Efficiency makes good real estate sense, says report

Real estate markets are sucking wind these days (regardless of occasional blips of good news), but there’s one way commercial real estate firms can make their money go further: energy efficiency, says a study by enviro-investor group Ceres and Mercer.
The study, available here, notes how financial services giant TIAA-CREF is expected to reduce energy use in its real estate portfolio by 10 percent by 2010, and is already yielding $4 million per year in reduced costs so far.
Jones Lang LaSalle’s efforts to retrofit New York’s Empire State Building will translate into $4.4 million in annual energy savings, the report says.
And a 2009 Maastricht University study found U.S. office properties with “EnergyStar” ratings had rental rates 3.5 percent higher than unrated buildings, six percent increases in occupancy rates, and a 16 to 17 percent premium on sales prices per square foot.

“This report documents what common sense tells us – that an energy efficient building is a more marketable building,” said Ceres President Mindy Lubber, who also directs the Investor Network on Climate Risk.
“Increasing energy efficiency in our buildings can increase occupancy rates, leasing prices and sale prices, all in a highly-competitive environment,” Lubber said. “And energy efficiency – stopping the waste of energy we use – is America’s cheapest, cleanest, smartest and most readily available new energy source.”

No Comments yet

  1. Revinax

    Did the “university study” conveniently ignore the fact that “Energy Star” properties tend to be newer, and thus more desirable on that basis rather than energy efficiency? Sheesh!

    #1
  2. lil_ol_me

    how much did they spend to save the 4.4M? Last I looked ROI is still important.

    #2
  3. TomFowler

    Revinax:
    I added a link to a bit more info on the Maastricht study. It doesn’t mention age as a variable of the buildings for the rental premium, just “compared with non-green buildings of the same size, location and function…”
    Lil Ol:
    After a quick look I didn’t see a total budget on the Empire State building but this link below notes a 5-year payback, so that seems to imply project costs of around $22 million. But that may be wrong: http://www.us.am.joneslanglasalle.com/SiteCollectionDocuments/United%20States/JLL_Empire_State_Building_Project_Plan.pdf?utm_source=LandingPage&utm_medium=LandingPage&utm_term=ProjectPlan&utm_campaign=EmpireStateBuilding

    #3