Assessing the Value of Green Buildings
In the real estate sector, energy performance may be a new asset valuation tool. This is being aided by mandatory certification and disclosure policies in several large cities in the United States, in Australia, and in Europe, along with voluntary programs like Energy Star and LEED, Australia’s Green Star and NABERS ratings, and Energy Performance Certificates (EPC) in Europe.
The 2012 Green Survey from the Global Real Estate Sustainability Benchmark offers early evidence that performance certification is an emerging trend in evaluating a real estate portfolio. For a number of years, advocates of green buildings have stated that efficient, green buildings not only have lower energy bills, but their design and features improve the occupants’ experience and worker productivity.
And by extension, these green attributes should increase the value of a building in the real estate market. recent empirical studies are demonstrating just that – energy efficient commercial buildings and commercial buildings with green attributes have:
- increased resale value (2-17%)
- increased rental rates (5.8-35%)
- higher occupancy rates (0.9-18%)
- lower operating expenses (30%)
- higher net operating income (5.9%)
- lower capitalization rates (50-55 basis points)
- Productivity gains (4.8%)
Interest in green buildings continues to grow. in the 2012 Global Energy Efficiency Indicator (GEEI) survey conducted by the Johnson Controls institute for Building efficiency, 44 percent of building executives (versus 35 percent in 2011) said their organizations planned to pursue voluntary green building certifications for existing buildings in the next year. Sixty percent of respondents said they had at least one certified green building.
Studies consistently show that markets are placing higher values on buildings with green features that translate into lower energy bills, better design and improved worker productivity. evidence shows that these features of energy efficient green buildings are translating into greater value in the form of increased rental rates, higher sale prices, increased occupancy rates, lower operating expenses, higher net operating income, lower capitalization rates, and increased worker productivity.
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