For Real Estate, Transparency is the New Black
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Did you Read Co-star’s article today about “the state of energy efficient and green buildings” in across the US?
Read all the hand-wringing there about how hard it is to green buildings?
Of course, its a tough time for landlords to navigate their portfolios towards energy efficiency — what with new state energy disclosure regulations, percolating federal building labeling discussion and all breathing down their necks.
Interesting to us is call for more transparency in our industry. Notes Co-Star:
“The issue of tenants, real estate brokers and landlords all having access to more transparent and readily available information to enable them to make better informed decisions remains one of the biggest challenges facing the industry today, noted the panelists”.
This time last year, “getting the plaque” was all the rage. And some firms became a little too good at talking the green talk without necessarily walking the walk.
Experts pointed out that some buildings had obtained LEED-Gold certification, without significantly improving their energy profile beyond code requirements. They were able to achieve certification via sufficient LEED credits from other categories. And this caused a few to raise public doubts about the market strength of third party ratings system to address market transformation to low energy buildings. Those concerns were misplaced.
We hope in the coming months that the voluntary, transparent dislosure of a building’s energy use becomes as trendy as getting a LEED plaque on a trophy office building was last year. That would go a great way toward shifting market perception in favor of a value premium for certified green and energy efficient commercial real estate.
5 Proven Policies to Bail Out Mother Nature and Boost Green Building
Even as the Federal government invests in energy efficiency and conservation, by announcing the award of $3.2 billion in block grants (including $1.9 billion to cities and counties) last Friday, environmental leaders are looking ahead and pushing for more sweeping action — calling on a “climate bailout” in today’s NYTimes Op-Ed.
You heard it — a climate bailout.
Friedman’s op-ed shares the perspective of Hal Harvey, head of ClimateWorks, about his five top policy picks that would help the US to decisively address the energy-climate challenge that we’re only just starting to collectively understand.
The main point about all of these suggestions is that they already are in place somewhere, so they’re proven. No need to reinvent the wheel.
We like thinking about how commercial real estate capital markets would view real estate risk and returns of green buildings if these policy recommendations actually became national laws.
But first, here they are:
- Building codes: California’s Title 24 saves Californians $6 billion per year via higher standards for building energy efficiency.
- Vehicle fuel efficiency: The European Union’s fuel efficiency standard averages 41 miles per gallon.
- Nationwide renewable portfolio standard: He favors a mandate that utilities be required to buy 15 to 20 percent of their energy from renewables by 2020.
- Decoupling: Already working in California, power utilities make money by helping people to save energy rather than by encouraging them to consume it.
- Charge for carbon: People should not be allowed to pollute for free.
Of course, the article enjoys the luxury of an op-ed; it does not map out how anyone will pay for any of these policies’ upfront costs. Or how long it would really take for any of these ideas to be adopted nationally.
Nonetheless, for the commercial real estate community, the fact that most of these policies are already being implemented in some form already, should mean that they can spread a bit easier than many might think.
And if a real estate investor has not prepared by adjusting their overall strategy and retrofitting their existing buildings to as good a standard as possible, more forces are very hard at work to eventually make their existing property business obsolete.
