Building performance matters. It affects operating costs, tenant satisfaction, asset value, and regulatory compliance. Yet many property owners and managers still lack clarity on how building performance is measured, what good performance looks like, and how to achieve it.
Enter NABERS—the National Australian Built Environment Rating System. Developed by the Australian Government and now widely adopted across the property sector, NABERS measures the environmental performance of buildings and tenancies across energy, water, waste, and indoor environment. A NABERS rating provides an objective, evidence-based assessment of how a building performs in operation, not just how it was designed to perform.
For property owners, understanding NABERS is no longer optional. Regulatory requirements, tenant expectations, and investment mandates are increasingly tied to NABERS performance. This guide explains what NABERS measures, why it matters, and how property owners can optimise their ratings to improve asset value and reduce operating costs.
What Is NABERS?
NABERS is a performance-based rating system that measures how buildings and tenancies operate, not how they were designed. Unlike design-focused tools such as Green Star, which assess sustainability features during planning and construction, NABERS evaluates actual operational performance using real data from utility bills, water meters, and waste records.
NABERS ratings are expressed on a scale from 1 to 6 stars, with 6 stars representing market-leading performance. Ratings are awarded based on measured energy consumption, water use, waste generation, or indoor environment quality—depending on the rating type. Importantly, NABERS assesses performance over a 12-month period, ensuring ratings reflect real-world operations, not idealised projections.
Why NABERS Matters
1. Regulatory Requirements
NABERS is embedded in regulatory frameworks across Australia. In New South Wales, the Building Sustainability Index (BASIX) and Commercial Building Disclosure (CBD) schemes require disclosure of NABERS ratings. In the Australian Capital Territory, minimum NABERS Energy ratings are mandated for office buildings. Other jurisdictions are implementing or considering similar measures.
Failure to meet NABERS requirements can result in penalties, restricted leasing options, and reduced asset marketability. Understanding and managing NABERS performance is now a core responsibility for property owners and managers.
2. Tenant Expectations
Tenants increasingly prioritise buildings with strong environmental performance. Corporate occupiers face growing pressure from investors, employees, and regulators to reduce their carbon footprint and operate sustainably. A strong NABERS rating signals that a building meets these expectations and provides a healthy, efficient environment.
Conversely, buildings with poor NABERS ratings face tenant resistance, lease renewals at discounted rates, and longer vacancy periods. In competitive leasing markets, NABERS performance is a key differentiator.
3. Operating Cost Savings
Higher NABERS ratings correlate directly with lower energy and water consumption. A building that achieves a 5-star NABERS Energy rating typically consumes 40-50% less energy than a 3-star building. For a mid-sized office building, this can translate to savings of hundreds of thousands of dollars annually.
These savings flow directly to asset value. Reduced operating costs improve net operating income, which enhances property valuations and makes assets more attractive to investors.
4. Investment and Financing
Investors and financiers increasingly incorporate environmental performance into decision-making. Green bonds, sustainability-linked loans, and ESG-focused investment funds often require minimum NABERS ratings as eligibility criteria.
Buildings with strong NABERS performance attract higher valuations, lower borrowing costs, and broader investor interest. Conversely, poor-performing buildings face financing constraints and valuation discounts as capital markets increasingly price environmental risk.
Types of NABERS Ratings
NABERS offers several rating types, each measuring different aspects of building performance:
NABERS Energy
Measures energy consumption including electricity, gas, and other fuels. This is the most widely used NABERS rating and the primary focus for most commercial buildings. Ratings are available for base buildings, tenancies, whole buildings, and data centres.
NABERS Water
Measures water consumption including cooling towers, irrigation, sanitary use, and other water-consuming systems. Water ratings are less common than energy ratings but are increasingly relevant in water-stressed regions and for buildings with high water use.
NABERS Waste
Measures waste generation and diversion from landfill. This rating assesses recycling rates, waste management practices, and overall waste performance. Waste ratings are gaining traction as circular economy principles become more prominent.
