Looking For Value in All The Wrong Places. Toward Expanded Consideration of Green and High Performance Attributes in Non-residential Property Appraisals in the United States
- Lawrence Berkeley National Lab. (LBNL), Berkeley, CA (United States)
Large numbers of commercial buildings have sought to improve their energy and environmental performance, with half of all leasable U.S. offices now designated at some level of “green”. All proper/es fall somewhere on the green/high-performance spectrum (above and below average) whether or not they bear a formal label or ra/ng.1 Variations in the level of performance can either positively or negatively influence value. This component of value can be shaped by many factors, from utility costs to tenant/owner preferences that translate into income (rent levels, vacancy rates, lease-up /mes, etc.). Occupant perceptions of indoor environmental quality are another potential influence on value. While there has been little uptake of this thinking by practicing appraisers, the increased prevalence of green/HP practices combined with concerns about appraiser competency are compelling the industry to adapt their traditional techniques to this new driver of value. However, the overly narrow focus of policymakers on appraisal of labeled or rated exemplary buildings (e.g., LEED or ENERGY STAR Certified) represents a significant missed opportunity. Any level of green or energy performance can in fact influence value, including below-average performance (a.k.a. “brown discount”), irrespec/ve of whether or not the building has been formally rated. Another surmountable challenge is the limitations to non-appraisers’ understanding of the appraisal process (and constraints therein). A crucial byproduct of this is unrealistic expectations of what appraisers can and will do in the marketplace. This report identifies opportunities for catalyzing improvement of the green/HP appraisal process, which apply to all involved actors—from owner, report-ordering client, the appraiser, and the appraisal reviewer—and fostering more demand for appraisals that recognize green/HP property attributes. The intended audience is primarily the public policy community and other stakeholders outside the formal appraisal community who can contribute to the broader effort to advance professional practces. The discussion begins with a descripton of the appraisal process and the points at which green/HP consideratons can enter the analysis. A series of major barriers to better practces are identfied along with approaches to reducing them.
- Research Organization:
- Lawrence Berkeley National Lab. (LBNL), Berkeley, CA (United States)
- Sponsoring Organization:
- USDOE Office of Energy Efficiency and Renewable Energy (EERE)
- OSTI ID:
- 1250898
- Report Number(s):
- LBNL-1003828; ir:1003828
- Country of Publication:
- United States
- Language:
- English
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