Best Cities for ESG Investing
There’s no doubt that ESG real estate investing is the next big thing: 84% of real estate investors have at least some ESG (environmental, social, and governance) focus, and 64% are establishing or have already established their ESG benchmarks. And it’s easy to see why—it can help you increase the value of your assets, lower your operational costs, and even decrease your upfront costs with incentives like financing opportunities for green buildings.
So, where are the best opportunities for ESG investing in real estate, particularly CRE? We looked at cities across the U.S. and ranked them across several criteria:
Economy: Is the economy growing or transforming with new industries? Is there a talented and accessible local workforce?
Environmental: Is the city a leader in green building? How many projects or buildings have received awards or certifications?
Social: Are citizens and businesses involved in climate action? Is there potential to make a positive impact on the community as a part of its environmental initiatives?
Governance: Is there political will for climate action? Has the city passed ambitious climate initiatives or legislation?
We gave the nod to many standbys, but we also viewed this topic through the lens of the economic transformation in so many cities across America, from the Rust Belt to the South. These 11 ESG-forward cities are on the rise—and the ones to watch this year.
We’ve ranked them based on how active major industries, business groups, and state and local legislation are toward ESG efforts and the steps each city is taking for a more sustainable future.
11. Springfield, MA
Massachusetts is a sustainable state—in 2020, 19 million square feet of space received LEED Certification (the established green building rating system by Leadership in Energy and Environmental Design)—and Boston can’t take all the credit. There are interesting things happening in Springfield, including the development of the 700,000-square-foot MGM Springfield, the largest LEED Platinum-Certified lodging project in the U.S.
Major industries: Medical devices, energy, insurance, health care.
Business groups Springfield Climate Justice Coalition, Pioneer Valley Planning Commission.
Environmental initiatives and legislation: Climate awareness is still building in Springfield, but the Live Well Springfield Climate Justice Initiative is already beginning to address climate change and health equity issues.
Recognition: Springfield Union Station won the acclaimed Phoenix Award for the Best Brownfields Redevelopment Project in the entire country. The city was also awarded a $2 million MVP Grant from the Commonwealth of Massachusetts for its green initiatives.
Notable buildings*: MassMutual (LEED Gold), Tower Square (ENERGY STAR Office), 100 Wason Avenue Medical Office Building (LEED Certified).
10. Grand Rapids, MI
Grand Rapids was once known as “Furniture City,” but it was also one of the first in the country to develop a sustainability plan (In 2006). In 2019, Grand Rapids adopted a strategic plan under a new City Manager and set goals for the future—one that looks bright for ESG investing.
Major industries: Health care, consumer goods, manufacturing, technology.
Business groups: West Michigan Sustainable Business Forum, Grand Rapids Climate Coalition.
Environmental initiatives and legislation: The 2019 Strategic Plan adopts sustainability as one of six core values. The Zero Cities Project aims to reduce the environmental footprint of commercial buildings.
Recognition: Named “America’s Greenest City” by Fast Company magazine and received Gold Certification from the Michigan Green Communities Network.
Notable buildings: AMPERSAND Balance (Fitwel Certification), 1120 Monroe (ENERGY STAR Office), Van Andel Institute (LEED Platinum).
9. Washington, D.C.
The Washington metro area has the second-largest amount of office space in the U.S. Its economic base is diverse, yet with the federal government as one of its main industries, it’s also recession-proof. DC is walkable, has excellent public transit, and was even the first LEED-Certified Platinum City, earning the accolade in 2017.
Major industries: Federal government, technology, construction, hospitality.
Business groups: DC Climate Coalition.
Environmental initiatives and legislation: DC passed the Green Building Act in 2006 and more recently enacted Building Energy Performance Standards. Sustainable DC is the initiative to help the city reach its goals by 2032.
Recognition: Platinum LEED-Certified City.
Notable buildings: Chevy Chase Plaza (Fitwel Certified), 250 Massachusetts Ave. and Four Constitution Square (LEED Platinum).
8. Coral Gables, FL
Coral Gables is known for its architecture and gorgeous botanic garden—but it’s also an excellent place for ESG investing. The University of Miami drives many green initiatives as well as the talent pool, and many of its well-known businesses are going green: The U.S. headquarters of Bacardi, Inc., received the EPA’s SmartWay Excellence Award for its supply chain practices and energy efficiency.
Major industries: Professional and technical services, administrative and support services.
Business groups: Coral Gables Green Business Certification Program, Coral Gables Chamber of Commerce.
Environmental initiatives and legislation: The 2016 Green Building Ordinance requires buildings to achieve LEED Silver Certification—and the Clean Energy Green Corridor Program provides incentives for commercial property owners to upgrade the energy efficiency of their buildings.
Recognition: 2021 LEED for Cities recipient.
Notable buildings: Perkins+Will Miami Office (Fitwel Certified), Columbus Center (ENERGY STAR Office, LEED Gold), 255 Alhambra (LEED Gold).
7. Kansas City, MO
Kansas City has been in the news recently—in a good way. First, it’s a 2021 LEED for Cities recipient. The Kansas City Council also made headlines for passing a “climate emergency” resolution to bring urgency to its ambitious sustainability plans. With the economy on the upswing, Kansas City residents are feeling good about the future.
Major industries: Business and technical services, health care, manufacturing.
Business groups: Green Business Network, Kansas City Industrial Council, Green Works.
Environmental initiatives and legislation: In support of its ambitious environmental goals, the Office of Environmental Quality works with the private sector to encourage sustainable development, social equity, and more.
Recognition: LEED-Certified City.
