Decarbonizing your building is now a “must have” feature of most any successful CRE projects. Today, that demand outstrips supply.
What used to be somewhat of an afterthought, a costly upgrade, or a “nice to have” amenity, decarbonizing your building is now a “must have” feature of most any successful CRE project. Whether it’s a future ground-up development, a Tenant Improvement, or a mid-lease renovation, incorporating sustainability into your CRE projects is critical to compete and realize investment grade yields.
This mandate is not only coming from regulatory directives, but also very much from the socio-economic market forces themselves, which have shifted dramatically over the last few years. Municipal governments have been aggressively updating their building codes with new rules for limiting carbon emissions, electrification, and energy efficiency, while business owners and boardrooms have been demanding the spaces they occupy meet their own ambitious climate targets. Both are reactions to the wave of consumers and citizens basing their choices about where they work, how they spend their money and time, on sustainability.
8 years ago, we recognized the coming challenges that CRE owners and developers would face in having to meet new codes and regulations, as well as the growing demand from tenants and the market itself, but what we saw was a massive opportunity for those who were willing to change their thinking and get ahead of the curve. By tapping into the value of energy inherent to any Commercial-Industrial building, and transforming what was once a cost for dirty carbon intensive utilities into a clean energy revenue generating asset, Mynt has created a path for owners and developers to improve the economic performance of their investment while simultaneously decarbonizing it.
The costs for retrofitting to meet codes or paying fines to defer them, can be significant. The cost of waiting, may mean the difference in tenanting your building or signing a lease extension with a high credit tenant. So why wait when there is a solution available now that not only future proofs your project for that imminent code change, but also differentiates it as a market leading asset, for alpha returns.
The demand for decarbonized assets still far outstrips the supply, and we all can agree, that’s a great thing for valuations. On top of this, we can also agree that happier tenants are more stable and more likely to renew leases, further enhancing the value of the property. Point in fact, one of our clients, recently sold their 85,000 sf building earning an additional $120/sf, or a 5x multiple on net invested capital. As a result of adding rooftop and carport solar as well as numerous efficiency measures, we lowered the tenant’s cost of occupancy, created a healthier working environment, and ultimately led to a long term lease extension. While there are plenty of tech based R&D properties in the Silicon Valley, when it came time to sell, this one stood out from the competition and fetched a valuation well above market.