Better energy performance increases your property's value

Commercial building lighting accounts for 71% of electricity use in the U.S. with 35% of the cost of electricity used in a commercial building consumed by lighting. It's obvious reducing lighting costs will also reduce a building's net operating cost. Doing so is not only sound environmental policy. Achieving energy efficiency creates strategic benefits including improved visual quality, reduced glare, enhanced market positioning and, speaking from the appraiser's point of view, increased property value. Other incentives for undertaking an energy efficiency program include the EPAct. Extended to Dec. 31st, it includes a tax deduction of up to 60 cents per s/f each for lighting, HVAC and building envelope energy reduction. Energy efficiency is becoming less optional as legislation is put into place. N.Y.C. Local Law 84 requires benchmarking energy use and an Energy Star rating. Local Law 85 requires buildings meet the most current energy codes for renovations. Local Law 87 requires base building systems that use energy be audited and retro-commissioning performed. Local Law 88 requires lighting systems be upgraded to Energy Conservation Code (ECC) standards. Appraisers focus on the financial results of lighting retrogrades, property designations and ratings as they affect property value. As N.Y.C.'s only commercial property appraiser with a LEED-AP credential, sustainability that creates value is an area of expertise. There is no doubt that sustainable buildings that are LEED certified, have earned the Energy Star designation, and otherwise demonstrate environmental and energy responsibility are preferred by tenants and investors with better occupancy rates and higher sales prices. According to the GBC, new construction green buildings demonstrate increased occupancy by 6.4% and rents by 6.1% over non-green properties. Updated buildings increase occupancy by 2.5% and rents by 1%. Operating costs in green new construction are lower by 13.6% and in green retrofit existing buildings by 8.5%. Retrofitting a property's lighting requires experts in lighting and design who analyze every building component for the appropriate solution. It's a complex process but well worth the effort based on reduced operating costs and increases in tenancy, rents and sales prices. With the Dec. extension of the EPAct tax deduction approaching, building owners should speak with their financial advisors to determine how best to write off the cost of new lighting this year rather than having to depreciate it, and better position their asset pool with a sharper competitive edge toward maximizing property value. Steven Schleider, MAI, LEED-AP BD + C, is the president of Metropolitan Valuation Services, New York, N.Y.