Tag Archives: energy benchmarking

Measuring the value of sustainable real estate investment

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While the current U.S. federal administration may be downplaying the benefits of sustainability, a new international study finds evidence that publicly-traded green real estate is more profitable to investors than non-green.

The award-winning study entitled “Decomposing the Value Effects of Sustainable Real Estate Investment: International Evidence” measured the impact of sustainable investment on the value and performance of listed real estate investment firms (REITs) by comparing countries with and without mandatory environmental reporting on investment properties. The study’s findings suggest that environmental reporting requirements may help improve the environmental performance of properties and enhance transparency.

In the U.S., a country that does not legislate green reporting, REITs that have green portfolios were found to achieve higher rental incomes, lower interest expenses and increasing cash flow, which benefits shareholders. They also carry lower systematic risk, are subject to more informed trading, and attract higher premiums to net asset value than firms with a non-green portfolio.

By contrast, in the United Kingdom (U.K.), where reporting on environmental performance is mandatory, the difference in the earnings of green buildings … Read More

Performance and profit gains with energy benchmarking

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Measuring the efficiency and cost of buildings’ energy use is essential in today’s real estate market. Buildings account for 40 percent of all energy used in the U.S., with an energy price tag of $450 billion annually. By measuring a building’s energy use through the EPA’s internationally recognized ENERGY STAR® program, commercial real estate professionals can save money and reduce energy consumption. Best of all, it’s free and easily accessed online.

ENERGY STAR® Portfolio Manager gives building owners and managers a baseline understanding of their buildings’ energy use and a benchmark against which to measure performance, according to Zachary Hart of the Institute for Market Transformation. Simply benchmarking energy usage led to reduced energy usage and savings: a 2012 EPA study of 35,000 benchmarked buildings found that they saved an annual average of 2.4 percent in energy costs. Buildings that benchmarked for three years straight saved an average of 7 percent.

In a competitive real estate market, this tool creates a baseline against which buildings can measure their energy usage, both for cost-saving and profit. Tenants are more likely to rent and stay in green buildings. A 2008 study by the CoStar Group found that ENERGY STAR®-labeled buildings rented at $2.40 per square foot more than non-labeled buildings, and that the labeled buildings had a 3.6 percent higher occupancy rate. Energy-efficient buildings are a safer investment for lenders and raise a building’s overall market value.… Read More