Key Considerations for Building Owners and Investors in High-Energy Performance Buildings

As the demand for sustainable, energy-efficient buildings grows, building owners and investors have a significant opportunity to contribute to this transition while benefiting financially. Whether it’s the development of Nearly Zero Energy Buildings (NZEBs), Zero Emission Buildings (ZEBs), or other high-energy performance standards, there are several critical considerations for maximizing returns and ensuring long-term value. Below are the most important factors that building owners and investors should prioritize.

1. Financial Returns and Long-Term Value

One of the main concerns for building owners and investors is how energy-efficient buildings translate into financial gains. High-performance buildings offer several tangible benefits that contribute to strong financial returns over time.

Reduced Operational Costs: High-energy performance buildings are designed to minimize energy consumption through improved insulation, airtight construction, energy-efficient HVAC systems, and renewable energy integration. This results in lower utility bills and reduced operational costs, which can significantly increase the return on investment (ROI) over the building’s lifecycle.
Increased Property Value: As sustainability becomes a priority for tenants and buyers, energy-efficient buildings often command higher resale values and rental income. A building that meets NZEB or ZEB standards is seen as future-proof, as stricter environmental regulations and market preferences shift towards sustainability. This creates a premium on properties that are energy-efficient and environmentally responsible.
Incentives and Subsidies: Many governments offer financial incentives, subsidies, or tax credits to encourage the development and retrofitting of high-energy performance buildings. These incentives can help offset the initial investment costs, improving the overall financial picture for investors.

2. Compliance with Regulations and Future-Proofing

As environmental regulations evolve, it’s critical for building owners and investors to stay ahead of compliance requirements. The European Union’s Energy Performance of Buildings Directive (EPBD) and similar legislation around the world are pushing for stricter energy efficiency standards.

Avoiding Future Retrofits: By investing in high-energy performance buildings now, owners and investors can avoid costly retrofits and upgrades in the future when regulations tighten. Meeting NZEB or ZEB standards ensures that a building will remain compliant for years to come, avoiding potential penalties or loss of marketability.
Access to Financing: Many financial institutions now offer green loans or preferential financing terms for projects that meet sustainability criteria. High-performance buildings are often eligible for such financing, reducing the cost of borrowing and making the initial investment more attractive.

3. Tenant Demand and Marketability

Tenant preferences are shifting towards sustainability, with both commercial and residential tenants increasingly seeking energy-efficient, environmentally friendly spaces. For building owners and investors, meeting this demand is crucial for long-term occupancy and marketability.

Higher Occupancy Rates: Energy-efficient buildings are more attractive to tenants due to lower utility costs and a healthier, more comfortable living or working environment. Features like better indoor air quality, thermal comfort, and noise reduction contribute to higher tenant satisfaction, resulting in lower vacancy rates and reduced tenant turnover.
Appeal to Corporate Tenants: For commercial properties, companies with strong environmental, social, and governance (ESG) commitments are seeking out energy-efficient spaces to align with their sustainability goals. By investing in high-energy performance buildings, owners can attract these tenants, who are often willing to pay a premium for green buildings.

4. Energy Independence and Resilience

With increasing concerns over energy security and rising utility costs, building owners and investors can benefit from creating properties that offer greater energy independence and resilience.

On-Site Renewable Energy Generation: High-performance buildings often incorporate renewable energy technologies like solar panels, wind turbines, or geothermal systems. These systems reduce reliance on external energy suppliers and provide a buffer against rising energy costs. In some cases, surplus energy can even be sold back to the grid, generating additional income streams.
Microgrid Capabilities: Buildings that are part of energy communities or that have on-site energy storage and generation capabilities can act as microgrids. This enhances the building’s resilience, especially during grid outages or energy crises. For owners and investors, this resilience can be a strong selling point, particularly in regions prone to power disruptions.

5. Sustainability as a Brand Asset

In addition to financial and operational advantages, sustainability is increasingly viewed as a valuable brand asset for both investors and building owners.

ESG Alignment: High-energy performance buildings align with growing investor interest in Environmental, Social, and Governance (ESG) principles. Buildings that contribute to carbon reduction, use sustainable materials, and minimize energy consumption are more attractive to ESG-focused investors and funds. Having a portfolio of energy-efficient buildings enhances the brand reputation of investors, positioning them as leaders in the sustainability space.
Attracting High-Quality Tenants: Many companies and individuals are choosing properties based on their environmental impact. By offering buildings that meet NZEB or ZEB standards, owners can attract sustainability-conscious tenants who prioritize low-carbon lifestyles and businesses that are committed to ESG practices.

6. Maintenance and Lifecycle Considerations

While the upfront costs of high-energy performance buildings may be higher, their long-term operational costs are significantly lower due to reduced energy consumption and maintenance needs. However, regular maintenance and monitoring are essential to ensure these buildings perform as intended.

Smart Building Technologies: Incorporating smart technologies into high-performance buildings can further optimize energy use, reduce maintenance costs, and ensure that systems such as HVAC, lighting, and water management operate efficiently. These systems can provide real-time data that helps building managers and owners monitor performance and quickly address any issues.
Lifecycle Planning: For investors, understanding the lifecycle costs of high-energy performance buildings is essential for long-term profitability. Buildings designed with sustainable materials and systems may require less frequent repairs and replacements, leading to cost savings over time.

7. Opportunities in Retrofitting Existing Buildings

While new constructions offer the opportunity to design high-energy performance buildings from the ground up, retrofitting existing buildings to meet NZEB or ZEB standards can also be a profitable venture for owners and investors.

Retrofitting for Energy Efficiency: Retrofitting an existing building to improve energy efficiency—by upgrading insulation, windows, HVAC systems, and renewable energy sources—can significantly reduce operating costs and increase the building’s value. Investors can benefit from government grants and subsidies aimed at encouraging energy retrofits, while also increasing the building’s appeal to tenants.
Environmental Impact Reduction: Retrofitting older buildings instead of demolishing them can also significantly reduce embodied carbon, the emissions associated with the building’s construction. This approach is not only environmentally responsible but can also contribute to ESG goals and sustainability certifications.

Conclusion: Strategic Investment in High-Energy Performance Buildings

For building owners and investors, high-energy performance buildings represent a strategic opportunity to maximize long-term value, meet regulatory requirements, and align with market trends toward sustainability. By focusing on reducing operational costs, enhancing tenant satisfaction, complying with future regulations, and leveraging green financing options, investors can secure strong financial returns while contributing to a low-carbon future.

Engaging with qualified professionals who are experienced in the design, construction, and maintenance of high-energy performance buildings is essential for ensuring that projects meet performance standards and deliver on financial expectations.