Energy Efficiency and Property Value
How Energy Efficiency Drives Up Commercial Property Values
In the simplest terms, energy-efficient buildings are more competitive buildings. Energy costs are the single largest expense for owners of commercial buildings. When buildings are more efficient, that means energy costs are lower—which translates into higher returns.
What’s more, a growing body of research shows that energy-efficient properties have higher occupancy levels, lease-up rates, and sale prices than less efficient properties. Increasingly, tenants and real estate investors demand energy efficiency, sometimes paying a premium to lease or own space where energy costs are lower. Banks and insurance companies are beginning to reward energy efficiency with better financing and lower premiums.
This trend will accelerate. As more buildings are energy rated and those ratings are made public, building owners will be motivated to ramp up their properties’ efficiency—to save money on utility bills and to stay competitive with the market.
IMT is working to identify ways that appraisal and lending can better capture the value of energy efficiency. Our experts help develop and promote innovative methods that appraisers, lenders, commercial real estate agents, and other professionals can use to factor energy performance into property valuation.