Efficiency Dividends in Commercial Real Estate (CRE) increase building income without increasing lease rates and jeopardizing tenant satisfaction. Let's first define Efficiency Dividends in CRE vs. Efficiency Dividends as defined by the International Monetary Fund (IMF). The ideas are very similar, but each are implemented are different.

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Difference between Efficiency Dividends for CRE vs. Efficiency Dividends defined by the IMF

In the public sector, the International Monetary Fund (IMF) refers to Efficiency Dividends as potential savings that can be extracted from agencies' budgets without harming frontline services. These savings can then be reallocated or utilized elsewhere, effectively increasing productivity and optimizing resources.

In the commercial real estate (CRE) industry, Efficiency Dividends have taken on a slightly different meaning. They represent a unique opportunity for building owners and property managers to increase building income without raising lease rates or jeopardizing tenant satisfaction.

The difference here is Carbon Lighthouse's Efficiency Dividends are generated from building improvements that reduce building energy use while ensuring tenant comfort. Energy savings are then retained by the Building Owner with a portion shared back to the Tenant. For the building owner, Efficiency Dividends result in new recurring ancillary income. For the tenant, Efficiency Dividends means lower OpEx through shared enery savings.

Learn more on How Efficiency Dividends Work here and here.

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Benefits of Efficiency Dividends in CRE

By investing in the right building improvements and upgrades, building owners can reduce their energy bills, increase the value of their properties, and retain their high-quality tenants, all while generating an additional source of ancillary income.

Carbon Lighthouse offers technology and services to help Building Owners implement high-yielding efficiency projects across their CRE portfolio, regardless of the lease type. We ensure that building owners generate the highest Efficiency Dividends possible. You can contact us here to learn more and get a free demo on how Efficiency Dividends can work for your buildings. In the meantime, keep reading for a quick look into how building owners can leverage efficiency dividends from energy savings to generate ancillary income:

Reduced Energy Bills + Eequipment Lifespan

• Building owners can reduce energy bills by making energy-efficient upgrades such as LED lighting retrofits and HVAC optimization. These savings are retained by the Building Owner and shared with tenants through lower operating expenses (OpEx).
• Additionally, by reducing energy consumption, building owners can avoid costly peak-demand charges, adding to significant savings over time.
• Lastly, optimized equipment can lead to significantly longer equipment life spans, which leads to fewer unplanned equipment replacements.

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New Revenue + Sustainability Goals

• Efficiency Dividends drive sustainable, profitable action in toward ESG, energy reduction, net zero, and decarbonization goals. By investing in energy-efficient upgrades, building owners reduce their carbon footprint, save money, and attract sustainable tenants.
• As businesses prioritize sustainability, building owners demonstrating commitment can attract and retain tenants while generating revenue streams.

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Green Certifications:

• In today's environmentally conscious marketplace, more tenants are looking for green buildings that prioritize sustainability. Building owners can differentiate their properties from the competition by investing in energy-efficient upgrades and obtaining green certifications like LEED or ENERGY STAR.
• Green certification tend to attract tenants willing to pay higher leases. A report on the Los Angeles market found traditional buildings earn an average of $2.16 per square foot, while tenants paid $2.91 per square foot for LEED certified space.
• Our fast payback projects can help fast-track your progress with LEED, ASHRAE-2, ASHRAE-3, and Energy Star.

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Next Steps

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Building owners can stay ahead of the curve by generating new revenue streams while demonstrating their commitment to sustainability. They're not mutually exclusive. Efficiency Dividends can help achieve both sustainability and profitability through predictable and repeatable ancillary income. If you want to explore how Efficiency Dividends can benefit your CRE portfolio, we'll show you how. Our team of experts can help you identify and implement energy-efficient upgrades that will generate maximum Efficiency Dividends and move your sustainability goals forward.

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