Climate Change “Opportunity”: Work from Home, More IT, Less Real Estate
Commercial real estate has had somewhat of a funny love affair with IT over the years. Remember back in the 80’s, when we were warned about the paperless office? It was still all good with IT, even though the paperless office never really happened — we never took the projected real estate angles seriously, anyway. How about the 90’s, when folks claimed that the internet would kill the shopping mall? Then IT made us sort of nervous. Now another wave of ‘less real estate/more IT’ ideas are back, but this time with a climate change angle and, also with a smarter sounding term that can get you more attention at the cocktail party — at least until people figure out what you’re really talking about…
The Climate Group has just issued a new report that lays out the many opportunities available to the information, communications and technology (”ICT”) sectors to help reduce carbon emissions. Like many issues associated with reducing carbon emissions, buildings get a lot of attention in this report, too. Hence, my interest in understanding how the opportunities could interact with commercial real estate.
One main concept, called dematerialization, stands for using technology to replace high carbon activities with low carbon alternatives. A simple example of dematerialization would be replacing face-to-face meetings with videoconferencing for example. A farther reaching example would be e-government. Dematerialization’s attractiveness lies in its ability to be applied to a wide range of business activities.
For the commercial real estate world, the report highlights telecommuting as one of the biggest opportunities for ICT sectors because it is a dematerialization application presenting the largest opportunity for carbon emissions reductions and absolutely requires ICT to be effective:
“Currently the largest opportunity identified within dematerialisation is teleworking – where people work from home rather than commute into an office. Although other dematerialisation opportunities may come to prominence in the future, based on historic trends, the analysis found that teleworking would have the largest impact, up to 260 MtCO2e savings each year (detailed assumptions in Appendix 3). For example, in the US, if up to 30 million people could work from home, emissions could be reduced 75-100 MtCO2e in 2030, comparable to likely reductions from other measures such as fuel efficient vehicles.”
So think about it –
what could happen in commercial real estate if 30 million people eventually worked from home?
The trick to realizing substantial emissions reductions from telecommuting appears to be in how far-reaching the employer’s work-from-home program extends. A company would need to have a significant number of employees working from home more than three days per week to generate substantial energy savings of 20%-50%. Less than that level of telecommuting means that the company still maintains significant office space for periodic office-workers, and therefore, less energy cost reductions.
So the question is, have times changed so much for companies that telecommuting will become more attractive this time around? The Climate Group thinks so, but also admits that more awareness and behavioral changes need to happen in order to reap more benefits from dematerialization.
Despite my general green zeal, I don’t believe that more companies will adopt telecommuting purely as a part of their climate change strategy. However, they may be reexamining their real estate costs during this economic slowdown and cost containment might get them interested in letting folks work from home, with the lower emissions being icing on the cake of their emerging (or still yet to emerge) climate change strategies.
And the “less real estate” could actually represent an interesting opportunity shift. I’m also thinking about how many real estate developers are already building green live/work TOD units, tailored for both the family and home office worker who occassionally commutes to the company. Sounds like that would be the complementary real estate opportunity, if some of the report’s “opportunities” were to gain traction.
