Medical Offices Look Toward Energy Star Certification as ESG Push Deepens
After an eight-year hiatus, medical office buildings can earn Energy Star certification again.
Medical office buildings are again eligible to earn Energy Star certification after an eight-year hiatus, thanks to recent regulatory changes that went into effect February 7.
The EPA has rolled out an updated 1-100 Energy Star score for the asset class, a move that’s based on new data collected by the American Society for Health Care Engineering. The existing score is based on a 1999 dataset.
“The new scores will reflect the most recent data available—both in terms of energy performance, but also in terms of modern equipment and operations,” say Cushman & Wakefield’s Jack Pufunt and Jennifer Seiler in an analysis of the changes. “For example, the new score will adjust for MRI machines and surgical operating beds—equipment that was not factored into the prior scoring methodology.”
Properties that achieve a score of 75 or higher on EPA’s 1 – 100 scale can now qualify for Energy Star certification, they say. The EPA also extended a one-time opportunity to retroactively apply for 2021 certification after the updated score was released, abut that deadline has passed.
However, “if a medical office building applied for 2021 certification between the period February 7 – March 7 using the Period Ending Date of Oct, Nov, or Dec 2021, then that property will also be able to apply for 2022 certification using any PED after July 2022 thanks to EPA’s flexible rules,” Pufunt and Seiler write. “If not, then medical office buildings with a score of 75 or higher can pursue certification only for the current year, 2022.”
Medical office buildings have been a stable source of income for investors throughout the pandemic, with occupancy rates holding stable and asking rents ticking up. Investors continue to flock to the asset class for those reasons despite rising construction costs. Medical REITs were among the most active buyers in 2021, according to NAI Global, with many focusing on point-of-access clinics in diverse communities.
The Energy Star certification also comes at a time of increasing focus among investors and occupiers alike on ESG initiatives.
“The role of buildings in creating a more sustainable future is now in the spotlight,” says Lori Mabardi, ESG research director at JLL. “Stakeholder pressure is rising where regulators, occupiers, lenders and investors are expecting more from the built sector.”