by Brianna Crandall — February 17, 2020 — The Building Owners and Managers Association (BOMA) International recently announced the release of a new research report created in partnership with the Rocky Mountain Institute (RMI) and the Urban Land Institute (ULI): Unlocking Hidden Value in Class B/C Office Buildings: Best Practices for Pursuing Low-Cost, High-Impact Energy Efficiency and Green Leasing Strategies. Touted as the first study of its kind, the report offers guidance and strategies for implementing energy efficiency and green leasing measures specifically tailored to the owners and operators of Class B and C office buildings.
Compared to their Class A counterparts, Class B and C office properties typically are older buildings with fewer technologies in place, explains BOMA International. While owners and operators of these properties are often eager to enact sustainability strategies, they can be constrained by smaller budgets, limited staffing and the high demand of day-to-day operational needs. As a result, Class B and C buildings often trail Class A buildings in adopting energy efficiency strategies and green leasing provisions. However, they also are the asset class with the most to gain from these measures.
Per the report, these untapped sustainability opportunities have the potential to:
- Reduce operating expenses for a Class B or C building by between $0.26 and $0.61 per square foot;
- Increase net operating income (NOI) for Class B or C properties by between 2.4 percent and 5.6 percent per year; and
- Boost Class B or C property value by approximately $5 to $11 per square foot.
Even with a clear business case, the report recognizes that building owners may still delay action due to three core challenges that Class B and C properties face: being information-constrained, resource-constrained and funding-constrained. These hurdles are accounted for in each implementation strategy, providing Class B and C office building owners and operators with an adaptable framework for success.
BOMA International Chair Scott O. Jones, PE, vice president with Jacobs, stated:
This research drives home not only how much value and savings a single Class B or C building can achieve as the result of implementing the energy efficiency and green leasing strategies outlined in the report, but also how much these strategies can elevate the entire commercial real estate industry’s sustainability efforts. BOMA, RMI and ULI are all deeply committed to providing owners and operators with the research and resources they need to make sustainability both a priority and a reality.
Greg Hopkins, manager of RMI’s Building Practice, added:
Pursuing energy efficiency and green leasing doesn’t have to be complicated, especially when owners already have enough on their plates. We’ve simplified things so they can focus on low-effort, high-impact strategies that can create win-wins for their tenants and their own bottom lines.
ULI Senior Vice President Marta Shantz concluded:
We are pleased to highlight the value proposition for Class B and C office owners to unlock energy efficiency across their portfolios. This new report offers actionable, realistic strategies to improve energy performance and implement green leasing — it’s exactly what the market needs to take advantage of these opportunities.
This research was supported with funding from BOMA International and Yardi and prepared by ULI’s Greenprint Center for Building Performance and RMI.
Unlocking Hidden Value in Class B/C Office Buildings: Best Practices for Pursuing Low-Cost, High-Impact Energy Efficiency and Green Leasing Strategies is available to download from the BOMA International website.