The Role of Clean Energy in New York’s Commercial Real Estate Market
Molly Podolefsky, Ph.D., Clarum Advisors
October 13, 2025
At the end of September, buildings and offices throughout the city played host to over 1,000 Climate Week NYC sessions, where more than 100,000 attendees met to share knowledge and facilitate action around climate change. Attending working groups and panels in varied settings downtown, one couldn’t help but wonder how many of the buildings housing these sessions were powered by clean energy. While occupancy rates have improved since the pandemic, the industry is far from a full recovery, meaning firms must use every tool at their disposal to attract and develop long-term relationships with key tenants. Based on our conversations with a wide array of industry actors, from investors and developers to commercial tenants, we believe clean energy amenities will be key to engaging and retaining prime clients in commercial real estate in 2026 and beyond.
Employee Preferences Drive Demand
New York City’s commercial real estate market differs in some significant ways from other metropolitan areas in the US. As a major hub for global corporations, financial institutions and Fortune 500 companies, New York attracts a large number of high value companies willing to pay a premium for prestigious locations. Post-pandemic, these same companies have incentivized a return to office by creating enjoyable, vibrant workspaces and providing upscale amenities for their employees. This trend has created a “flight to quality” as leading employers move into higher-priced spaces in the city. Companies increasingly consider sustainability and environmental amenities in this flight to quality, reflecting their employees’ values. Recent research by Deloitte suggests 70% of employees consider a company’s commitment to sustainability when choosing to accept a position. More than 1 in 10 Millenials have actually changed jobs due to concerns around their employer’s environmental impacts.[i]
Sustainability Reporting Creates Demand
Another source of demand for sustainability in the market for commercial real estate stems from companies’ environmental commitments and reporting obligations. Despite recent shifts in US federal policy, the majority of leading brands still practice sustainability. As of 2023, 99% of Fortune 500 and 93% of Russell 1000 companies published sustainability reports or disclosures.[ii] PitchBook’s annual sustainable investment survey, conducted in 2025, finds 72% of investment firms still actively incorporate ESG factors into evaluating or managing investments, 22% never have, and only 5% have stopped.[iii] Many leading corporations are subject to GHG emissions reporting under the CSRD, and NYC itself has implemented significant green building regulations in recent years setting emissions caps and penalties, and requiring energy efficiency benchmarking, ratings, audits, retro-commissioning and electrification for large commercial buildings.
Clean Energy as an Amenity in Commercial Buildings
For many commercial real estate companies in NYC, the path to a greener portfolio begins by developing, acquiring and renovating buildings to be energy and water efficient, and to look and feel sustainable. Biophilic features like terraced landscaping, layouts that encourage movement, air circulation and natural light, passive heating and cooling designs and green building materials provide a sustainable look and feel. While developers and CRE firms will often pursue LEED or other sustainability ratings for their properties, most apply only to building design specifications, excluding actual performance and energy sourcing. As a result, these certifications may feel hollow to prospective tenants when the energy for these buildings is not any cleaner than the standard utility grid mix. Below we explore key pathways and considerations around sourcing clean energy for NYC commercial real estate.
Virtual PPAs, Unbundled RECs and Green Leases
Green leases, an increasingly popular pathway for companies committed to sustainability in NYC, help CRE companies unlock value from the flight to quality. Specifying energy efficiency and sustainability actions for landlords and tenants, green leases can help property owners comply with NYC green real estate regulations like Local Law 97, while enhancing tenants’ sustainability credentials. Empire State Realty Trust, SL Green Realty, Tishman Speyer, and Vornado Realty Trust, all major CRE providers in the NYC market, have been recognized as leaders in the green leasing space. Green leases often require the purchase of renewable energy or Renewable Energy Certificates (RECs) to offset building energy use. Virtual power purchase agreements (VPPAs) are the most common tool for companies to attest green energy use by their buildings—while continuing to source standard grid-mix energy from their utility, companies pay to acquire the sustainable attributes of clean energy produced on their behalf somewhere else (i.e., unbundled RECs) equal to their energy use on an annual basis.
24/7 Carbon-free Energy, Onsite and Local Generation
Leaders in sustainability are pushing the boundaries of sustainability in NYC buildings by pursuing locally sourced, hourly-matched clean energy or onsite generation. The physical landscape of NYC is a barrier to onsite generation—tall buildings with small rooftop footprints and low buildings shaded by taller neighbors face limited opportunities for solar generation, while safety-related concerns and regulations make it difficult to site battery energy storage systems (BESS). The Javits Center is a prime example of industry-leading self-generation in NYC—more than 2,000 solar panels combined with 3.5 MW of energy storage meet roughly 10% of the building’s energy needs. Brookfield Properties’ One Manhattan West took clean energy sourcing a step beyond VPPAs, securing a 5-year contract to meet 100% of its electricity needs through locally-sourced wind and hydro power. Rather than acquiring unbundled RECs to offset annual emissions, the property matches RECS and energy consumption on an hourly basis. Though Hochul, New York’s governor, is implementing policies to accelerate the development of new clean energy resources,[iv] constrained clean energy capacity in NY may encourage some companies to take an incremental approach in the near term, increasing the percentage of hourly matched RECs over time. The GHG Protocol’s recent move toward hourly carbon emissions reporting requirements may also provide a tailwind for hourly matching.
Premium Verification, Tracking and Reporting
Regardless of their approach to sourcing clean energy, one of the most powerful tools for NYC property owners in appealing to sustainability-minded tenants during the flight to quality will be tenant-specific energy use and emissions reporting. Brightly, Cleartrace, and Energy Hippo are some of the leading software providers in this space, delivering real-time dashboards, energy use and carbon emissions tracking and tracing, and customizable reporting for each of a building’s tenants. Especially as companies may be subject to hourly reporting requirements under the new GHG Protocol, these amenities will lower the cost of reporting while protecting against greenwashing accusations through external verification.
New York’s commercial real estate sector has begun its recovery from the pandemic, but that recovery is far from complete. As cultural, political and economic forces continue to shape the market, savvy real estate companies will be looking for ways to leverage those changes to their advantage. CRE leaders will incorporate clean energy amenities into tenant engagement strategies, creating value by greening the flight to quality. These companies will position themselves for long-term success, realizing higher rent premiums, reducing tenant turnover and increasing shareholder value over time.
[i] https://www.esgtoday.com/70-of-gen-z-millennials-consider-environmental-sustainability-important-in-choosing-employers-deloitte-survey/
[ii] https://ga-institute.com/Sustainability-Update/gas-2024-trends-report-the-few-remaining-non-participants-in-esg-reporting/
[iii] https://pitchbook.com/news/reports/2025-sustainable-investment-survey
[iv] https://www.governor.ny.gov/news/governor-hochul-directs-state-agencies-accelerate-renewable-energy-development-and