Energy Efficient Buildings Are Increasingly More Attractive to Better Tenants
For many years now, a revolution has been taking place in the way commercial building owners approach energy efficiency for commercial buildings. Where economic policy and the demand for sustainability have created the impetus for green, energy efficient buildings, owners and managers are realizing that green buildings also attract more and better tenants. Big green earnings are helping fill commercial real estate coffers.
Market Demand for Sustainability, Efficiency
Energy efficiency for commercial buildings is no longer optional; it’s essential. As older buildings are renovated and updated, taking stock of the components that deliver true real estate energy efficiency are increasingly built into plans.
Newer buildings, including LEED Certified buildings (Leadership in Energy and Environmental Design) significantly improve efficiencies, consuming on average 25% less energy and 11% less water than non-green buildings. Some property owners today are even taking this a step further, striving for ‘Zero Net Carbon Status’ (ZNC) — a designation bestowed upon buildings that produce on-site or procure enough carbon-free renewable energy to meet the buildings’ operations energy consumption each year.
The buildings where America works account for one-third of the world’s greenhouse gas emissions and 40% of global energy, according to the United Nations.
Since the Recession of 2008, the business performance of many commercial tenants is being evaluated by customers and investors alike. In addition to the financial benefits of energy efficiency for commercial buildings, tenants today want to be able to tout that they operate in green “space” in buildings that actively pursue sustainability efforts throughout their technical infrastructure. Whether in the installation of cost-efficient LED lighting, smart-monitored climate control and HVAC systems, tenants and investors alike are looking for their buildings to have a positive effect on the community and the environment. This is a huge selling point to better tenants, including restaurants, medical offices and advertising firms as well.
Studies make one fact clear: the building sector boasts the greatest potential to reduce greenhouse gas emissions compared to all other emitting sectors. Understanding the industry’s footprint, coupled with the rise of green buildings and third-party benchmarking standards, has moved sustainability from the fringes into the mainstream of commercial real estate.
Be Responsible; Be Profitable
Commercial building owners traditionally see their properties in terms of profit and loss, with higher rents delivering higher capitalization rates. Upgrades that increase real estate energy efficiency can contribute additional profits in many areas; some easy to identify, others that may be identified by partnering with an energy management company.
Because today’s workforce seeks out socially responsible workspaces, buildings that tout sustainability have a significant competitive advantage. Many tenants will pay higher rents for sustainable properties and are happier in them, leading to higher retention rates, which directly impacts revenue. Additionally, improved energy efficiency for commercial buildings opens the door to possible tax credits and better financing conditions.
Certain sustainability efforts, like the use of energy-efficient lighting and environmentally friendly building materials, can reduce expenses by up to 30%, according to the Morgan Stanley Institute for Sustainable Investing. Building owners can use additional strategies to reduce peak demand charges. Simple and effective measures include avoiding the use of high-power electrical equipment at hours when electricity consumption is already high.
Chiller plants can be enhanced with ice storage tanks, to operate at reduced output and mitigate peaks in power consumption. Lithium-ion batteries, eligible for a tax credit of up to 30% when combined with a privately-owned renewable generation system can also contribute greatly to real estate energy efficiency. A complete and comprehensive plan to lower these costs can result in less pass-throughs in your “green” image, contributing to making your real estate more and more attractive to the best tenants.
Energy Efficient Buildings as a Function of Running Your Business
Every commercial real estate organization is unique. One trait CRE organizations share, however, is the unwavering desire to provide a great experience for their tenants.
Green buildings–those which are environmentally responsible and resource-efficient–are estimated to consume 30-50% less energy than non-green buildings. Green buildings also use an average of 40% less water, emit 30-40% less carbon-dioxide, and produce 70% less solid waste.
Take the Lead in the Community
There are other ways in which active and ongoing sustainability efforts benefit the successful commercial real estate operator.
Promotion of energy efficient buildings is not just relegated to property advertising or even ongoing public relations efforts. Successful CRE organizations and energy management companies are giving courses and informational sessions to the community- educating real estate agents, agencies, maintenance companies and others in the principles of sustainability.
Through these sessions, CRE operators are increasingly being seen as leaders in these fields. Participants learn about opportunities; market demands for sustainability and how to advise their own clients on energy efficiency for commercial buildings and the financial benefits of it. Participants can also earn continuing education credits toward state certification requirements.
Commercial building energy efficiency is increasingly of interest to policymakers as well. A well-educated industry can be seen as helping state and local governments accomplish mutual and vital goals all citizens are concerned with.
Be a Part of the Solution
With more and more businesses interested in real estate sustainability, smart operators and investors are developing environmental strategies that will differentiate them from competitors and allow them to attract this increasingly sustainably minded set of future occupiers. They will educate themselves about technologies and trends towards efficiency, smart monitoring/ management, and how they impact restaurant operations, cooking, refrigeration, climate control, lighting, etc. They increasingly are seeking out third-party energy management companies to assist them in these areas.
Budderfly is one such solution controls of all your energy by deploying state-of-the-art smart monitoring systems in dozens of points of usage throughout your building. Budderfly’s proprietary cooling products can achieve savings of over 20% alone, allowing both reduction in your monthly bill and complete funding of efficiency upgrades. Well-made components provided by the company remain in place for years without the need for replacement, saving even more in costly repairs and maintenance.
While the environmental benefits of green leasing speak for themselves, integrating sustainable smart monitoring solutions into operations gets reflected in lease agreements in commercial buildings. Energy efficient buildings improve returns on investment, lessen landlord’s carbon footprints, increase CRE operator’s profitability- and ultimately improve the loyalty and well-being of highly desirable tenants.
The value proposition is enormous. Let companies like Budderfly set your company on the road to leadership in commercial real estate in your area.