Investor guide on deep retrofits makes value case

US green research body has published a guide to help property investors better evaluate opportunities for deep energy retrofits.

This guide gives guidance on how investors can identify key value elements for deep retrofits, including how to prepare a comprehensive deep retrofit value report to be presented as part of a retrofit capital request.

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.

The guide, How to calculate and present deep retrofit value: A guide for investors, complements a guide that the Rocky Mountain Institute published last year for owner-occupiers. The new guide also provides the thought leadership behind three online courses and a spreadsheet tool being co-developed with the Institute of Real Estate Management scheduled for release soon.

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