Valuation of sustainable commercial buildings

Valuation is critical to sustainability take-up in commercial buildings because the combined monetary value of the building and land, as identified in the valuation process, remains an important consideration for many stakeholders. These stakeholders include investors and owners who refer to the market value on behalf of their shareholders, as well as financiers who rely on the value for lending purposes.<br /><br />This article examines the valuation of sustainable commercial buildings and why it requires a broader consideration of what constitutes value, compared with 'traditional' valuation processes. Definitions relevant to the valuation of sustainable commercial buildings are listed, and the importance of sustainable buildings to the broader property industry is emphasised. The article covers traditional valuation methodology and how sustainability is included in each of the valuation approaches.<br /><br />Consideration is given to the globally accepted definition of market value, and what the individual components of the definition refer to. The article outlines opportunities for incorporating sustainability considerations into the valuation process, and examines what the future direction for the valuation of commercial buildings may be.<br /><br />By increasing knowledge about the approach to valuing sustainable office buildings, this article is designed to benefit three groups:<br /><br /> * It will equip valuers, financiers, investors/owners, and other stakeholders with a better understanding of the varying levels of sustainability, and how sustainability affects the level of risk, and subsequently the value, associated with a commercial building.<br /> * It will allow owners, investors and tenants to appreciate the role of a valuer, their exposure to liability, and their challenging task of assessing the current and future risk, and subsequently the value, of a sustainable commercial building.<br /> * This higher level of understanding should mean that the benefits of sustainability will be fully reflected in the valuation process, therefore contributing to support for those developers and investors who are leading in the provision of sustainable solutions. <br />