Seven years ago, sustainable real estate was a buzzword. Today, sustainability is in high demand. ESG (Environmental, Social and Corporate Governance) practices are becoming more widely embraced and evaluated by institutional investors. These sustainable performance improvements are also becoming easier to track through research analysts and ratings groups.
GREATER ENERGY PERFORMANCE TRANSPARENCY
State and municipal laws are becoming more stringent about requiring property owners to disclose and track building energy performance. Sustainable performance improvements are easier to benchmark, and new laws are holding owners responsible for sharing that information, such as utility costs and energy ratings. This holds building owners accountable, and encourages them to improve sustainability to attract new tenants and retain existing clients.
National Real Estate Investor comments, “For assets with poor energy performance, greater transparency and the associated operating costs for prospective tenants or buyers may increase lease-up times, reduce effective rental rates and lower asset values at disposition.”
More often, commercial real estate tenants are required to meet minimum LEED or other green building standards to qualify for leasing, this is especially true for corporate and government clients. Because of this trend, LEED has become the standard for new development in major metro markets.
REAL ESTATE TAX CREDITS AND TAX INCENTIVES
Considerable tax incentives are increasing client demand for energy efficient real estate investments. Come tax season, the IRS Section 179D provides a tax deduction of up to $1.80 per sq. ft. for energy efficiency retrofits. Closer to home, states and municipalities are offering incentives in the form of income tax credits, property tax abatements, bond financing, grants and rebates.
Discover a sustainable real estate solution in the St. Louis area, and talk to us further about possible tax incentives that could benefit your bottom line.