Energy-efficiency projects for commercial buildings offer many benefits, including a positive effect on the bottom line, yet getting approval to fund such upgrades continues to be a challenge. To help property managers understand and assess the financial value of investing in a property’s energy performance, the Better Buildings Initiative and USAA Real Estate Company created the Building Upgrade Value Calculator (BUVC).
Most real estate and business owners prioritize money for “good news” property improvements like tenant improvements and leasing commissions when allocating capital. Efficiency projects may fail to make the list for a number of reasons, including payback times that exceed industry standards or the perception that energy retrofits are too complicated. Another problem is that the capital expenditure for energy retrofits often is not underwritten when an asset is purchased or developed, so spending capital lowers investor dividends and yield.
USAA Real Estate Company, which manages about $7 billion in real estate assets, developed the Excel-based analysis tool to help their property managers evaluate the financial returns of energy performance projects in investor-owned real estate. Energy Star partnered with USAA on the second version of BUCV to expand its functionality and make the tool widely available to the broader industry. You can download it for free from the Energy Star website.
The user enters information, such as square footage, annual utility bill, the projected cost and savings for each investment and financing terms, to determine a particular investment’s energy and financial benefits. BUVC allows you to calculate the costs and benefits of base building energy-efficiency measures for both the owner and each tenant under a variety of lease types—full service gross, modified gross, triple net. The results can be either printed as a summary report, or generated as a customized letter to present to senior management to make the business case and secure funding.
USAA continues to use the calculator to reach its Better Buildings Challenge goal of reducing energy use by 20 percent. Also, the Building Owners and Managers Association International has included the tool in its Energy Efficiency Program .
Your key accounts managers can use the BUVC to help commercial real estate customers understand the value of making energy-efficiency improvements on their properties. Increasing funding for such projects can reduce energy use in some of the most energy-intensive buildings in your territory. Efficiency upgrades can also increase asset value and net operating income for large utility customers, while keeping their tenants happy. That is a lot of value for the calculator.
Source: Better Buildings Initiative, 10/4/16