For commercial property owners in California, reducing operational costs is a constant priority.
Throughout the state, residential and commercial tenants are thinking about the footprint they’re leaving on the planet.
A myriad of problems can be solved with an investment in energy efficiency. It’s possible to cut costs and to achieve sustainable practices as a commercial property owner.
Energy efficiency upgrades offer a unique opportunity to lower overhead costs, save energy, and even tap into financial incentives specifically tailored for commercial properties.
At Bell Properties Commercial Real Estate, we’ve been helping out commercial investor clients make their properties a little bit greener. Here's everything you need to know about cutting costs with energy-efficient solutions—and why taking action now is a smart move in a competitive market.
The Financial Benefits of Energy Efficiency
Energy-efficient upgrades might require an initial investment, but their long-term savings can be game-changing for commercial property owners. Here's how they maximize financial benefits:
Lower Utility Bills
Installing energy-efficient lighting systems, HVAC upgrades, and insulation cuts down on a building's energy consumption. Many commercial property owners report savings on utilities after implementing these changes. Long-term savings from these investments can enhance the Net Operating Income (NOI) of any commercial investment property, and that space also instantly becomes more appealing to potential tenants and their customers.
Attract and Retain Tenants
Energy-efficient buildings are more attractive to tenants, as they offer lower utility costs and align with sustainability goals. This competitive edge helps improve tenant retention rates. When tenants are responsible for energy and electricity costs, they’re especially likely to be looking for features and upgrades designed to maximize the use of existing energy. Large windows, for example, will reduce the need for overhead light and heat. Showcase the improvements that have been made to make energy efficiency easier.
Increase Property Value
Green buildings are in demand by buyers and investors. Introducing energy-efficient features can significantly increase the value of a property in the marketplace. Getting ahead of stricter environmental laws that are likely to be implemented eventually will allow owners to maximize the improvements they’ve made right now. When selling or renting out a commercial space, these adjustments and updates will bring in a higher rental or sales value.
Tax Credits and Incentives
All commercial investors are looking for anything to reduce the amount of taxes that are owed. Moving towards energy efficiency can help. Numerous programs are designed to encourage energy-efficient upgrades for commercial properties, providing substantial cost savings through rebates, tax credits, and grants. Consider obtaining an Energy Performance Certificate, especially if the building being rented out will rank well. This can improve a building’s marketability by demonstrating a commitment to energy conservation. Additionally, many local governments offer tax incentives for buildings that meet certain energy standards, leading to further financial reward.
Energy Efficiency Incentives for Commercial Property Owners
The U.S. and the state government partner with utility companies to provide powerful incentives that support these energy-saving initiatives. Here are some key programs to be aware of:
Federal Tax Deductions
Under the Energy-Efficient Commercial Buildings Tax Deduction (Section 179D), property owners may qualify for deductions based on improvements made to a building’s energy efficiency—such as HVAC upgrades, lighting retrofits, or better insulation.
Local Rebates and Incentives
From upgraded appliances to renewable energy investments, many local utility providers offer rebate programs that can help offset the cost of upgrades. Not sure where to look for specific opportunities? Contact us at Bell Properties Commercial Real Estate. We’re always checking the state energy department for guidance.
Green Roof and Solar Panel Programs
Many of California’s metropolitan markets offer added incentives for roofing upgrades, like solar panels or reflective, energy-efficient roofing material. These incentives not only lower long-term costs but also provide upfront savings.
PACE Financing
Property Assessed Clean Energy (PACE) is a financing solution that allows commercial property owners to cover energy-efficient upgrades and renewable energy installations with no upfront cost.
Top Energy Efficiency Upgrades to Consider
Knowing where to start can be a challenge, and at Bell Properties Commercial Real Estate we can always help property owners get through an energy audit to determine where the best opportunities might be found. In general terms, however, here are some of the most impactful energy-efficient upgrades for commercial properties in California.
