We used to say that a more efficient building tends to be a more valuable building. It happened that PACE framework in the US already proved the opposite.
PACE which was originally developed in 2008 primarily with residential buildings in mind, was almost completely derailed in 2010 when the federal agencies that back the vast majority of US residential mortgages issued statement’s saying that they would not buy mortgages that there were subject to PACE agreements. They argued that PACE debt reduced a building’s value, irrespective of the implicit value of the improved energy performance. Various legal challenges, still continuing to this day, were made by stakeholders interested in the success of PACE, but the majority of PACE programs were either suspended or abandoned.
This may have spelt the end for PACE but it didn’t. One of the reasons is that commercial mortgage and residential markets are different. And what worked for one, didn’t for the other one.
Obviously, this is not a general conclusion and it will occur that attaching a debt, or any other relative liability, to a more efficient building could lower its value. However, most of the time luckily we can expect building’s value to increase thanks to a better Energy Efficiency. We’ll see in a forthcoming article, how a proactive and smart firm can assess its Energy Efficiency product’s impact on a client’s building’s value.
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