How Energy Efficiency Window Upgrades Can Increase Commercial Building Values

Improving your commercial building’s energy performance has many potential financial benefits. It can not only reduce your monthly energy costs and allow you the opportunity to earn tax incentives and other government rebates, but also greatly increase your profit when selling by increasing your building’s Net Operating Income (NOI).

NOI is the annual income generated after deducting all expenses incurred from operations. Commercial building energy expenses can be greatly reduced through the installation of interior window systems, leaving more money on the table to go toward the building’s NOI. As your NOI increases, your property value goes up – so if you’re ready to sell in the near future, upgrading your building’s windows can give you a big impact on the value of your investment. Net operating income factored together with the Cap Rate will typically provide the sale price of your investment property. Cap Rate is similar to the price-earnings (PE) ratio in the stock market, in which a stock’s total price is based upon multiples of its earnings.

For example:

To determine the maximum purchase price of a commercial building: NOI/Capitalization Rate (cap rate). Installing Thermolite’s interior window systems could potentially yield $100,000 energy savings annually with a 10 year ROI. The $100,000 increase in available NOI would then be the equivalent of a projected increased property value of approximately $1.4 million at an average 7% cap rate. In this particular case, the project may only cost $1.5 million for the window retrofit, resulting in an almost immediate payback if you consider the increase in the value of the property.

Commercial buildings in high-value areas, such as New York City, may yield even higher purchase prices of up to 15 times of what they earn – this makes increasing NOI through energy efficiency window upgrades even more valuable to building owners when it comes time to sell.

Window retrofits in areas where the area is cold, utility rates are high, and cap rates are very low would represent the best geographic locations to consider for Thermolite – NYC, Boston, Washington, DC, Chicago. Contact Thermolite today to learn how our window systems could potentially increase your building’s value.

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The Thermolite engineering staff is an innovative structural, energy modelling, and implementation team that works to create unique window systems alternatives to traditional replacement windows. Our systems protect against blasts, hurricanes, and sound, while being energy efficient and quick and easy to install. We serve a wide range of industry buildings including government, military, historical, schools and universities, financial, health care, hospitality, and offices. Contact us today to learn how we could update your building’s window systems.