New green technology could boost asset values of US office buildings by as much as $35 billion.
Saving the planet is not the only reason why investors should seek out buildings that use green technology.
A new report, released by Morgan Stanley’s Institute for Sustainable Investing, argues that sustainable technology can cut a typical office building's annual expenses by 3% to 30%1, depending on what US city it’s in.
These savings can potentially add $3.5 billion-$34.9 billion2 of asset value in the 10 largest US commercial real-estate markets. The report details the yearly utility savings in each of those 10 US cities, which can range from $32 million in Philadelphia to $239 million in New York. That potentially adds $489 million to $4.8 billion of asset value.
Below is a before and after picture of the value created through a green retrofit of an existing office building.
Potential Savings in Five Major Cost Areas From Sustainable Building Management Practices for a Theoretical 250,000 Square-Foot Building in San Francisco
1 “Green Retrofitting Costs and Benefits: A New Research Agenda”, National University of Singapore and Institute of Real Estate Studies, 2011; accessed on 1/26/2016).
2 Calculated by the Morgan Stanley Real Estate Investing Team (MSREI) using BOMA Experience Exchange Reports, CBRE market inventory data, and Real Capital Analytics market valuations.
3 Calculated by the MSREI team using BOMA Experience Exchange Reports.