I'm not sure how much I am sticking my neck out in this prediction, but within 20 years, most office buildings will be energy neutral or will actually produce more energy than used. Roofing material will be solar collectors as well with exterior glass and sidings, and super-efficient small windmills to generate energy. Building systems will keep usage down to amazingly low levels, and technology will be transforming. According to the Bay Area News Group, the Lawrence Berkeley Lab has a new facility devoted to cutting-edge research on energy efficiency in commercial buildings, called FLEXLAB. Buildings account for 40 percent of all U.S. electricity use and "many employers have found that improving the energy performance of buildings has a positive impact on employee health and productivity".
There is a spike in office building operating expense pass-throughs with office building values in some submarket space. In some states, the real estate property taxes can double, causing a huge financial hit to the tenant. If a building, which was previously valued at $300/sf, sells for $600/sf, the increase in property taxes could be as much as $375/year, or a monthly rent spike of $.31/sf. Few landlords are willing to cap this property tax increase exposure as, using a 6 percent cap rate as an example, the per-square-foot value of this $3.75/rsf year expense is roughly $67.50 per building foot. Sounds small, but for a 100,000 sf building, the value differential works out to $6.25 million!
By: Jeffrey Weil
Executive Vice President | Colliers International - Walnut Creek
Jeffrey Weil is an executive vice president for Colliers International Walnut Creek. Mr. Weil has specialized in the sale and leasing of commercial properties for 38 years and has achieved CCIM, SIOR and NACORE’s Master in Commercial Real Estate Services with Honors (MCR.h) designations.
Email Jeffrey: email@example.com
Follow Jeffrey on Twitter: @jeffreyweil
Follow Colliers International on Twitter: @colliersintl
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