Green office savings

Today I want to talk about something that is set to usher in some drastic changes in the commercial property industry, for properties over 2,000sqm anyway.

Commercial Building Disclosure of energy efficiency is a national program that has been in effect since November 1, 2010. It mandates that sellers or lessors of commercial office spaces over 2,000sqm must obtain a current National Built Environment Rating System (NABERS) energy star rating which is required to be disclosed on the publicly accessible Building Energy Efficiency Register (BEER). This is the transition period where no real enforcement is likely and as far as I am aware has been made.

From November 1, 2011 though, it is a different story. A full Building Energy Efficiency Certificate (BEEC) comprising a NABERS energy star rating, an assessment of tenancy lighting and general efficiency guidance is required to be disclosed on BEER with the NABERS energy star rating also required to be included in any advertising for the property.

The idea being that buildings of lower performance will not attract the sale or rental incomes that higher performing buildings will hence building efficiency improvements in these commercial buildings will be incentivised. Evidence of this is already present in large commercial buildings where Green Star rated buildings attract higher prices in both rental and sales markets.

This is great news for businesses that are selling energy efficiency products and services to commercial clients, such as myself. Although it remains to be seen exactly how this legislation will affect prices and how much owners of leased properties will need to spend to increase their rental returns. As rented properties comprise a large portion of commercial spaces it will be interesting to see how the ratios of invested amounts to rental increases pan out.

This is a very rigorous scheme with qualified assessors performing comprehensive and verified ratings that will provide accurate information about building efficiency. It will be interesting to see how it affects lease prices and sales of commercial buildings. Overall it should result in tenants of commercial office space getting a fairer deal on their rental rates.

For start-ups this is an opportunity to get a better understanding of the energy costs associated with leasing an office space as well as a good way to begin incorporating long-term thinking into your business decisions. With rising energy prices the efficiency of your office space will affect your running costs more and more into the future. Decisions made now could make or break your business in the future, particularly if your business model involves small profit margins.

A similar scheme for residential dwellings is currently in consultation at the moment also (I will cover this in an upcoming blog).


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