So how much are those energy-efficient upgrades you paid extra to install on your commercial building really worth? Sure, they lower your monthly operating costs, but will “the market” ever recognize these savings and factor them into the value of your building? And what about the fact that your ahead-of-its-time building is more likely to comply with stricter energy efficiency standards moving forward, without the need for expensive retrofits—shouldn’t this also be considered as part of your building’s value? Under draft guidelines soon to be released by the U.S. Department of Energy (DOE), the answer to these questions will be “Yes.”
In June 2011, DOE announced a partnership with The Appraisal Foundation to help ensure appraisers nationwide have the information, guidelines and professional resources they need to evaluate a building’s energy efficiency performance when conducting commercial real estate appraisals. Through this partnership, DOE and The Appraisal Foundation will develop educational tools and guidelines for valuing energy efficient buildings based on the Uniform Standards of Professional Appraisal Practice, which are the generally accepted standards for real estate appraisers in the U.S.
The Appraisal Foundation Partnership is one of the steps DOE is taking as part of its Better Buildings Initiative, which set a goal of making commercial and industrial buildings 20% more energy efficient by 2020. DOE estimates that commercial buildings account for about 20% of all energy consumed in the U.S., and that improvements in energy efficiency could save American businesses about $40 billion annually. According to DOE Secretary Steven Chu, “Providing appraisers with the tools to accurately include energy performance when they place a value on a commercial building will help American businesses and institutions save money by saving energy. If better performing buildings have a higher value, it will help enable the upfront investment for energy efficiency upgrades.”
During a recent (April 30th) appearance at an Environmental Law Institute conference, Maria Vargas, director of DOE’s Better Buildings Challenge, said the draft appraisal guidelines should be available for public comment soon, and that she hopes to have them in place by this time next year. The guidelines will help real estate appraisers, building owners, and potential buyers to accurately assess the value of energy efficiency as part of a building’s overall appraisal. In other words, it’ll allow you to know just how much those upgrades you paid extra for are really worth!
