Rocky Mountain Institute (RMI) released a guide to help real estate investors better evaluate opportunities for deep energy retrofits: “How to Calculate and Present Deep Retrofit Value: A Guide For Investors.”
Many real estate investors are beginning to realize they can earn higher returns from their properties by investing in deep retrofits, which employ integrated efficiency measures to reduce energy consumption by 30 percent or more. These types of retrofits can reduce operating costs and are able to improve the satisfaction and health of occupants, as well as enhance the sustainability leadership, reputation, and risk management of tenant companies.
RMI is working to equip real estate investors with practical guidance to incorporate all the value elements of deep energy retrofits—both energy and non-energy benefits—into their decision making. The key value elements include:
- Retrofit capital costs – retrofit projects can have little cost premium if timed with other capital improvement projects;
- Non-energy operating costs – deep retrofits can reduce operating costs associated with maintenance and insurance costs, as well as increase a building’s occupied space through equipment downsizing and better occupant use of space;
- Tenant revenues – retrofits can enhance demand, resulting in increasing rents, occupancies, absorption and tenant retention;
- Sales revenues – sales revenue premiums from deep retrofits result from higher net operating income, increased investor demand and risk reduction;
- Retrofit risk analysis – the thorough identification and evaluation of risks enables action to mitigate and accurately price them, helping to maximize value from the other value elements