Commercial real estate (CRE) has been facing some rough weather lately, particularly in areas hit hard by the pandemic. But there’s a bright spot emerging for buildings with a sustainable edge. Private credit funds are stepping in to refinance struggling properties, with a keen eye for those boasting energy efficiency and lower emissions.
Industry experts say this focus on “green” buildings isn’t just about environmental responsibility. Private credit firms are recognizing the very real risks posed by climate change, including extreme weather events like flooding and rising temperatures. Buildings that are well-adapted to these challenges are seen as more resilient investments.
The hunt is on for “best-in-class” buildings – those that prioritize energy efficiency and minimize their environmental footprint. This shift in focus from private credit providers is creating a ripple effect, potentially driving up the value of green buildings compared to their less sustainable counterparts.
For CRE owners looking to refinance, this presents a golden opportunity. By investing in green building improvements, they can potentially attract more favorable terms from private credit lenders, offering a financial incentive alongside the environmental benefits.
This trend highlights a growing recognition within the financial sector of the long-term risks posed by climate change. By prioritizing sustainability, private credit firms are not only safeguarding their investments but also potentially shaping the future of commercial real estate towards a more environmentally conscious model.
