CRE Giants Join Race to Decarbonize NYC Skyscrapers

With mandatory carbon emission caps—and potentially stiff penalties for not meeting them—going into effect in 2024, CRE players with some of the largest footprints in NYC are lining up to join a state initiative that rewards them for taking early action to decarbonize their buildings.

NY Gov. Kathy Hochul announced this week that Tishman Speyer, LeFrak, Brookfield Properties, Boston Properties, Equity Residential, and Amalgamated Housing have signed up for the Empire Building Challenge.

The group has promised to decarbonize eight of its skyscraper assets in a competition that will award $3.1M to the team that does it first.

The targeted properties include Tishman’s 520 Madison Ave.; Boston Properties’ 601 Lexington Ave.; LeFrak’s 59-17 Junction Boulevard in Queens; Equity’s 180 Montague in Brooklyn; and Amalgamated’s 3965-3975 Sedgwick Ave. in the Bronx.

Empire Building Challenge is a public-private partnership between NYSERDA and real estate developers that aims to develop best practices for decarbonizing the heating and hot water systems of skyscrapers. The pilot program will test methods including recovering and sharing heat and using thermal storage, advanced heat pumps and low-temperature hydronics.

The competitors announced this week are the second team to accept the Challenge. L&M Development, Hines, Empire State Realty Trust and Omni New York previously agreed to aim for zero carbon emissions at seven buildings with a pot of $5M in state funding as the prize.

With buildings generating an estimated 40 percent of the carbon emissions in the US, several cities are preparing to enforce carbon caps on buildings as small as 20K SF, with the first mandates going into effect as soon as 2024.

New York City’s Local Law 97 (LL97), enacted in 2019 as part of the city’s Climate Mobilization Act, place carbon caps on most buildings larger than 25K SF.

There are an estimated 50,000 residential and commercial properties in New York that will be covered by the caps, which will go into effect in 2024 and become more stringent over time, with a goal of reducing carbon emissions from the city’s buildings by 80 percent by 2050.

In October, Boston adopted an update to the city’s Building Emissions Reduction and Disclosure Ordinance (known as BERDO) that requires buildings of 20K SF or more to report building emissions and meet mandatory caps that go into effect in 2025.

Boston’s caps are scheduled to get tighter—meaning a lower amount of emissions will be acceptable—every five years until 2050, when Boston requires buildings to be carbon neutral. An estimated 70 percent of emissions in Boston come from buildings.