Buildings to get energy rating like a car or fridge

Adelaide Advertiser
Tuesday 30/6/2009 Page: 40

THE clock is ticking for commercial property owners to obtain energy-efficiency ratings ahead of a mandatory disclosure scheme next year. Industry experts are saying owners may find it difficult to sell or lease assets unless they have met strict new criteria under the Federal Government's Mandatory Disclosure of Office Building Energy Initiative, expected to be in place from July 1 next year.

From then, any commercial property owner wanting to sell their premises or lease more than 2000sqm of office space will be required by law to disclose the building's energy-efficiency rating before any agreement can be made. Ratings will be determined by government-accredited National Australian Built Environment Rating System, or NABERS, assessors.

Only five Adelaide office buildings have published NABERS ratings, including the ANZ Building on Waymouth St, but not many realise the risk of not complying, says national auditor Big Switch Projects managing director Gavin Gilchrist. "Thousands of local businesses are putting themselves at risk of losing rental income and the ability to sell their premises - or risk breaking the law," Mr Gilchrist said. "Regrettably, Adelaide commercial building owners don't realise this is coming," he adds.

The new mandates will enable tenants shopping for office space to get accurate energy ratings information about a building before they sign a contract, just like with a new fridge or car. It can take from four to six months for assessors to collect data for analysis and determine the rating. The entire process costs between $3000 and $7000, depending on a number of factors including size and tenancy.

Jones Lang LaSalle head of sustainability Anita Mitchell said that combined with new regulatory requirements, current market conditions also would drive a flight to environmentally sound buildings. Investors were de-risking their portfolios and a yield spread between prime and secondary assets was becoming more apparent.

"In softer markets what we are starting to see is a differentiation between prime and second grade yields, which means the market is starting to value building quality," she said. "If you hold an asset in your portfolio that is unable to meet these new standards.., then the real risk is that property owners will be left holding assets that will be devalued by the market."

Ms Mitchell said a recent survey of Adelaide investor sentiment found 68% of investors rated sustainability as deal-breaking or a positive aspect to a deal. She also said tenants were becoming more astute and were increasingly looking for energy-efficient buildings to minimise outgoings, which would further add to the pressure on building owners. "There is a bit of a perfect storm happening at the moment in the building sector with regulation coming together with market dynamics." she said.