Green building represents a way to improve a property value while reducing its footprint on our environment. Restoring an old building applying principals of water and energy efficiency is a long term investment for our finance and overall for our future.
At a time when companies are battening down the hatches and bracing for tougher economic times, the business case for green commercial buildings is starting to become stronger.
We know that energy and water efficient buildings effectively reduce greenhouse gas emissions, but they also offer genuine cost savings, improve property values and add value to a range of business activities. Retrofitting inefficient offices into sustainable workplaces not only pays for itself, but also delivers long-term economic benefits.
Although new green buildings are slowly being developed around Australia, our nation has thousands of inefficient commercial buildings that are currently wasting water and energy every day. The building sector is responsible for almost a quarter of Australia’s total greenhouse emissions, with commercial buildings consuming around 76,000GWh of energy at an estimated cost of $7.6 billion per annum1. While new leading edge developments are to be commended, we really need to address the problem of inefficient existing buildings.
According to the Green Building Council of Australia, green building practices can reduce a building's operating costs by as much as 9%. With water, energy and waste disposal costs expected to dramatically increase in the coming years, sustainable buildings will have reduced exposure to price volatility and escalation.
Improving property values
Companies are becoming increasingly interested in buying or renting green commercial buildings because they are better value and more cost-effective to operate. Sustainable buildings maintain their market value and command a higher return on investment - in some cases an ROI of up to 14% more. Greater rent revenue can also be achieved and due to higher tenancy retention, there is less vacancy downtime and lower re-leasing expenses.
Green buildings add value to a range of business activities in tangible and intangible ways. For companies that consider sustainability a critical business issue, owning or leasing a sustainable building aligns with their company and brand values, allowing them to ‘walk the talk’. Human capital value includes improved recruiting and retention, reduced absenteeism, increased productivity, and overall morale.
An example of how energy and water efficient measures can minimise outgoings and running costs, and demonstrate that going green is commercially viable is The Szencorp Building in South Melbourne. It was Australia’s first commercial building retrofit to be awarded a 6 Star Green Star Office Design v1 certified rating from the Green Building Council of Australia. It has also achieved 5 Star NABERS ratings for water and energy, which are proof of the building’s effective water and energy performance. Compared to a standard office building, the Szencorp Building is 53.4% more energy efficient. A standard building’s outgoings are around $80 - $100 m², whereas the Szencorp Building’s outgoings are around $45m². Considerable efficiency gains were achieved in this building’s first year of operation and in its second year, it attained 71% energy savings and water usage that was 94% below the industry average. Analysis of third year savings is now underway.
Making your building sustainable
With the current market volatility and need to reduce costs, as well as greenhouse emissions, installing energy and water efficient systems is an obvious solution. Environmental consultancy companies may help businesses reduce their energy and water usage by providing a solutions that cut energy and water consumption. These products can lower operating costs, improve the building’s performance, and increase its value.
Retrofitting a standard commercial building into a green building makes good economic sense. Reducing energy and water costs are only one advantage of a green building. The improved property value along with company, brand and human capital gains offer much greater benefits that are enduring and more financially sustainable than immediate cost savings. The current investment climate does not detract from the fact that this set of returns will be more than competitive in the long-term.
1 - CleanTech opinion: Tapping a large, unsexy opportunity by Jo Hume, CVC Sustainable Investments, 2 October 2008 www.environmentalmanagementnews.net
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