Report | Creating Resilience

Australia NABERhood Watch 2023

June 20, 2023


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Energy efficient buildings have enduring premiums.  We’ve updated our analysis to reflect the latest rents, yields and occupancy premiums associated with offices which have higher NABERs ratings.  

Key Points: 

  • Over three quarters of office stock is NABERs rated
  • 54% of office buildings are now 5 Star and above rated.  This stat stood at 35% in 2019 as landlords continue to invest in improvements across their portfolio
  • Age is no barrier.  43% of buildings that were constructed pre 2000 have been upgraded to at least 5 Star rating
  • Specific opportunities.  39% of Premium buildings have a 5 Star rating and 26% of Grade A buildings have 4 Star or 4.5 Star rating – these assets represent the next set of opportunities for improvement.
  • 10-15%.  Energy costs make up 10-15% of operating cost of an office building.  In today’s high energy cost environment, the business case is easier to justify.
  • 7% higher occupancy. Office towers with 5.5 Star and 6 Star rating enjoy a 7% occupancy advantage to their 4 Star peers.
  • 2-4% rent advantage.  We find 2%-4% higher rents for each notch of higher NABERs rating, comparing buildings within each city CBD location.
  • Valuation premiums/discounts. We find a slight correlation between cap rates and NABERS ratings. There is a slight premium for 6 Star rated buildings and a slight discount for 4.0 Star rated buildings. Valuations are also impacted by location and cashflow strength.