Creating Resilience

North American City Sustainability Study 2023

Achieving a Low Carbon Future

August 16, 2023 10 Minute Read



The impact of climate change is top of mind for real estate investors and occupiers. Nearly 70% of the more than 500 commercial real estate professionals participating in a recent CBRE global survey cited reducing greenhouse gas emissions as a top organizational goal.1 In North America, many cities have set goals to become carbon neutral or net zero by 2050.

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The commercial real estate industry will play a large role in cities’ ability to achieve their emission reduction targets. Buildings account for 39% of energy-related carbon emissions worldwide—28% from operational emissions (energy to heat, cool and power them) and 11% from materials and construction.2 The U.S. has one of the world's largest carbon emission reduction targets by 2050, while Canada has a below average reduction target (Figure 1).

Figure 1: Carbon Emission Reduction Targets by 2050


Source: CRREM, CBRE Econometric Advisors. * Calculated using unweighted average of countries and sectors

Decarbonizing the built environment will play a crucial role in helping cities reach greenhouse gas (GHG) reduction goals. Worldwide, only 15% of buildings are currently on track to help limit global warming to no more than 1.5 °C (2.7 °F) by 2050, according to data from the Carbon Risk in Real Estate Monitor (CRREM) and the Global Real Estate Sustainability Benchmark (GRESB). Thirty-seven percent of the world’s buildings will need to have the necessary carbon reduction standards in place by 2030 to meet this goal.3 For existing buildings undergoing renovation, decarbonization targets should be considered to ensure long-term sustainability, protect property value and retain tenants.

The Study

Physical and transition risks can affect buildings, directly or indirectly, by having an impact on the markets with which the assets interact.4 To better understand how certain North American markets are addressing these challenges, CBRE Econometric Advisors (CBRE EA) assessed more than 60 markets based on the following criteria.


CBRE EA has identified the following 10 North American cities that are best positioned to withstand the impact on property values from both transition and physical climate risks:

  • Austin
  • Boston
  • Denver
  • Montreal
  • New York
  • Ottawa
  • San Francisco
  • Toronto
  • Washington, D.C.
  • Winnipeg

Transition Risk

  • All 10 have pledged to be carbon neutral or achieve net zero GHG emissions by 2050.
  • Eight have building performance standards (BPS) in place to gradually reduce GHG emissions, which should allow them to achieve emission targets at a faster pace.

Physical Climate Risk

  • Six have physical climate risks below average and eight have low baseline water stress.
  • Six have improved air quality over the past five years.
  • Four have decreased heating degree days over the past five years.

Mitigation and Adaptation Measures

  • All 10 cities have increased use of renewable energy over the past five years.
  • Eight have issued a significant amount of green bond funds for climate-related spending.
  • Four have more than 20% of their total buildings LEED certified.

Figure 2: Leading North American Cities for Resiliency & Emission Reduction Target Years (Click on the cities for more details)

Source: American Council for an Energy-Efficient Economy, CBRE Research, July 2023.

Real Estate Considerations

Real estate investors and occupiers face many challenges to reduce emissions, including high interest rates and the rising cost of capital. Based on our study findings, following are some of the most relevant sustainability considerations for commercial real estate:

Green Initiatives

  • Green finance, green building adoption and green leases provide great opportunity for the commercial real estate industry to achieve decarbonization goals and align the expectations of tenants and landlords.
  • Additional green initiatives for renovation projects (e.g., water conservation, energy audits, use of solar energy, insulation and window double-glazing) should also be considered.

Regulations & Standards

  • Government regulations are a critical part of decarbonization efforts.
  • Investors should prepare for more stringent regulations and additional compliance and reporting requirements.
  • Penalties for non-compliance vary among jurisdictions.

Renewal & Reduction

  • Broader use of renewable energy sources, such as wind and solar, will have a significant impact on reducing GHG emissions.
  • Investing in infrastructure that supports the use of renewable energy (e.g., electric-vehicle charging stations, rooftop solar panels and energy storage systems) will also help reduce GHG emissions.
  • Implementing water-saving features and air-quality improvement measures can also help conserve energy usage.

Adaptable Sustainability Strategies

  • Investors and occupiers should use this study to evaluate city-level performance based on a range of sustainability indicators.
  • Investors and occupiers will benefit from developing real estate strategies that are adaptable to local market conditions.

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1 Strengthening Value Through ESG: Survey of Global Property Professionals, CBRE, Feb. 28, 2023.
2 Bringing embodied carbon upfront, World Green Building Council, 2019.
3 Building Performance Standards Aim to Reduce Carbon Emissions Across the U.S., CBRE Econometric Advisors, November 2022.
4 Climate Risk and the Opportunity for Real Estate, McKinsey & Company, Feb. 4, 2022

The CBRE EA City Sustainability Study

The transition to a low carbon future has markedly increased the factors and costs that real estate investors and occupiers have to consider, including the regulations being established by the growing number of cities with emission reduction targets. CBRE EA believes cities that can demonstrate climate resilience are likely to benefit from a halo effect on property values and will attract more occupiers that are challenged to meet their own net zero goals.

CBRE EA assessed 66 North American cities for their resilience to climate change. The cities are evaluated for their performance on transition risk, physical climate risk, and adaptation measures. The CBRE EA Sustainability Study provides real estate professionals with insights to evaluate and benchmark real estate markets based on these characteristics.

CBRE clients can reach out to one of the report authors for insights on the report and the individual cities evaluated.

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