Benefits of Green Building Certifications in Real Estate

Bricksnwall Trusted Experts

How Getting Certified Can Improve Your Bottom Line

For property managers seeking for methods to enhance revenue and reduce costs, there are numerous options that may or may not deliver value to their renters. However, one approach to add value while increasing revenue and minimising costs is to have your property certified as a green building.

While gaining a green certification may appear to be an expensive and time-consuming endeavour, green certifications are becoming increasingly popular among tenants. And it's frequently simpler than many people assume, and even with a few minor changes to existing structures, you could be qualified for certification. Any level of accreditation can provide significant advantages for property managers.

Some of the advantages include:

1. An advantage over the competitors

While many businesses have returned to the office, more are operating in smaller premises, as remote and hybrid work remains a driving factor in employment. Vacancy rates in commercial real estate have remained high, despite expectations that they will eventually recover. This means that commercial tenants have more options than ever before, and with so much competition, particularly in major cities, you must stand out.

Commercial renters are increasingly demanding cleaner, more environmentally friendly, and healthier workplaces. Wellness and sustainability, particularly in the aftermath of the pandemic, are two of the most important factors for occupiers to consider. By providing assurances of these things through certification, you will have an advantage over other buildings.

2. Charging higher rents

According to a 2018 assessment by the World Green Building Council, commercial workplaces located in certified buildings had better overall employee health, increased productivity, and higher job satisfaction. Because these are considered premium features, property managers may charge higher market rates for these buildings.

In fact, JLL discovered that in the APAC region, seven out of ten enterprises were willing to pay more for green-certified buildings.. So, even if certain changes are required upfront to become accredited, the long-term returns on investment will be higher.

3. Reduced vacancy rates

In addition to higher rents, green-certified buildings have lower vacancy rates than the entire market. Most of this is due to the two benefits described above: a better working environment and fewer green buildings in a city.

Tenants in green-certified buildings are more likely to renew their leases and stay for longer periods of time. This leads to fewer tenant transitions and less time spent in vacant office premises, both of which have an influence on the bottom line.

4. Reduce operating costs

While greening a building may require an initial investment, it can result in long-term savings as operating expenses fall dramatically. This results from more efficient design systems and their lifetime. Replacing outmoded heating systems with cleaner, greener heating systems, for example, will last longer, cost less, and require less maintenance.

Even minor improvements like these can have a significant influence on the bottom line while also assisting a facility to achieve certification requirements.

5. Increased efficiency

A green building certification evaluates a variety of aspects, including energy efficiency and waste management. Having top-notch systems in place will make your job easier, reduce tenant complaints, and save money.

For example, energy-efficient lights will last longer and require fewer adjustments, saving you time, whilst streamlined recycling systems result in fewer waste levy changes and improved overall waste efficiency.

6. Reduce emissions

Commercial real estate accounts for 39% of worldwide greenhouse gas emissions, with 11% coming from the construction of new buildings and the remainder from the structures and energy themselves. However, green buildings contribute less to global carbon emissions overall. Compared to traditional structures, there are 50% fewer greenhouse gas emissions from water usage and 48% fewer from trash.

This benefits the environment, the communities surrounding your facilities, and your overall brand reputation. Lowering your building's carbon footprint contributes to a more sustainable future.

7. Governments push for it

With more countries advocating for greener communities and net zero emissions, many governments are attempting to impose stricter building rules. In New Zealand, all new government buildings must satisfy a minimum Green Star rating. While these criteria are now only applicable to government buildings, many people expect that they will be extended to all commercial buildings in the future.

Because governments recognise the significance and costs of these new regulations, many communities have incentivised building owners to go green. These include funding options, tax breaks, and public-private partnerships to help create new green buildings or renovate existing ones. While these incentives differ by country or state, property managers can use them to assist offset some of the costs associated with Making a building greener.

In Summary

While the future is unknown, becoming green certified will put your building in a much better position to deal with future environmental and economic volatility. It can lower running expenses, make your building more appealing to renters, and keep occupancy rates at a higher rental price. Greening your building is an excellent method to lower your overall environmental footprint while also demonstrating to investors, stakeholders, and building occupiers your commitment to the future.

1. An advantage over the competitors

While many businesses have returned to the office, more are operating in smaller premises, as remote and hybrid work remains a driving factor in employment. Vacancy rates in commercial real estate have remained high, despite expectations that they will eventually recover. This means that commercial tenants have more options than ever before, and with so much competition, particularly in major cities, you must stand out.

Commercial renters are increasingly demanding cleaner, more environmentally friendly, and healthier workplaces. Wellness and sustainability, particularly in the aftermath of the pandemic, are two of the most important factors for occupiers to consider. By providing assurances of these things through certification, you will have an advantage over other buildings.

2. Charging higher rents

According to a 2018 assessment by the World Green Building Council, commercial workplaces located in certified buildings had better overall employee health, increased productivity, and higher job satisfaction. Because these are considered premium features, property managers may charge higher market rates for these buildings.

In fact, JLL discovered that in the APAC region, seven out of ten enterprises were willing to pay more for green-certified buildings.. So, even if certain changes are required upfront to become accredited, the long-term returns on investment will be higher.

3. Reduced vacancy rates

In addition to higher rents, green-certified buildings have lower vacancy rates than the entire market. Most of this is due to the two benefits described above: a better working environment and fewer green buildings in a city.

Tenants in green-certified buildings are more likely to renew their leases and stay for longer periods of time. This leads to fewer tenant transitions and less time spent in vacant office premises, both of which have an influence on the bottom line.

4. Reduce operating costs

While greening a building may require an initial investment, it can result in long-term savings as operating expenses fall dramatically. This results from more efficient design systems and their lifetime. Replacing outmoded heating systems with cleaner, greener heating systems, for example, will last longer, cost less, and require less maintenance.

Even minor improvements like these can have a significant influence on the bottom line while also assisting a facility to achieve certification requirements.

5. Increased efficiency

A green building certification evaluates a variety of aspects, including energy efficiency and waste management. Having top-notch systems in place will make your job easier, reduce tenant complaints, and save money.

For example, energy-efficient lights will last longer and require fewer adjustments, saving you time, whilst streamlined recycling systems result in fewer waste levy changes and improved overall waste efficiency.

6. Reduce emissions

Commercial real estate accounts for 39% of worldwide greenhouse gas emissions, with 11% coming from the construction of new buildings and the remainder from the structures and energy themselves. However, green buildings contribute less to global carbon emissions overall. Compared to traditional structures, there are 50% fewer greenhouse gas emissions from water usage and 48% fewer from trash.

This benefits the environment, the communities surrounding your facilities, and your overall brand reputation. Lowering your building's carbon footprint contributes to a more sustainable future.

7. Governments push for it

With more countries advocating for greener communities and net zero emissions, many governments are attempting to impose stricter building rules. In New Zealand, all new government buildings must satisfy a minimum Green Star rating. While these criteria are now only applicable to government buildings, many people expect that they will be extended to all commercial buildings in the future.

Because governments recognise the significance and costs of these new regulations, many communities have incentivised building owners to go green. These include funding options, tax breaks, and public-private partnerships to help create new green buildings or renovate existing ones. While these incentives differ by country or state, property managers can use them to assist offset some of the costs associated with Making a building greener.

In Summary

While the future is unknown, becoming green certified will put your building in a much better position to deal with future environmental and economic volatility. It can lower running expenses, make your building more appealing to renters, and keep occupancy rates at a higher rental price. Greening your building is an excellent method to lower your overall environmental footprint while also demonstrating to investors, stakeholders, and building occupiers your commitment to the future.