Especially today, when interest rates are so high, vacancy rates are at an all time high for office buildings, commercial real estate values have taken a hit.
Some of the ways investors are working toward stabilizing and increasing property value is a focus on Environmental, Social and Governance factors (ESG). What this translates into is reducing asset risk by being environmentally responsible, sustainable and reducing hazards and future costs associated with climate change.
By enacting energy efficient measures, property owners can realize measurable and significant cost savings in the long term. For example, a more energy efficient building can reduce utility costs and lowers operational costs and in turn increase Net Operating Income for a higher property value.
Implementing energy efficient measures such as LED lighting, solar panels and a high efficiency HVAC system can reduce annual utility costs by as much as 30%.
Other potential benefits of having an energy efficient building are potentially increased rent from tenants willing to pay for a greener space and government incentives and rebates for making energy efficient improvements.
Green buildings are designed with more durable materials that can withstand harsh weather conditions better than traditional buildings and their maintenance can be more cost effective. The useful life of a building will also increase along with higher value.
Some other potential impacts of ESG measures on property value are: lower vacancy rates, attracting high quality tenants, higher rent, improved market perception, increased value through compliance with local laws to avoid material fines.
Yes, the initial costs of ESG measures can be high, but long term returns can far outweigh the initial costs.
It is important to note that ESG measures on property value are also influenced by the property's location, local laws and regulations and very importantly, market conditions.
To be continued...
If you are interested in selling your property or you know someone who is planning to sell their New York or Brooklyn property, whether a single family residential property, an apartment building, a commercial property, mixed use, multi family, coop or condo, vacant land or a development opportunity, call us. You will be very happy that you did.
We always bring our clients the top market price for their property and provide exceptional personalized service from initial consultation to closing.
Accord Real Estate Group
Your Brooklyn Realtors