Why Commercial Real Estate Needs to Go Green

If you own or manage commercial real estate or are looking to get into real estate investment then you are probably becoming aware of the need for offering green real estate solutions. Unless your property is let to a single occupier who have the responsibility to manage their own energy use your tenants will be looking to the building management company to be implementing energy efficiency measures for common services.

There are several main drivers for promoting energy efficiency in commercial real estate, environmental concerns, legal implications and economic considerations. Taking these in turn it is possible to apply each to an individual building to assess what measures are required, and which will be beneficial.

Environmental concerns

Whether you or your management company subscribe to the theory of global warming and the greenhouse effect, it is likely that your tenants, or potential tenants, or their investors will do. In the UK, all large public properties need to have a Display Energy Certificate and may also require an Energy Performance Certificate if it is newly constructed or refurbished. If a Display Energy Certificate is required then an advisory report is also required showing how savings can be made.

Whilst this regime does not apply to private buildings, it is a clear indication in the way that legislation is heading and how public perception is manifest.

Legal Implications

The legal implications have the most practical implications on Real Estate by way of changes to the Building Regulations and these effect both new build and refurbishments to existing commercial properties with more stringent regulations taking effect from 1 October 2010. Where there is a legal imperative on owners and property managers to make changes these of course must be observed although there are certain regulations that also allow for economic considerations to be taken into account, so that alterations only need be made where reasonable economically viable so to do.

Economic Considerations

With the cost of utilities and particularly electricity rising steadily any changes that can be made to improve energy efficiency will have an increasing and direct reduction on ongoing energy expenditure. Items such as passive infrared switching and heating and ventilating equipment with lower energy requirements or low water use appliances will have an ongoing financial benefit to the running cost of a building. In addition there may be grants available towards the capital costs of changing to better performing equipment.

The decision on whether individual improvements should be made needs to take into account all of the above, however it can be seen that there is pressure from a number of directions that means more and more real estate related decisions will have to be green orientated.

Thinking of Green Real Estate Concepts - Get Your Solar ROI Promises in Writing

There is a lot of alternative energy hype these days, but you have to be careful with solar installation sales people. Often, they make claims that you will have the unit, installation and equipment all paid off within 5-10-years with all the money you save on energy, the ROI or return on your investment. If the company's salesman takes an overly optimistic approach to such promises to get you to buy, you may find yourself underwhelmed with the results and later determine that you didn't save any money after all.

Not long ago this exact issue occurred and the homeowner being a lawyer asked for the ROI in writing. He lived in a very sunny city with only 6-9 rain days a year on average, so he accepted the salesman on his word, but got it in writing just in case, because he'd heard of problems that other consumers had encountered. Turns out that in 2.5 years of the 10 year so-called ROI, he had not saved more than 10% on his energy bill. Worried that the company wouldn't be around in 7 and a half years, he took them to court for the entire cost of the unit.

He offered to allow them to remove it or leave it there, but wanted his money back, as he had been lied too. The solar company had all sorts of excuses such as cloudy weather, house facing the wrong direction, and even energy cost increases of 3%. The judge was hearing none of this nonsense and awarded the gentleman full re-imbursement. The solar company could take the unit away or sell the unit for 15% of the original cost and walk away.

The homeowner had agreed that 15% was fair because a home buyer might like a solar system on the house and figured that he could raise the price of the house that small amount and recover that cost at a later date, which is more than fair considering he was lied to, and whether they meant to or not is irrelevant, the point is beware of these ROI claims during the initial purchase of your solar alternative energy system.

The Value of Your Real Estate Investment is at Risk

As real estate values keep losing ground, many are still asking why. The answers may not be what everyone wants to hear. The questions will remain as predictions of a recovery are still not reflecting any positives for the average consumer. It still amazes me that many feel a recovery has started. As those receiving unemployment beg for any kind of extension, tell them the recovery has started. Who doesn't have a family member who is suffering from either being jobless, or if still employed or those who fear for the loss of their job? Everyone lives in a piece of real estate. Everyone works in a real estate investment. What will it really take for a buyer to buy a home once again? No, I am not talking about a short sale. Why don't the FEDS and their economists see that this is another huge red flag for the mortgage industry? If I could, I'd stop the FEDS from allowing this to go on and tell them that this should stop immediately. The upside is home inventory is slowly being sold off but the downside is, at who's expense? The average homeowner who is in good standing (no there are not many) needs to know how the system really works.

