Commercial Real Estate Stimulus Pushed by Architecture 2030
A bigger tax deduction for energy-efficiency improvements would benefit the troubled commercial real estate (CRE) sector and help prevent climate change, according to Ed Mazria, FAIA, and the nonprofit Architecture 2030. In a new report, “The Imminent Commercial Real Estate Crisis and The CRE Solution,” Architecture 2030 argues for increasing the federal Section 179D tax deduction for efficiency improvements to commercial properties from $1.80/ft2 to $3–$9/ft2 for projects meeting the energy reduction targets of the 2030 Challenge.
The proposed solution is well timed. As discussed in the report, the construction industry lost 35,000 jobs in May alone (mostly in the commercial sector); CRE values have dropped 40%, and CRE transactions have decreased 90% in only three years. CRE loans totaling an estimated $200–$300 billion will be due in 2011—many will require refinancing, while some are already in default.
Mazria’s 2030 Challenge calls for an immediate 60% reduction in fossil fuel use with a goal of carbon neutrality by 2030. Through the “CRE Solution,” Mazria proposes a tiered series of tax deductions for buildings meeting and exceeding the 60% goal (which is embedded in the Waxman-Markey Climate Change Bill that’s in Congress). According to the report, the result would be at least $6 billion in tax benefits resulting in an invigorated CRE market with $73.4 billion in spending and one million new jobs.
Published July 30, 2010
Emily, C. (2010, July 30). Commercial Real Estate Stimulus Pushed by Architecture 2030. Retrieved from https://www.buildinggreen.com/news-analysis/commercial-real-estate-stimulus-pushed-architecture-2030