Notable buildings: C&W Kansas City Office (Fitwel Certified), 2555 Grand Boulevard (ENERGY STAR Office), Commerce Tower (LEED Gold).
6. Bloomington, IN
Nearby Indianapolis may get the credit for environmental initiatives, but Bloomington won’t be left behind. Its economy is transforming from manufacturing to higher-wage, higher-growth industries like health care and professional services, while its cost of living remains low. The city also offers incentives for developers and businesses to go green, making it a great place for ESG investors.
Major industries: Health care, education, professional and scientific services.
Business groups: Green Business Bloomington, Green Business Network.
Environmental initiatives and legislation: The city passed its Sustainability Action Plan in 2018, which includes ways to support sustainable building practices. The Unified Development Ordinance gives developers bonuses and allowances for buildings that meet certain sustainability goals.
Recognition: Bloomington is one of the newest LEED-Certified Cities.
Notable buildings: Hoosier Energy Headquarters (LEED Gold), 3140 West Whitehall (ENERGY STAR Certified Retail), Sears Store (ENERGY STAR Certified Retail).
5. Akron, OH
Akron was once known as the “Rubber Capital of the World” thanks to the Goodyear Tire & Rubber Co. Headquarters. Today, however, even that building is LEED Gold Certified. Biomedical engineering and information technology companies are taking hold, and Akron is at the forefront.
Major industries: Health care, IT, banking, manufacturing, and distribution.
Business groups: Greater Akron Innovation Network for Sustainability.
Environmental initiatives and legislation: Akron adopted its Greenprint in 2013. Other initiatives include Akron Waterways Renewed and Permaculture Akron.
Recognition: Several Akron city buildings have won environmental awards, including the Renewable Energy Facility and the Water Reclamation Facility.
Notable buildings: University of Akron National Polymer Innovation Center (LEED Certified), METRO Intermodal Transit Center (LEED Gold), First Energy West Akron Campus (LEED Gold).
4. Charlotte, NC
Charlotte has a lot going for it: It’s the 10th fastest-growing city in the country, with a 17.5% growth rate. It has dozens of colleges. It’s quickly becoming a hotbed of life sciences investment, while its low property taxes make it affordable. And, it has adopted many green initiatives and resolutions over the past several years.
Major industries: Banking, health care, manufacturing, energy, technology.
Business groups: Sustain Charlotte, Envision Charlotte, NC Climate Solutions Coalition.
Environmental initiatives and legislation: The city council passed both the Sustainable and Resilient Charlotte by 2050 Resolution and the Strategic Energy Action Plan in 2018. The second of these focus on buildings, energy, and workforce development.
Recognition: No. 42 on the American Council for an Energy-Efficient Economy’s City Clean Energy Scorecard.
Notable buildings: Escent Research Park (Fitwel Certification), MetLife Project Greenfield (LEED Platinum), Duke Energy Center (LEED Platinum).
3. Wilmington, NC
Wilmington has seen a lot of interesting green developments in the past few years, including solar installations at its Streetsweeper Facility and Miracle Field. With an economy in transition from tourism to professional and business services, there are plenty of opportunities for commercial investors.
Major industries: Business services, manufacturing, construction, retail, utilities.
Business groups: Wilmington Chamber of Commerce, Wilmington Downtown Inc.
Environmental initiatives and legislation: Adopted its Comprehensive Climate Plan in 2016, which emphasizes transportation, business growth, and redevelopment. The LED Street Light Replacement Project has been working since 2015 to convert 8,000 streetlights to LEDs.
Recognition: 2021 LEED for Cities Program.
Notable buildings: Monteith Building (LEED Gold), Wilmington Convention Center (LEED Silver), Time Warner Cable Building (LEED Silver).
2. Syracuse, NY
Syracuse is smart—and not just because of its local university. The city has received several smart cities awards, and its city initiatives and agencies have won awards, too. The university drives many green initiatives and provides a sustainability-minded workforce to populate its growing list of ESG buildings. New York was also one of the first states to offer green building incentives for commercial developers.
Major industries: Higher education, research, health care.
Business groups: Sustainable Syracuse.
Environmental initiatives and legislation: The city’s recent Sustainability Plan lists goals for energy, green building, education, and training, while the Climate Action Plan for Onondaga County recommends improvements to greenhouse gas emissions.
Recognition: 2022 IDC Smart Cities North America Winner, 2019 New York State Flagship Smart City.
Notable buildings: Hotel Skyler (LEED Platinum), One Park Place (LEED Silver Office), 784 Dewitt Road (ENERGY STAR Retail).
1. Oakland, CA
Oakland is a city on the rise, and it’s taking its real estate with it. Development is booming and includes the recent acquisition of 1919 Webster, which will soon be transformed into a modern office building. Thanks to its close proximity to San Francisco and Berkeley, Oakland’s workforce is both talented and socially minded.
Major industries: Business services, health care, transportation, light manufacturing.
Business groups: Sustainable Business Alliance, Community Impact Committee, Oakland Climate Action Coalition.
Environmental initiatives and legislation: The 2030 Equitable Climate Action Plan is the city’s framework for climate action. The city council has also adopted an ambitious 2045 Carbon Neutrality Goal.
Recognition: Alameda County has won many Beacon Spotlight Awards for greenhouse gas reductions and energy efficiency.
Notable buildings: StopWaste (LEED Platinum, Fitwel Certification), 1100 Broadway: The Key (LEED Platinum), Uptown Arts Building (LEED Gold).
It’s an exciting time to be an ESG real estate investor, especially for commercial properties. Yes, there’s plenty that goes into deciding where to invest. However, these cities have excellent resources and incentives, growing and changing economies, and bright—green-powered—futures.