[ecis2016.org] Retrofitting a commercial building, to make it ‘green’, may involve significant upfront expenditure. We look at what the landlords of such buildings can do, to obtain finance for the renovation and the long-term benefits it will offer
Commercial buildings that are eco-friendly or ‘green’, have several advantages over traditional buildings, including lower cost of maintenance and positive perception among prospective tenants. However, retrofitting a building to make it ‘green’, can sometimes involve high costs and you may need financing for the same. There have been several cases where landlords have applied for and availed of loans, for turning their property into a green building. A thorough approach is required, to avail of such loans. Here are some of the ways in which you can get financing for such a retrofitting project:
You are reading: How to get a loan, to turn a commercial building into a green building
1 Have a detailed plan in place, before applying for a loan
Be thorough about each of the retrofit item that you plan in your property and the cost associated with it. Each retrofit should have a specific end result – for example, a particular reduction in electricity consumption. Mention all this in the project document, before you apply for the loan. This will give the impression to the lender that you are serious about the project. Some of the equipment available in the market may be older and not result in optimum electricity savings. Hence, educate yourself about the latest gadgets and retrofit items available in the market.
2 Plan according to your local environmental laws
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Contact your local authorities and municipalities, to know what is allowed and what is not. Get to know the latest environmental rules in your zone or locality. You may have to take help from an expert for this. This will help you to draw up the best green retrofit plan for your building and ensure that you avoid being on the wrong side of the law. Remember that banks may not grant the loan, if the plans are not in consonance with local laws.
3 Calculate your savings
The idea behind any green retrofit is to save costs, especially energy costs. Do a through calculation of the savings that will accrue to you from each modification, after the retrofit is carried out. Include these details in the project document that you present to the bank, while applying for the loan. A green building will also be able to command a higher rent. Take this advantage into consideration, to arrive at the overall benefits. This will also improve your chances of getting the loan approved.
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4 Promotion of the building
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One of the important ways in which a building can be turned ‘green’, is by having electricity saving systems, so that the energy bills of the building reduce. You should promote this aspect as much as possible in marketing your building, even before you start the retrofit process. This will increase the perceived value of the property in the eyes of potential tenants and in the market area in which your building is situated, in general. Your property may stand out from others in that area, as a result of the retrofit and this should be highlighted in your marketing material. This may make the bank look at your loan application more favourably. If other properties or buildings in your area are not ‘green’, this may make your property unique.
5 Check for sops offered by the government
You may also qualify for some sops or inducements by the government, to carry out the retrofit. With increased focus on environment protection, various governments, including local governments, are offering sops for landlords to carry out pro-environment measures. These include reimbursement of some of the costs incurred towards the retrofit. Check which ones will be applicable in your case and calculate the overall cost benefits accordingly. Even your banker will be more willing to approve of the loan application, if parts of it are supported by the government.
Other avenues for going green
Trying to obtain a LEED (Leadership in Energy and Environmental Design) certification, can be another good idea to not only protect the environment but also to get a higher rent for your property. There are many other recognised certifications that can add to the attraction and credibility of your property. There is also a wellness certificate for commercial buildings. US-based International WELL Building Institute (IWBI) gives such a certification, on the wellness quotient of commercial buildings. This certification is based on the economic, social and environmental well-being of a building. It is based on the construction, as well as interiors of the building. Such a certification can also lead to higher rentals for the building.
Source: https://ecis2016.org/.
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Source: https://ecis2016.org
Category: Lifestyle
