How to get financing for your green retrofit project
Energy-efficient retrofitting of your existing commercial building can be one of the best ways to lower your commercial real estate costs, boost business revenues and protect the environment, all in one go.
However, green retrofits are a big investment. Odds are you’ll need your banker’s support. So how do you prove your retrofit project is loan-worthy? BDC Business Centre Manager Rod Nickel says there’s a compelling business case to be made.
“More and more businesses want to associate themselves with green initiatives,” notes Nickel, “and they’re willing to pay a premium for environmentally sustainable office space.”
He offers these five tips to help you get financing for your green retrofit project.
1. Show your banker that you’ve done your homework
Your project documents should demonstrate good research—including a clear understanding of the kind of tenant you want to attract and how that might influence your project. While commercial real estate competition is tough when it comes to winning tenants, there’s actually a lot of good information-sharing about green practices. “It’s something building owners are proud of and have worked hard for,” says Nickel. “They want to tell their stories, and there’s a lot of awareness of environmental and social impacts.”
He also recommends taking advantage of the information and expertise available from local environmental organizations, municipal governments and expert bodies such as the Canada Green Building Council, which certifies sustainable buildings according to internationally recognized standards. You can also talk to engineers and contractors before you see your banker.
2. Estimate your cost savings and increased revenues
With businesses increasingly adopting corporate social responsibility principles, you’ll have the opportunity to charge more for your leased space and improve occupancy. Nickel says it’s a good idea to get a projected appraisal of your retrofitted building to reinforce your revenue projections. It also helps to get letters of support from realtors and future tenants.
You can work out what you’ll save by implementing sustainability initiatives with the help of trusted local experts who may have examples on hand or be able to provide reasonable estimates.
Green retrofits often attract triple-A clients and professionals such as lawyers, doctors and dentists, Nickel says. They’re looking for cleaner air, better water, better lighting, consistent temperature and, generally, a sustainable work environment for themselves, their employees and their clients.
3. Seek out other loan and grant sources
Your project may be eligible for government grants or financial incentives. Check out resources such as Natural Resources Canada for more details about these kinds of programs across Canada.
By showing your banker that you may be eligible for government incentives, you help prove that your project is valuable and credible. Citing potential sources of financial help is a good way to bolster the project documents you will leave with your banker.
4. Consider LEED® or another certification
While not necessary to get a banker on side, Leadership in Energy and Environmental Design (LEED) or other recognized certification will add credibility to your project. The Canada Green Building Council is the licence holder for the LEED rating system and supports other standards as well. The LEED certification program generates reports that you could show your banker to demonstrate you are on track to save energy and sustain the environment.
You can learn more about the benefits of LEED and other green building certifications in our free on-demand webinar.
5. Promote your project and investment
Nickel says entrepreneurs who are retrofitting for improved energy efficiency shouldn’t be shy about saying what they are doing and why. Differentiate your project and create a competitive advantage. “Really promote it and be proud of that investment,” he says. When you showcase and leverage your proposed investment, you demonstrate your own confidence in the project and why others should be confident in it, too.
By getting the support you need from your banker for a green retrofit project, you may not only lead your community in sustainability improvements, but also make a tidy profit from marketplace trends.