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Analyzing capital allocation for energy efficiency improvements by commercial real estate investment managers

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dc.contributor.advisor Sarah Slaughter. en_US
dc.contributor.author Peterson, Kristian A en_US
dc.contributor.author Gammill, Ross M en_US
dc.contributor.other Massachusetts Institute of Technology. Center for Real Estate. Program in Real Estate Development. en_US
dc.date.accessioned 2010-05-25T19:20:47Z
dc.date.available 2010-05-25T19:20:47Z
dc.date.copyright 2009 en_US
dc.date.issued 2009 en_US
dc.identifier.uri http://hdl.handle.net/1721.1/54858
dc.description Thesis (S.M.)--Massachusetts Institute of Technology, Program in Real Estate Development in Conjunction with the Center for Real Estate, 2009. en_US
dc.description This electronic version was submitted by the student author. The certified thesis is available in the Institute Archives and Special Collections. en_US
dc.description Cataloged from student submitted PDF version of thesis. en_US
dc.description Includes bibliographical references (p. 118-120). en_US
dc.description.abstract Numerous studies have shown that retrofitting an office building with energy efficiency improvements can significantly reduce operating costs, yet many existing office buildings have not been retrofitted. The objective of this paper was to explore the incentives and motivations of various parties throughout the real estate management chain to better understand why investments in energy efficiency are not more prevalent. The paper focuses on investor-owned multi-tenant office properties. The authors explored the question from a qualitative and quantitative methodology. The qualitative study consisted of interviews with key players in the real estate management chain including property managers, asset managers, portfolio managers, and institutional owners. The quantitative study consisted of a financial model to compare competing alternative capital investments. The competing investments consisted of a cosmetic improvement which was modeled to either increase rents or decrease leasing costs and an energy efficiency improvement which was modeled to decrease utility costs. Multiple permutations were tested in each scenario in order to gauge the sensitivity of returns in each scenario. Both methods were designed to understand how industry participants allocated capital to energy efficiency improvements. The study determined that financial considerations are the primary drivers behind real estate investment decisions. Secondary factors that drive investments in energy efficiency improvements include fostering a positive public image, winning new business, and focusing on environmental responsibility. en_US
dc.description.abstract (cont.) Recommendations to increase investment in energy efficiency conclude the paper. Increased investment in energy efficiency will result if managers recognize that energy efficiency projects can decrease the volatility of returns, and that these returns are maximized by making the investment in energy efficiency prior to significant lease rollover. en_US
dc.description.statementofresponsibility by Kristian A. Peterson [and] Ross M. Gammill. en_US
dc.format.extent 140 p. en_US
dc.language.iso eng en_US
dc.publisher Massachusetts Institute of Technology en_US
dc.rights M.I.T. theses are protected by copyright. They may be viewed from this source for any purpose, but reproduction or distribution in any format is prohibited without written permission. See provided URL for inquiries about permission. en_US
dc.rights.uri http://dspace.mit.edu/handle/1721.1/7582 en_US
dc.subject Center for Real Estate. Program in Real Estate Development. en_US
dc.title Analyzing capital allocation for energy efficiency improvements by commercial real estate investment managers en_US
dc.type Thesis en_US
dc.description.degree S.M. en_US
dc.contributor.department Massachusetts Institute of Technology. Center for Real Estate. Program in Real Estate Development. en_US
dc.identifier.oclc 609666967 en_US


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