NABERS Ratings Explained for Owners and Tenants

What do NABERS ratings actually measure?

NABERS stands for the National Australian Built Environment Rating System. It is a national scheme, and the NSW Government has long been closely involved in running it. The scheme turns a year of metered data into a star rating, which makes buildings comparable in a way that a glossy brochure falls short of.

The energy rating is the best known, but the same approach applies to water, waste and indoor environment. A NABERS energy rating looks at greenhouse gas emissions or energy use per square metre, adjusted for factors such as hours of operation, climate and the size of the space. Water ratings follow a similar logic, while indoor environment ratings look at things like air quality, thermal comfort, acoustic conditions and lighting.

In my view, the star count is only the headline. The real value sits in the data behind it, because that is where you see which months, floors and systems drive consumption.

Base building, tenancy and whole building: which rating is which?

This is the question I hear most from both owners and tenants, and it deserves a clear answer.

• Base building rating: covers the central services an owner controls, such as chillers, boilers, lifts, common area lighting and ventilation to shared spaces.
• Tenancy rating: covers the energy a tenant uses inside its own premises, such as lighting, equipment, and any supplementary air conditioning.
• Whole building rating: combines both, and suits buildings where one party controls everything or where the owner wants a complete picture.

Each rating has a natural owner. The landlord can influence the base building result, while the tenant controls most of what happens in a tenancy. When a lease is being negotiated, matching responsibility to control makes the conversation far more productive.

The split exists for a reason: it allows each party to focus on what it can change. A tenant with a strong tenancy rating in a building with a modest base building result still has a story to tell, and vice versa.

Why NABERS ratings influence leasing and valuation

Many Sydney tenants, especially larger corporate occupiers and government agencies, include a minimum rating in their property requirements. Some investors and lenders do the same when they assess an asset. Higher rated buildings tend to attract stronger interest, while lower rated buildings face harder questions about future capital works and obsolescence risk.

The Commonwealth also runs a disclosure program for larger office spaces, which requires a current energy rating to be provided when space is offered for sale or lease above a certain size threshold. Requirements and thresholds can change. Confirm the current position with your adviser or the relevant government body.

Here is the practical point. A rating is a public signal of how well a building is run. Owners who treat it as a management tool, rather than a certificate to frame, tend to see the benefit in lower running costs and smoother lease conversations.

How does a NABERS commitment agreement work?

A commitment agreement is a mechanism for new buildings and major refurbishments. The owner or developer commits to achieving a target rating, the design team works towards that outcome, and the building is then assessed after a period of operation to confirm the result.

The value of this approach is discipline. Setting a target before design is locked in changes which options get tested, which services strategies get chosen and how the building is commissioned. Targets are far easier to hit when they shape decisions from the start than when they are added at the end.

A sound approach is to treat the target as a design brief item with the same weight as lettable area or programme. Ask the design team to show how each major decision supports the rating, and ask the contractor how commissioning and handover will protect it. Details of the scheme change over time. Check current rules and rating tools with an accredited assessor.

Practical ways to lift a rating

Most owners and tenants can improve a NABERS energy rating through operational changes before any major capital program. In my experience, a sensible order of attack looks like this:

1. Check the data: confirm that metering is accurate and that every major load is captured. Poor data hides both problems and wins.
2. Tune the operation: review start and stop times, setpoints, economiser operation and after hours behaviour. Small control changes often deliver measurable gains.
3. Fix the faults: simultaneous heating and cooling, stuck dampers and failed sensors quietly waste energy in many buildings.
4. Upgrade selectively: replace lighting, pumps, fans and motors where payback is clear, and plan plant replacement around end of life.
5. Engage occupants: tenants who switch equipment off, adjust lighting and review after hours use contribute directly to the result.

Tenants can also lift a tenancy rating through fitout choices. Efficient lighting, sensible controls, well designed supplementary cooling for server rooms and equipment that suits the actual use all help. Considering these items in the design phase costs far less than retrofitting them later.

Common mistakes to avoid

Some patterns appear again and again in Sydney offices.

• Chasing a star count while ignoring the underlying data quality.
• Setting a target that lacks an owner, a budget or a reporting rhythm.
• Treating the tenancy and base building as separate worlds, when shared governance would help both.
• Leaving the rating until renewal or sale time, when options are limited.

A regular review, ideally quarterly, keeps the rating on the agenda and surfaces problems early. Pair it with a short action list and a named person responsible for each item.

Final thoughts

NABERS ratings reward buildings that are run well, and they give owners and tenants a shared language for improvement. Start with reliable data, set a target with a clear owner, and review progress regularly. The gains tend to compound over time.

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