How Energy Efficiency Increases Commercial Building Value
Written by Mateo Fabregas |
May 12, 2021
Far too many building owners and facility managers simply aren’t aware that adopting a strategic approach to energy management can have a significant financial impact on their commercial buildings value.
It’s common knowledge that making energy improvements helps to reduce a building’s electricity expenses, but it doesn’t end there. There are many ways that a business’s financial performance can be measured as a result of energy improvements. An organization’s approach to energy management can significantly impact both the top and bottom lines of financial performance when it comes to its commercial buildings.
Energy use in Commercial Real Estate
Commercial real estate refers to any multi-family residential, industrial, office, or retail property that can be purchased or sold in a real estate market. The single largest operating expense that commercial buildings face is that of energy consumption, accounting for approximately one-third of typical budgets and contributing almost 20% of the nation’s greenhouse gas emissions annually. When residential buildings are included, the building sector totally accounts for 39% of the world’s co2 emissions.
By improving energy efficiency, commercial real estate organizations can reduce operation-related expenses, increase property asset valuations and even enhance their tenant’s comfort. In doing so, they are also demonstrating a commitment to the environment by doing their bit to reduce pollution and the greenhouse gas emissions that contribute towards global warming.
Here are some of the ways that improvements in energy and operational data can enable businesses to increase their commercial building values.
1.Reducing maintenance and operations costs
A building’s equipment performance can be assessed at any time by reviewing energy data, and these insights can provide important information for a facility’s teams to use in determining the most efficient approach to maintenance procedures.
From a scalable perspective, by utilizing energy data analysis and thus eliminating the need for manual on-site equipment inspections, companies are able to reduce the amount of time and money spent on service visits. This also avoids disruptions to operations which further increases productivity.
In addition to the impact on maintenance and operations, increased insights into equipment performance can also assist businesses in making more informed decisions when it comes to capital investments.
Individual changes may seem like small-fry savings, but when scaled across an entire portfolio of properties, this extent of visibility could have sizable cumulative effects upon capital investments.
3.Higher lease rates as well as selling prices
With investors, customers and even employees showing an increasing expectation towards businesses demonstrating a commitment to energy efficiency, research indicates that tenants are more willing than ever to pay a premium for commercial buildings that go some way towards meeting these demands.
The results of a McGraw Construction survey reported that one-third of respondents said they would be willing to pay a premium for a retrofitted green space. Furthermore, a study into the commercial real estate market of Los Angeles found that buildings holding Energy Star and LEED (Leadership in Energy and Environmental Design) certifications were commanding higher leasing rates per square-foot. They were also sold at higher than asking prices compared to the region’s average rates.
4.Improving tenant retention
A key component to retaining tenants long term is the ability to create and maintain a positive overall experience within buildings. Analyzing data by leveraging energy intelligence software allows engineers to identify measures that can be taken to create the greatest impacts upon comfort, and thus improve tenant retention.
Energy efficiency measures for higher building value
There are many energy efficiency measures that can help you increase your commercial buildings values. Commercial buildings often waste up to one-third of their consumed energy. Here are some measures that can be taken and investments that can be made to improve energy efficiency:
Set the thermostat back in the evenings and any other times that the building is not in use
Perform regular checks and maintenance on equipment to ensure efficient functioning
Optimize equipment sequencing, start-up and power-down times
Revise janitorial practices to potentially reduce the number of hours that power is used
Educate employees/tenants as to best practices for energy efficient behaviors
Install energy efficient systems for lighting – compact fluorescent lights, light emitting diode exit signs, and, if feasible, occupancy sensors
Conduct retro commissioning and energy audits to identify any areas of inefficiency
Add insulation or install reflective roof coatings as well as window films to reduce energy consumption
Upgrade or install new cooling and heating equipment to take maximum advantage of efficient technologies and meet reduced loads
Work closely with energy service providers to improve performance
To capitalize on these opportunities, businesses need to take a comprehensive approach towards their energy management strategies, with the potential to not only make huge operational savings, but improve tenant retention, operational efficiency and even sizably increase their property’s valuation as they do.