High-Efficiency HVAC Systems
Modern heating and cooling systems consume significantly less energy, reduce costs, and maintain tenant comfort.
LED Lighting
Replacing traditional lighting with LEDs reduces energy use and lasts longer, leading to lower maintenance costs. This is perhaps one of the most basic and cost-effective improvements a property owner can make in an effort to save electricity and minimize operational costs (there’s no need to continually replace light bulbs).
Smart Building Solutions
From automated lighting and temperature control systems to real-time energy use trackers, smart technology optimizes energy consumption. It’s also a growing demand among the commercial tenant base in California.
Improved Insulation and Windows
Better insulation and energy-efficient windows can dramatically reduce heating and cooling expenses by minimizing air leaks.
Solar Panel Installations
Installing solar panels can lower a property’s electricity bills and qualify your property for additional tax credits and utility rebates.
Invest in Renewable Energy
We’ve lately been talking to commercial owners a lot about renewable energy. It’s not just for residential properties; it's a great way to increase the value of any California commercial property. Installing solar panels or partnering with local renewable energy providers will not only decrease reliance on fossil fuels but also protect against fluctuating energy prices.
This is also likely to be a significant selling point for environmentally conscious tenants who are willing to pay a premium for sustainable spaces, allowing owners to attract higher rents and increase investment value.
Water Conservation
California is routinely dealing with drought conditions, and whether we’re talking about a real estate market in the state’s deserts or even in large cities like Los Angeles and San Diego, it’s important to be mindful of the water we use.
Water efficiency mechanisms represent an important, yet often overlooked, facet of sustainable commercial property management. Low-flow toilets, drought-resistant landscaping, and rainwater harvesting systems can greatly decrease water usage and help you make substantial savings on utility bills.
Implementing water conservation strategies can also reduce the risk of expensive water-related damage to a commercial property, such as that caused by leaks or flooding, which can negatively impact income and will typically require extensive repairs.
How to Get Started
Agreeing to embrace energy efficiency is one thing, but taking the necessary steps to implement strategies can feel overwhelming and challenging. If that’s the case, a commercial property management expert like Bell Properties Commercial Real Estate can be a secret weapon. We’re happy to take the lead on making any commercial property more sustainable and less taxing on the planet and its resources.
Let’s talk about taking the first steps toward energy efficiency. We will likely recommend the following:
Conduct an Energy Audit
By hiring an energy consultant to assess a building's current energy usage, it’s easier to recommend upgrades for maximum savings.
Start Small
There’s no need to rush into solar panels, windmills, and hydro-energy all at once and all right away. Take things slow so the business and the property’s tenants can adjust to the new normal. We always recommend a property owner begin with low-cost, high-impact solutions like LED lighting replacements or programmable thermostats.
Research Incentives
Explore the available rebates, tax credits, and financing programs in a given area. These can significantly reduce the upfront cost of your upgrades. They can also require some complexity when it comes to filing for rebates and incentives. Contact the team at Bell Properties Commercial Real Estate for help with navigating these programs.
Partner with Experts
Experts. That’s us. We work with energy efficiency experts and contractors who have the knowledge and experience to guide our commercial property owners toward the most cost-effective solutions.
The commercial rental market all throughout California’s cities and regions is competitive. One of the best ways to stand out is to make properties in the commercial space more environmentally sustainable. Those who proactively adopt green initiatives are likely to emerge as industry leaders. Sustainable practices are more than just eco-friendly—they’re a strategic investment that can enhance property value, attract quality tenants, and increase profitability.
Implementing green initiatives contribute to sustainability, and that sets a property owner up to be forward-thinking and innovative. Smart investors will do what they can to bring their properties up to date when it comes to green systems and functions.
We can help make some recommendations, which might start with a simple energy audit. Contact us at Bell Properties Commercial Real Estate, whether you’re interested in making energy efficient upgrades or still a bit skeptical that it really matters to the business at hand. We are happy to talk through any challenges and answer any questions. We’re your best resource in California commercial property management.
