Smart capital: How to make investing in building upgrades pay for itself as a commercial landlord
Turning your building into an Intelligent Building can pay for itself - whether the building is vacant or tenanted.
Commercial landlords must navigate an increasingly complex and constricting landscape of tightening energy efficiency regulations, growing tenant expectations and investor demand for concrete data.
Regardless of whether you have already implemented energy efficiency solutions in your portfolio or are only getting started, building upgrades investments bolster regulatory compliance and continued leasing – which famously comes at a cost.
With Inspired’s Intelligent Landlord framework you can turn these demands into your advantage and your assets into Intelligent Buildings that generate communal benefits. Let’s talk about how.
What are Intelligent Buildings?
An Intelligent Building is a technology-enabled asset that uses real-time data, smart systems and connected technologies to optimise performance, reduce carbon and enhance value for landlords and tenants alike.
Intelligence covers the whole building, from front-of-house digital signage to technology solutions such as AMR/sub-metering, HVAC systems and lighting controls.
Although turning your building into an Intelligent Building requires investing, this investment can pay for itself – whether the building is currently vacant or tenanted.
Vacant buildings
The technology immediately reduces holding costs by identifying and eliminating unnecessary base-load consumption, while allowing agents to simultaneously market the building as “technology-enabled.”
This differentiation drives higher rental premiums and reduces costly void periods, often allowing the system to pay for itself through increased asset value and faster leasing before a tenant even moves in.
Commonly, this technology is seen to reduce void energy costs by around 75% almost instantly.
Moreover, marketing a unit as “technology-enabled” typically reduces void periods by six weeks. This six weeks of extra rental income alone often covers the entire hardware investment.
Tenanted buildings
The technology is passed through to the occupier to support their own net zero journey and energy reduction.
The capital cost is typically recovered via the service charge or shared savings initiatives, effectively making the upgrade self-funding because the tenant pays for the direct value they receive in lower bills and better data.
Moreover, digital, data-rich and sustainable buildings are commanding a ‘Green Premium’ – with recent market data showing over 11% verified rental premiums for these types of prime assets.
Inspired’s experts discussed how smart buildings can unlock value for landlords, improve compliance readiness, reduce operational costs, enhance tenant satisfaction and drive measurable rental uplift in a recent webinar. Watch this on demand below.
How can Inspired help?
The property market has reached a culmination point, where inactivity is not an option.
Assets that are analogue, inefficient and data-poor are seeing ‘Brown discount’ valuation haircuts of 20% or more.
Landlords who make the most of their buildings now are going to be leading the way with improved marketability, premium rents and credible ESG reporting while the competition catches up.
Regulatory changes such as the Energy Performance of Buildings reform are coming – now is the time to revise your portfolio for building upgrades.
If you would like to learn more about how our experts can help you turn your assets into self-funding Intelligent Buildings, please contact us at [email protected]
