Let’s Get Down to Business: Early Research Offers New Insights into the Business Case for Energy Efficiency

By Better Buildings Beat Team on Dec 17, 2018

What is the relationship between a building’s energy efficiency features and its financial performance? Through the Better Buildings Alliance’s Market Solutions Team, DOE is working to find out.

New research is underway in this field – supported by an RFP led by Lawrence Berkeley National Laboratory (LBNL) and the Real Estate Research Institute – that offers new insights into these relationships, and what they could mean for valuing high-performance commercial real estate (CRE). While final research results are expected in Spring 2019, researchers shared their progress this fall at a research symposium hosted at the University of North Carolina, Chapel Hill – and the Beat Blog has an inside look!

Here are the studies (and in two cases, some preliminary findings):

  1. Beyond Environmental Building Certification: The Impact of Environmental Interventions on CRE Operations: The authors are looking at the “nudge concept” – can you incentivize property managers and tenants to get occupants to change their behavior? The goal of this study is to relate monthly energy consumption and operating expenditures to green certifications, investments in energy-related capital expenditures, and tenant engagement programs, and identify the most effective means of intervention.
  2. Effect of Energy Benchmarking and Disclosure on Office Building Marketability: This study is trying to find out if mandatory benchmarking policies in New York City, San Francisco, Chicago, and Washington, D.C. affected the energy and real estate performance of office buildings in those markets. So far, they’ve discovered ENERGY STAR® qualified buildings in Chicago have lower vacancy rates, and that in most of these cities, energy-efficient properties attract more efficient development.
  3. Estimating Office and Residential Building Energy Retrofit Hurdle Rates and Risk Arbitrage in Energy Efficiency Investments: This project focuses on energy audit data and why some property owners adopt energy audit recommendations while others don’t. The results of this research will be especially valuable in markets where appreciation has stabilized requiring asset managers and/or owners to seek alternative ways to increase the value of their properties.
  4. Sustainable Insights in Public Real Estate Performance: This study aims to identify the effect of the Global Real Estate Sustainability Benchmark (GRESB) in REIT markets by comparing its effect on stock performance with that of other Energy, Sustainability, and Governance (ESG) reporting platforms. Once completed, the results should show how ESG reporting platforms are measuring sustainability and if they impact stock performance.
  5. Dynamics of Energy Consumption in CRE: What is the relationship between building certifications, energy efficiency capital investments and actual building energy consumption? This research explores these factors, especially in aging building stock. Preliminary results show that while certified buildings are consuming less, it’s not by much when controlling for certain factors.

These latest studies will further advance the understanding of the link between more efficient, high-performing buildings and their market value.  Visit the Better Buildings Solution Center to learn more about the Better Buildings Alliance Market Solutions work on High-Performance Buildings.