NABERS Indoor Environment
Measures indoor environment quality including air quality, thermal comfort, acoustic performance, lighting, and occupant satisfaction. This rating provides insights into occupant health and wellbeing, which increasingly influences tenant decisions and leasing outcomes.
What Influences NABERS Performance?
NABERS ratings are influenced by numerous factors, including:
Building Design and Systems: Efficient HVAC systems, high-performance facades, LED lighting, and building management systems all contribute to better energy performance.
Operational Practices: How buildings are operated matters as much as how they are designed. Regular maintenance, optimised HVAC schedules, and proactive system monitoring improve performance.
Tenant Behaviour: Tenant energy use, especially in whole-building or tenancy ratings, significantly impacts performance. Engaging tenants in energy management and encouraging efficient practices can drive ratings higher.
Climate and Location: NABERS accounts for climate differences, so buildings in different regions are assessed against location-specific benchmarks.
Occupancy and Hours of Use: Buildings operating extended hours or with higher occupancy densities typically consume more energy. NABERS adjusts for these factors to ensure fair comparisons.
How to Improve Your NABERS Rating
Improving NABERS performance requires a systematic approach that combines technical upgrades, operational optimisation, and data management.
1. Conduct a NABERS Assessment
Start by obtaining a current NABERS rating (or a predictive rating if you don’t have 12 months of data). This establishes a baseline and identifies improvement opportunities.
2. Engage a NABERS Assessor Early
Independent NABERS assessors bring expertise in data collection, rating preparation, and performance optimisation. Engaging an assessor early ensures data is collected correctly and improvement strategies are aligned with rating requirements.
3. Optimise Building Operations
Many improvements require no capital investment. Optimising HVAC schedules, improving control sequences, conducting recommissioning, and enhancing preventive maintenance can deliver significant energy savings and rating improvements.
4. Upgrade Building Systems
Where operational improvements are insufficient, consider capital upgrades such as replacing inefficient HVAC equipment, installing LED lighting, upgrading building management systems, or improving facade performance. Lifecycle cost analysis can identify upgrades that deliver strong return on investment.
5. Engage Tenants
If pursuing a whole-building or tenancy rating, tenant engagement is essential. Provide tenants with energy use data, encourage energy-efficient practices, and include Green Lease clauses in tenancy agreements to align incentives.
6. Monitor and Report Performance
NABERS ratings are based on 12 months of data, but performance should be monitored continuously. Regular monitoring enables early identification of performance issues, supports proactive maintenance, and ensures sustained improvement.
NABERS and Green Star: What’s the Difference?
Property owners often confuse NABERS and Green Star. While both assess sustainability, they serve different purposes:
Green Star is a design and construction rating tool that assesses sustainability features during planning and delivery. It evaluates design intent, material selection, and construction practices. Green Star is valuable for demonstrating sustainability credentials during development but does not measure operational performance.
NABERS measures actual operational performance based on real utility data. It assesses how buildings perform over time, not how they were designed. NABERS is the preferred tool for asset owners and managers focused on operating costs, tenant satisfaction, and regulatory compliance.
Many buildings pursue both Green Star during development and NABERS during operations. The two tools are complementary, not competing.
The Future of NABERS
NABERS continues to evolve. Emerging developments include:
- NABERS Net Zero: A framework for certifying carbon-neutral buildings.
- NABERS for Homes: Extending NABERS to residential buildings.
- NABERS Energy and Carbon: Combining energy efficiency and carbon emissions into a single rating.
- Increased Regulatory Requirements: Expectations of higher minimum ratings and broader mandatory disclosure.
Property owners who proactively manage NABERS performance today position themselves ahead of regulatory changes and market expectations.
Conclusion
NABERS is no longer a niche sustainability tool—it is a core performance metric that influences regulatory compliance, tenant demand, operating costs, and asset value. Property owners who understand NABERS, engage expert advisors, and proactively manage performance will reap financial and strategic benefits for years to come.
Eco Project Consulting provides independent NABERS advisory and rating services across office buildings, apartment buildings, and shopping centres. Contact us to discuss how we can support your building performance objectives.
Phone: +61 469 877 084
Email: info@ecoproject.com.au
