiming for net-zero buildings as a regulatory requirement, however implementing this will certainly pose a challenge. As capital sources make investment decisions, a body of data is beginning to substantiate above-average operational and financial performance of ‘Green’ office portfolios in Europe. Green buildings are becoming the new prime: they offer reduced obsolescence, the potential for better long-term returns and increased liquidity.

WHY GREEN BUILDINGS SHOULD COMMAND
HIGH VALUES

Source: IIGCC Climate Impact Reporting for Property Investment Portfolios