Building labels could yield higher returns

Commercial buildings will soon sport more than just a certifying plaque.

Labels that display a building's energy use are a hot trend, thanks to policymakers. California and Washington both passed laws recently requiring them for commercial buildings and ASHRAE in June released a label aggregating data from Energy Star-certified buildings. A national building label law has also been proposed and is included in the the American Clean Energy and Security Act of 2009, or the Waxman-Markey bill.

Under the California law, passed in 2007, utilities started reporting energy usage information to Energy Star Portfolio Manager on Jan. 1, 2009. As of Jan. 1, 2010, building owners must disclose their building’s energy efficiency rating and benchmark data. Under Washington's law—called Efficiency First and passed this year—utilities will have to make building-level energy data available to potential buyers and tenants by 2012.

Many compare the value of the idea to stickers on new cars that state mileage and other facts that give consumers valuable data for decision making.

"Tenants are not engaged in the energy use characteristics of their space," says Mark Finkel, technical director at New Buildings Institute. "The triple-net-lease does not do anything."

Under such a lease, building owners pay the costs of capital improvements but tenants reap the savings from more efficient building systems. However, a recent study found that energy-efficient properties with an Energy Star label performed better than non-labeled properties. Such buildings had 13.5 percent higher market values and 5.9 percent higher net incomes per square foot and 1 percent higher occupancy rates.