New tax credits for investment in energy efficiency and office-to-residential conversions are on the wish list for commercial real estate ahead of the United States election. A coalition of organizations that champion decarbonization — including the U.S. Green Building Council (USGBC) — has released a 6-point proposed policy agenda for the incoming White House administration to consider.
It underscores the role commercial real estate plays in both the U.S. economy and its environmental footprint — noting that commercial buildings account for about 17 per cent of the country’s total energy consumption and 15 per cent of total greenhouse gas (GHG) emissions. The sector currently faces rising interest rates, insurance costs and climate-related risks, coupled with falling occupancies and building values and tenants’ ongoing wellness concerns coming out of the COVID-19 pandemic. Promoters of the new policy agenda argue this confluence of pressures make it “exactly the right moment” to incentivize building improvements through market-based, bipartisan actions.
“The next Administration can help revitalize America’s commercial property sector while improving its resiliency, addressing its impact on human health and the environment, and supporting U.S. economic competitiveness,” they urge. “These policies will reduce business costs, create tens of thousands of jobs across the building trades and manufacturing sectors, prepare the commercial building sector for the future and deepen private sector investment in communities across the country.”
Topping the list is a call to include investments in energy efficiency in the existing investment tax credit for clean energy. It’s suggested this could apply on qualifying technologies for high-performance building envelope, HVAC or energy management in either new construction or building retrofits.
Tax stimuli to encourage conversion of obsolete office space is the next ranked priority, with the qualifying stipulation that it must be tied to requirements for the resulting new building forms to be energy efficient, climate-resilient, sustainable and offer a component of affordable housing. In addition to offering tax credits and/or accelerated depreciation, a new federal administration is urged to consider seeding state-level revolving loan funds with capital to help subsidize conversion projects.
The proposed policy agenda also calls on a new federal administration to consider policies to:
- encourage investment in U.S.-based production of construction materials with low embodied carbon;
- increase financial and insurance industry recognition and support for efficient and resilient commercial buildings;
- provide technical guidance and resources to help commercial building owners improve indoor air quality; and
- better coordinate and increase access to federal agency data that is useful to the commercial buildings sector.
“Other sectors of America’s built environment, from multifamily housing and schools to state and Federal buildings, are also in need of new policies that support innovation, job creation, cost savings, resilience and future readiness,” the policy agenda states. “With the exception of commercial-to-residential-conversion, the incentives outlined herein can be designed so they are broadly available and useful to various building types and to nonprofits, governments and other entities that do not pay taxes yet are important participants in the economy.”
Along with USGBC, authoring organizations include the New Buildings Institute (NBI), Institute for Market Transformation (IMT) and Carbon Leadership Forum.
