How to Turn Green Buildings into Green Money
Generating revenue is better than avoiding costs — pretty much any business school will tell you that. What you may not know is that when your product is real estate, it’s possible to do both at once.
For a commercial real estate manager investing in sustainability, Verdigris provides high definition energy data that can generate huge additional value by:
- Reducing your building’s operating expenses, driving bottom line value directly to your cap rate
- Raising occupancy rates by increasing your appeal to sustainability-minded tenants
- Increasing net rents by offering enhanced transparency for tenant charges
The U.S. Green Building Council awards the Leadership in Energy & Environmental Design, or LEED certification. Whether silver, gold, or platinum, buildings can be recognized at various levels for their commitment to best-in-class building design, strategies, and operational practices.
LEED certification can also be a powerful signal to commercial tenants and corporations who are increasingly focused on their sustainability footprint. A2014 Nielsen survey found that 55% of global respondents said they would pay more for products and services from companies committed to positive social and environmental impact — a 10% increase from 2011.
In fact, research has shown that there is a significant financial benefit to “going green” in the commercial real estate sector as well. A Department of Energy review of academic studies encompassing thousands of buildings found conclusive evidence that buildings with “green” certifications such as Energy Star and LEED had:
- 8–16% higher rental rates
- 10–17% higher occupancy rates
- PLUS 13% lower utility costs
- AND these buildings maintain more stable rental rates in real estate down cycles.
That Means Money!
These benefits add up: Lux Research found that in LA, LEED Gold certification added 12% to the overall value of a building. DOE research showed that LEED certification could actually add from 10–31% nationally to the value of a non-certified property. Before its LEED silver award, the Bently Reserve, one of San Francisco’s most popular event spaces, had an occupancy rate of less than 1%.
But the DOE, Lux, ACEEE, and pretty much everyone else agree that actually measuring these benefits is hard. Our friends at Paladino & Co lay it out clearly: the lack of information about how energy efficiency upgrades may improve a property’s financial performance leads directly to underinvestment in energy efficiency.
Verdigris = Usable Intelligence
Now, portfolio managers have a powerful tool to generate the intelligence they need to make informed investment decisions. Find inefficiencies beyond the “low hanging fruit” and directly validate ROI on your retrofits. And with an end-to-end wireless solution, all that intelligence arrives magically on your desk, no extra effort required.