Energy and Commercial Real Estate
In the United States, commercial buildings consume – and often waste – a huge amount of resources. While energy efficiency initiatives typically offer double-digit returns, the majority of building owners, property managers, and tenants haven’t yet taken action.
Buildings in the United States are responsible for:
|Energy Consumption||Electricity Consumption||Waste Output||CO2 Emissions||Water Consumption|
Energy and Asset Performance
Historically, electricity prices have risen about 5% per year. Rising costs can erode corporate profits and depress real estate asset values. In a market defined by excess space, “energy hog” properties are certainly less attractive to tenants than green buildings, and present greater credit risks to lenders.
Boosting Financial Returns through Energy Efficiency & Renewable Energy
Consider: for a building that trades at an 8% cap rate, every dollar of operating expense reduction adds $12.50 to the building value. Most commercial real estate buildings can save between 10-30% on energy expenses by changing behavior, improving maintenance, and making modest capital investments. Beyond energy efficiency improvements, renewable energy can further improve financial performance.
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