I am Mrs. Homeowner. In about 5-8 years, I want to become Mrs. Home Seller. Now, in my neighborhood there are foreclosures galore. There are a few homeowners who are trying to sell for the normal reasons, such as downsizing, family changes, relocation and job change. So the homes that are selling are from short sales. They are being sold for less because of the mortgage meltdown. So as Mrs. Homeowner, when I am ready to sell, could will the full value of my home be recognized or will buyers want my home for less. Who makes the decision on the value of my home? Is it my Realtor. Actually it is your buyer, Mrs. Homeowner. Your agent and you can set the price wherever you want but it is your buyer who offers you a contract, and it is the price that you settled upon that will dictate the sales price. Then it is the real estate appraiser who will value the property. They have had their own challenges in these times as well. Now the real estate taxes of the homes that are selling in these short sales seem so much higher than mine are right now. What is the real tax base for homes like mine? There are so many unanswered questions in these markets.

How can the real estate investment become a good value again?Are short sale techniques considered sustainable methods to turn around the real estate market? Is common sense a lost character trait in today's business minds?

As a green real estate educator and someone who has completed close to 400 real estate transactions successfully, the word sustainable should be a key in any plans or suggestions to turn the real estate markets around as well. Can we agree "it is not business as usual anymore." The rules are changing and nothing is as it seems anymore. We hear of food prices going down, but no one will admit packaging from manufactures is smaller. There are no more half gallons of ice cream. Look closer. Loaves of bread are smaller. We are in an economic downturn that needs drastic measures and we need them now.

My suggestion on how the real estate market can be turned around. If I showed you a home, that had a utility bill that is 45% less than others in a neighborhood, would you have interest? If I showed you a home, priced within $10,000 of others in a neighborhood that documented smarter use of appliances and the materials used to renovate it or build it were not producing harmful chemicals than the neighbor's homes were, would you want to know more? If you learn freshly painted smell is not good for your family, would you have wanted the home to have been painted with lower toxic paints? If this home was not ruining the environment, was within walking distance of schools, food stress and the park, would this be of interest? Suppose rainwater was being recycled and the association fees were including no restrictions if you wanted to add solar panels when the prices come down, would you have interest? If this home had an energy audit documenting home energy use was rated quite well, would this be of interest to your family? Talk about sustainable steps to create lasting and sellable value. Then the competition really becomes "healthy" competition.

The real estate investment needs help. It needs a better product in more way then one. Just lowering rates, will not do it. Having a 3% interest rate and thousands off to renovate green would be a few steps in the right direction. Now, I am a staunch Republican and proud of it. The way our president is addressing these issues is not the way to do this. Incentives are good but give them to companies who will hire and retrain those who are out of work. We are all ready for a new industrial revolution and it needs to first address those will represent renewable products in the marketplace. If you build a new economy with incentives for small enterprise and big business, jobs will be created and the new industrial revolution can begin. Pardon the level of my simplistic explanation but this is how I see it.

The Real Estate Industry Needs Green Education to Revitalize Current Markets

I am not practicing real estate right now but even I see that the real estate industry and all affiliate industries need market transformation and they need it fast. I can remember the days where life was good when I was a real estate agent. Working on 4 and 6 active contracts a month. Attending 4 to 6 home inspections, helping buyers with financing options, meeting mortgage lenders and coordinating everyday 4 and 6 transactions a month. Then getting paid. Then, in the middle of all of this I had 4 and 5 buyers to work with and 3 or 4 sellers who wanted market analysis on their homes. Who ever said agents in the residential and commercial markets don't work hard?

Try a schedule like that. Now, try to picture all of this gone. Can you imagine a world where an agent shows a buyer 20 and 30 homes, and they don't buy or even with great credit the lender turns them down?

Try picturing the fact that agents are doing this for 4-6 buyers? Can you imagine writing contracts and having back and forth communication on situations that you know will not work? Sellers painting on the agents recommendation just to have a home sit and sit. Builders who have land that is not developed? Paying taxes while you can't pay your contractors and your support staff is dwindling. Agents advertising with their own money and houses just don't sell? Did I mention you, as an agent, pay $2000 a year to stay in the business, for incidentals such as license renewals, ads, association and MLS dues and continuing education credits? How about the loan officer who keeps trying to refinance people and can't get them a loan? Think of the home inspector who waits for the agents to write business. Everyone is hurting.

