Owners Invest in Cost-Effective Energy Programs as Evidence of Financial Value Mounts: Jones Lang LaSalle Global Sustainability Perspective

New report shows maturation of green building industry’s ability to achieve and measure increased cash flows and value as well as reduce environmental impacts
Nov 7, 2012 6:30 PM ET
Campaign: GSP

November 7, 2012 /3BL Media/ - As evidence mounts that energy and sustainability programs are good for business as well as for the environment, the vast majority of commercial real estate owners have spent money on green strategies in the past year, but most have avoided making large capital investments requiring financing, according to the latest Global Sustainability Perspective report from Jones Lang LaSalle.

“Since the emergence of green buildings a decade or more ago, our understanding of sustainable construction and building management has evolved quite significantly,” observes Franz Jenowein, Director, Energy & Sustainability Services, in the report’s lead editorial. “In parallel with the rise of significant volumes of sustainable building investments, we have seen the introduction of benchmarking tools at enterprise levels. They are helping to track the impact that sustainability strategies are having on property companies and to what extent they are following their commitments in greening their assets.”

More capital is available for energy retrofits and renewable energy installations today than in recent years, but most owners have avoided financing options, focusing on self-financed projects that can demonstrate a direct financial payback, according to the Jones Lang LaSalle report.

“Owners tend to favour moderately priced projects such as lighting retrofits and temperature controls, rather than expensive HVAC upgrades that would save more energy but would be less visible to tenants,” said Dan Probst, Chairman of Energy and Sustainability Services at Jones Lang LaSalle. “They need to know that every dollar they spend produces a financial return, not just in energy savings but also in terms of ROI and building value.”

In Jones Lang LaSalle’s Global Sustainability Perspective, an article entitled “Building Energy Retrofit - Owners Need Convincing, Not Just Financing” notes that most investment owners do not expect energy improvements to result in higher rent, but they do expect to attract more tenants, thus improving return on investment and building value.  While owners have focused primarily on moderate cost improvements, those that analyse the cost and financial payback of a whole-building energy retrofit, and can take advantage of tax incentives, may find more extensive retrofits make financial sense as well.

Also in Global Sustainability Perspective are articles on:

- Future Proofing Gulf Cities, a guest column by Herbert Girardet, co-founder of the World Future Council, on ways that cities in challenging environments are addressing sustainability and resource issues;

- Putting a Value on Sustainable Buildings, from cash-flow and other methods used in UK portfolios to making the business case for LEED certification;

- Energy performance standards in Shanghai, with Jones Lang LaSalle’s analysis of the city’s Class A building stock and prediction that a “rental performance gap between green and non-green buildings will widen quickly” in the next few years;

- Results of a new EPRA/Jones Lang LaSalle survey on sustainability performance of property companies, with six European listed firms receiving the highest 'Gold' rating;

About Jones Lang LaSalle

Jones Lang LaSalle (NYSE: JLL) is a financial and professional services firm specializing in real estate. The firm offers integrated services delivered by expert teams worldwide to clients seeking increased value by owning, occupying or investing in real estate. With 2011 global revenue of $3.6 billion, Jones Lang LaSalle serves clients in 70 countries from more than 1,000 locations worldwide, including 200 corporate offices.  The firm is an industry leader in property and corporate facility management services, with a portfolio of approximately 2.1 billion square feet worldwide. LaSalle Investment Management, the company’s investment management business, is one of the world’s largest and most diverse in real estate with $47 billion of assets under management. For further information, please visit www.joneslanglasalle.com.