Valuing low energy offices: the essential step for the success of the Energy Performance of Buildings Directive

Panel: Panel 2. Making buildings more energy efficient

Authors:
Pedro Guertler, Association for the Conservation of Energy
Jacky Pett, Association for the Conservation of Energy
Zoe Kaplan, Imperial Centre for Energy Policy and Technology (ICEPT)

Abstract

Energy use in offices is a long way from being a hot topic for managers. Spending on refreshments in meetings is often higher than energy bills. So which stakeholders are interested? Previous research suggests that investors hold the key, provided that property valuation takes account of energy performance.

Under present valuation methodologies, energy efficiency of offices is rarely taken into account. Those properties that might be categorised as 'low energy' are undervalued; the market for them is stagnant. This research argues the property investment benefits of low energy offices, namely the prospect of both increased rental return and increased future investment worth. Despite difficulties gathering empirical valuation data the work reaches important conclusions regarding data availability, energy assessment and market stimulation.

The Energy Performance in Buildings Directive is a strong driver. Its stipulations should address key data availability issues as well as making investment in low energy buildings desirable. It should also stimulate remedial action to upgrade existing portfolios through certification. However, the research shows that unless valuation professionals appreciate the importance of low energy offices, the likelihood of the EPBD having any impact in a reasonable time is small.

This paper highlights the current inability to demonstrate the investment benefits of low energy offices under current practices, and emphasises the reduced risk for owners that ensure their properties comply with energy efficiency best practice. The question remains: without stronger legislation or higher energy prices, will energy use in commercial buildings ever become more important than the cost of tea and biscuits?