Is there any end in sight? Is there anything that can turn this around? YES!

Now I have another scenario for you. You are a buyer or seller of real estate. You want an agent who is green certified to help you understand green attributes in homes. You want to put your home on the market or buy and want your agent who is also your friend or relative to help you. They tell you they have a certification 6,000 have and been green certified by Green Real Estate Education. They like the fact that they only had to pay $99 to learn of what energy efficiency and green these issues have to do with the home you may want to buy or sell. In the current economy, they didn't choose to spend hundreds or thousands (and neither do you) to learn about energy efficiency so you respect their budget conscience mindset. Can you already see the value in working with this agent? This Certified Real Estate Professional has been trained to assist you to understand how you can keep your utility bills low and have a healthier indoor air quality. That agent works with 2 or 3 ( GCHI's ) Green Certified Home Inspectors. They have 2 Green Certified Mortgage Professionals (GCMP) who know of ways to finance energy efficient upgrades or special loans for newer energy efficient homes.

This agent likes working with buyers who also want a utility bill that is only $500-$1000 a year. Sparking interest already? You hear that green building ideals offer healthier indoor air quality. Interesting. You find a home that has an Energy Star, Environments for Living, Green Build or LEED green certification. Priced the same as other homes, that home has a low utility bill and energy efficient systems and utilizes solar and is in the perfect area too. What will you choose?

You call a Green Certified Real Estate Agent, a GCREP and say, what can I do to help my home sell in a year or so? They come by, recommend you replace all light bulbs with compact fluorescent or LED products that are much more efficient and paint with non toxic paint, add healthy and efficient insulation. Aren't these suggestions a bit different than the normal advice. They also have that certification 6,000 have across the country.

In the years to come, you may not want to sell now but that Green Certified agent, inspector or mortgage professional has taken his or her level two certification to learn even more and offer advice that you get an energy audit, and from the results they suggest you upgrade the widows, insulation, the roof and you don't want to get a second mortgage. They begin to tell you about the state offering a program with PACE concepts. What is PACE you ask? Property Assessed Clean Energy (PACE) programs are designed to allow property owners to install energy efficiency, renewable energy, and water efficiency projects and repay those costs as a line item on their property tax bill or utility bill (depending on state law and local options). Wow, half of my family members are in the construction industry and out of work, what a great way for them to have work. Are we thinking job creation? You didn't even know about this. Thank you for green real estate education.

Stimulating the real estate industry is possible. I do not feel this has anything to do with democrats or republicans. A clean energy economy reduces our dependence on foreign oil. Energy efficiency concepts will create jobs. This is not new to other countries, and we need an economic stimulation NOW. So I will ask again, can green education transform the real estate industry? What do you think?

Green Real Estate - What Homes Qualify and Which Don't

There is an uprising trend in the number of green homes. Perhaps the much insisted eco-friendly solution have finally caught up with real estate as people are now adopting to using renewable energy sources and materials without residual toxins inside their homes. But if you are a newly celebrated eco-friendly folk and you are on your way to buying your new eco-friendly home, there are a few things that you need to look out for.

The first thing to look for is the type of flooring. Hardwood floors are important in not only maintaining the aesthetics of the house, but in house warming as it conserves heat especially in the cold seasons of winter. It eliminates the need for carpets which are usually prone to dust.

The windows have to be orientated towards the sun, so that much natural light as possible can get into the rooms. They should also be large and preferably double paned. When there is an adequate source of natural light, you cut back on the need of artificial lighting, and in the end, you save up some money in the electric bill.

The location you choose for your eco-friendly home is of the essence. It should be away from any source of pollution, and instead, be as deep in nature as it can be. If it's near the city where there are a lot of carbon emissions from vehicles, or near some factory, then it is inappropriate. Choose instead a place where there is an abundance of trees, and nature is in its fullest.

The design that the house has is essential too. The bigger a house is the more power hungry it's going to be. That's in respect to the amount of electrical power supply needed in running the systems, and in heating and cooling it depending on the environmental temperatures. If you don't need too much space, go for a medium sized house that will be easier to maintain.