Landlords of commercial office buildings are facing large capital outlays to bring their buildings up to the required energy-efficient standards following the passing of Building Energy Efficiency Disclosure Bill last month.

The new legislation states owners and lessors of commercial office space with a net lettable area of 2,000 square metres or more must disclose the energy efficiency rating to prospective buyers and tenants when that space is sold, leased or subleased.

The legislation will come into effect through two stages. The scheme will begin in October 2010 with the first stage to cover the first 12 months to October 2011 and will only require owners to obtain a National Australian Built Environment Rating System Energy base, instead of the full Building Energy Efficiency Certificate.

Stage two, after those first 12 months, will require owners to obtain a full Building Energy Efficiency Certificate. This includes three components – a NABERS Energy base building rating, a tenancy lighting assessment and an energy efficiency guidance.

The largest owners of CBD properties, including the Commonwealth Property Office Fund, Charter Hall Office Trust, Dexus, GPT, Mirvac and Stockland, have most of their buildings rated.

It is expected that these measures will provide strong market-based incentives for owners to improve their properties with energy-efficient upgrades that should result in an increase on their return on investment. Buildings not meeting tenant criteria faced higher vacancies, lower rentals and value deterioration, meeting the market's green requirements can minimise this risk.