How Energy Efficiency Will Affect the Value of Your Property

By Tony Anthony

Now more than ever, energy efficiency is playing a larger role in determining property values and their income potential.

New York City has recently introduced an annual benchmarking and public disclosure of energy performance requirement for many large commercial and multi-family properties.

According to a recent report by the Appraisal Institute:

Various factors affect the value of real property – location, the composition and condition of structures, operating history and potential future use, and many others. Each factor affects the income and investment potential of property. Each has its own influence on investor and occupant preferences, which ultimately determine how money flows for financing, purchasing, and rental in the real estate market.

Energy consumption is one of these factors. It usually has significant effects on net income from buildings – effects often higher than any other operating expense, and at times higher than property taxes. Therefore buildings that are energy efficient can create significantly greater net income for owners than otherwise similar buildings that are not so efficient.

Recognition Of Energy Costs and Energy Performance in Real Property Valuation

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