New York Climate Legislation Drives Surge in Leasing for Renewable Energy Companies

Climate legislation in New York has had a significant impact on leasing by energy-related companies in the city, according to a new report from CBRE (CBRE).

New York’s Climate Leadership & Community Protection Act (CLCPA) was passed in 2019 with two stated goals: to achieve 100 percent zero-emission electricity by 2040 and to reduce emissions to at least 85 percent below 1990 levels by 2050, according to the state’s Action Council website.

The act’s passage has had a ripple effect on the energy-related market in New York City, where firms involved in solar, wind and transmission infrastructure have rushed to set up shop in the state, according to CBRE. The amount of office space leased by those companies between 2020 and 2024 shot up 175 percent compared to the previous decade, the report found.

“Renewable energy leasing is not likely to see any kind of exponential growth, but ongoing financial commitments by the state and utilities will continue to create opportunities for companies that want to take advantage of the state’s nascent renewable sector, manage their project portfolios, and pursue business development opportunities with the state and utilities,” CBRE’s Ben Wurtzel, who authored the report with Nicole LaRusso, said in a statement to Commercial Observer.

A spokesperson for the state Department of Environmental Conservation did not immediately respond to a request for comment.

So far this year, leasing by renewable energy companies has increased by 18 percent above the five-year average, while overall energy-related leasing is at just 97 percent of the five-year average, according to the report.

This transition to renewable energy has “encouraged the growth of investment groups in renewable energy infrastructure,” which have been establishing a presence in New York City, according to CBRE.

Through August of this year, eight infrastructure investment firms with clean energy portfolios have leased about 108,000 square feet of office space in Manhattan, CBRE’s data shows. And while that number is very small compared to the overall office leasing market — in which a total of 17.6 million square feet has been leased so far in 2024 — the growth in leasing in the specific renewable energy sector is considerable after the CLCPA passed, CBRE found.

A total of 44 firms focusing on energy investments have leased more than 500,000 square feet of office space in Manhattan since 2018, according to CBRE. In 2023 alone, 10 transactions in energy-related investment leasing on the island totaled 165,000 square feet.

Energy-related firms are still not set to make a major impact on New York’s commercial real estate, but the state is committed to its goal of achieving a clean energy grid by 2040.

Since CLCPA passed in 2019, more than $50 billion has been committed to New York’s energy transition, with funding going toward offshore windmills, solar arrays and battery storage, electric vehicle charging stations and a nearly 350-mile-long clean energy transmission line, CBRE said.

Isabelle Durso can be reached at idurso@commercialobserver.com.