Increasing asset value

Increasing your asset value with proven strategies

How to outpace the competition

High-performance energy buildings are the wave of the future in the commercial market because commercial buildings with high energy performance surpass their neighbours on operating expenses, rent premiums, occupancy rates and asset value. In an increasingly competitive market, relative energy performance will increasingly become a factor in which properties are priced at point of sale.

At National FM we understand energy-efficient building features and appropriate methodologies to implement and measure reduction in energy-related operating expenses.

Increasing asset value

It’s possible that a project saving $200,000 per year in energy can increase building asset value by $1 million.

The positive impact on a building’s asset value is an undersold aspect of energy savings upgrades. Even when owners are not planning to sell their building, this benefit is attractive. For example, a business with larger assets looks better to banks and lenders.

Energy efficiency projects have high returns and extremely low risk. However, what they typically don’t have is a compelling event forcing them to get done. Unlike a roof leak that demands repair, energy waste does not cause the same kind of immediate concern. Mostenergy projects are discretionary and optional. Nevertheless, the value created by energy conservation should attract the attention of building owners.

Can you believe that a conservation project that saves $200,000 per year in energy can increase a building’s value by $1 million? It’s true.

All it takes is two simple steps to calculate the improved building value:

1) Know the simple payback rate required by the building owner.
Assume that the rate of return is roughly the inverse of the simple payback. For example, assume your prospective project must meet a five-year payback or less. That is roughly a 20% return (which is still probably better than many other available investments).

2) Multiply the simple payback by the annual energy savings from a project.

 

Here’s an example to show you one way we can create increased building asset value

  1. Imagine that you have two identical buildings, A and B, that spend $1 million annually on energy and maintenance.
  2. Assume (from Step 1) the building owner requires a 20% ROI for project approval i.e. the building owner approves projects only if the money is returned within five years.
  3. Suppose you implement an energy project on building B and that this reduces the operating cost by $200,000 per year.
  4. As a result, building B costs only $800,000 per year to operate.
  5. Now imagine a prospective buyer for building B.
  6. If the buyer’s minimum payback period is also five years, then they would be willing to pay $200,000 per year over five years, or the $1 million in increased building sale value, because the buyer would recover that additional investment in five years.

 

So ask yourself this: which sounds more appealing to you?

Do this project and save $200,000/year, or

Do this project and increase your building’s value by $1 million?

In actual fact you can see benefits for both because both are true, and they are not mutually exclusive. Some building owners might consider the increased building value to offset the cost of a project. As another example, if a project costs $40,000 and adds to the building value by $40,000, then some owners may mentally consider the project as neutral, even though they wouldn’t recoup the additional sale value unless they sold the building.

 

The issues of an aging building infrastructure

 The issues of an aging building infrastructure can be managed by our proven integration strategies that reduce problems, making the integration of disparate systems a realistic objective for any building modernisation project.

  • We believe that building system modernisation enables owners and operators to proactively manage infrastructure needs while gaining the ability to meet regulatory mandates
  • Integrating multiple disparate systems into a single infrastructure is a challenge that we have the expertise to overcome
  • Challenging issues such as legacy equipment, policies, administration, and competing management approaches; differing telecommunications infrastructures, and differing densities of measurement and control instrumentation are easily solved with our systems approach

 

We have proven integration strategies that reduce these problems. When used in combination with our proven strategies for creating a sense of place and community, your building will outshine other developments when it comes to valuing or marketing your asset.

 

Read about how we create community and place

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