It's clear that energy-efficient features can increase a property’s value. But what’s not so obvious is how each element contributes to the overall boost -- and how property owners can use this information to maximize their efforts for the largest payoff.
Changes to a building’s lighting, windows and HVAC system can all provide payoffs in lowered utility costs, but at different rates. Increased value can also be derived from the occupants’ comfort and health in addition to increased attractiveness.
And as the market share for energy-efficient buildings continues to grow, the value of green buildings will rise, while the value for buildings with poor energy performance will drop.
So says a new report co-authored by the Appraisal Institute, a global association of professional real estate appraisers, and the Institute for Market Transformation, a Washington, DC-based organization focused on energy efficiency. Titled the “Recognition of Energy Costs and Energy Performance in Real Property Valuation,” the report aims to help real estate appraisers assess the effects of energy efficiency on a property’s value.
According to the report, energy efficiency has only recently been recognized as a factor that can affect a property’s value. Increased environmental awareness, evolving social and cultural priorities, and technical expertise are some of the reasons for the shift.
“Now more than ever, this value is the reflection of real market demand and willingness of tenants and investors to pay more for efficient and green buildings,” the report says.
Photo of building covered by grass provided by Eugene Sergeev via Shutterstock
Next page: Impact of green upgrades
I was surprised not to see
I was surprised not to see the term "energy audit" used in this article anywhere. Prioritizing conservation investments in order of payback time makes good business sense, and I appreciate that perspective in this article. I have found by personal experience that hiring an energy auditor to go through my building to look for easy fixes in insulation and air sealing, was a great first step. Unfortunately it seems that a huge amount of utility cost and consumption data (more than most consumers have at their fingertips) is needed in order to suss out the quantitative savings from discrete various measures once they are implemented.
Also interesting is the lack of any mention of LEED standarda for new or renovated buildings, or of any other similar benchmarks for green construction.
These approaches are not being developed in a vacuum and it is worthwhile to benchmark and compare your own efforts with those of others in similar situations.
The cost of lighting investments and savings therefrom are dependent on the specific features as well as number of annual hours of operation of the equipment involved. Payback times will vary accordingly, of course. Insulation and air sealing (did my new windows get properly caulked around the perimeters of the frames? are my wall cavities filled with something that will reduce convective and conductive heat losses? are my HVAC ducts sealed and insulated?) upgrades can often have very quick payback times.