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Key Drivers & Barriers to the Sustainable Development of Commercial Property in NZ

Professor Sandy Bond

Format for this Session

Carbon Emissions from buildings Definition: sustainability Sustainable buildings: initiatives Green Rating Tools Cost as a barrier Economic argument for Research: Drivers & Barriers

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Sustainability in the Built Environment

Buildings account for ~33% of GHGe NZ 17%, AU 23%, US 38%, UK 42%

Emissions by Source - Commercial sector: 89% from electricity

Cooling (28%) Air handling (22%) Lighting (21%) Heating (13%)

GHG emissions from Buildings

Buildings in NZ account for 17% of the country’s GHGe’s

While the building sector is not the largest contributor to GHGe’s, it is one of the fastest-growing

Unfortunately, NZ’s emissions since 1990 have increased by 25% Unique GHG profile: Ag. & transport

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Sustainability

Sustainable development is defined as: “development that meets the needs of the

present without compromising the ability of future generations to meet their own needs”

World Commission on Environment & Development (1987)

Similar to goals of the RMA 1991

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Demand Drivers Govt. Policies

In 2001, the NZ Government introduced The NZ Energy Efficiency and Conservation Strategy (NZEECS) a detailed action plan for increasing the uptake of energy efficiency,

Barriers to uptake they identified: Lack of information Weak price signals Access to capital Split incentives between landlords & tenants

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Demand Driver: Energy Efficiency Strategies

Australia (Labour) NZ (National) Offices: Government requires 4.5* NABERS or 5* Green star

Government removed requirement for green star!

Mandatory disclosure – homes & offices from 2012

No Mandatory disclosure

Incentives, rebates, grants: e.g. Green Loan program, water tanks, PV, Solar HW

2009 Warm up NZ: Heat Smart (insulation & clean air)

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Green Rating Schemes The prominent rating systems worldwide:

Rating Tool Year Country

BREEAM 1990 UK LEED 1998 USA Green Star 2003 Australia CASBEE 2004 Japan NABERS-AU 2005 Australia Green Star 2007 NZ NABERS-NZ 2013 NZ

Initiatives to encourage environmental sustainability

The EECA is also the principal sponsor for the introduction & use of the NABERS Rating System in NZ (2013)

National Australian Built Environment Rating System

(NABERS - NZ)

Rating tool for existing commercial office buildings

Helps building owners & tenants benchmark their greenhouse performance

Rates buildings 1-5 stars - with 5 stars representing exceptional performance

Voluntary Rates a building on actual performance

over 12 months’ energy data

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As Built Ratings Proof in performance

Australia: 81/479 = 16.9% of rated buildings NZ: 5/49 = 10.2% of rated buildings Reasons for low %: Cost too much in $ & time

Requires collating 12 months energy & water use data

Pay back not worth it once building rented/sold

= Suggests ratings been used to market buildings primarily

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Green Star http://nzgbc.org.nz/main/greenstar/elaboration/about

Assesses: Energy 25% Indoor Environment Quality 20% Water 14% Materials 14% Management 9% Transport 8% Emissions 5% Ecology 5% Innovation +5%

Elements of Sustainability Measured by Green Star

Elements of Sustainability

Elements of Sustainability

Elements of Sustainability

Green Star

Green Star Certified Rating: 4 (score 45-59) “Best Practice” 5 (60-74) “NZ/Oz Excellence” 6 (75-100) “World Leadership”

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Cost as a barrier

Common argument against “going green” is that it costs more than a comparable conventionally designed building

Davis Langdon (2007) found that the initial impact on construction costs is likely to be only 3 – 5% for a 5 Star solution

Cases in 2009: no cost premium

Tenant requirements

Reduced OPEX via energy savings Versus

Increased Productivity The cost of employees to a business is said

to be approx. 10x larger than the cost of property

Tenants now placing a higher value on intangible benefits: Productivity Staff attraction & retention (esp. Gen Y) Reduced sick leave & absenteeism

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Tenant requirements

Increased Productivity Difficult to collect data on productivity esp.

where the work is of “knowledge” workers Indirect measures are commonly used: Absenteeism Hours worked Employee turnover + subjective data collected using surveys

from employees (self assessment)

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Increased Employee Productivity

Many studies about health & productivity benefits resulting from adopting green design strategies

8-25% ↓ in symptoms of allergies & asthma 20-50% ↓ in Sick Bldg Syndrome symptoms

Total: annual productivity gain $30/m2/worker Fisk, W, (2000), "Health and Productivity Gains from Better Indoor Environments and Their Implications

for the U.S. Department of Energy", Annual Review of Energy and the Environment, Vol. 25: 537-566 http://www.rand.org/scitech/stpi/Evision/Supplement/fisk.pdf

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Increased Employee Productivity

Relevant attributes in green buildings that promote healthier work environments (& measured by GBCA *s)

Less toxic materials

Significantly better lighting quality

Improved thermal comfort

Better ventilation (incl. opening windows; greater % fresh air)

CO2 monitoring, etc

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The Business Case

Australian part of a global study: Doing Well by Doing Good? Green Office

Buildings (2008) Eichholtz, Kok, & Quigley US-based study of office buildings

First credible evidence on the economic value of certification of “green buildings”

Investigates the relationship between investments in energy efficiency in design & construction & the selling prices commanded by these properties

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The Business Case in Oz New Research Australia 2010/2011:

Newell & McFarlane (UWS) Method:

Obtain databases of Green Star rated buildings (GBCA) & Energy Efficiency (NABERS) rated buildings

Obtain sale prices or values from IPD data/PCA

Compare sales prices/values of rated buildings versus non-rated buildings

Hypothesis: a premium is paid for energy efficiency or green ratings

The economic argument for Green

Value Premiums NABERS energy rating 5NABERS energy rating

9% green premium in value 3 - 4.5NABERS energy ratings

2-3% green premium in value The Green Star 12% green premium in value

The economic argument for Green

Rent Premiums NABERS Lesser impact in rent premiums

Green Star A 5% green premium in rents

Greening the Empire State Bldg

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Greening the Empire State Bldg

Anthony Malkin, President of Malkin Holdings owns the Empire State Building wanted to reposition the bldg

A team of consulting, design, & construction partners incl., Johnson Controls Inc., Jones Lang LaSalle, Rocky Mountain Institute (RMI) completed an 8-month modeling & analysis project which will save 38% of the building's energy & $4.4million (US) annually

https://www.esbnyc.com/documents/sustainability/presentations/san_francisco_010710.pdf 28

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Drivers & Barriers to Sustainable Development in NZ

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Research Aims

Identify methods to increase the uptake of sustainability practices that will help improve building performance & reduce GHG emissions

Investigate industry perceptions of the

drivers & barriers to the uptake of sustainable building practices

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Methodology:

1. Interview CEO of the GBCNZ 2. Survey property professionals:

Developers & investors Architects Building Contractors Property & project managers, Property consultants

Online survey developed Email to 300 practitioners with survey link

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Response Rate Online Survey: 18.7% Respondent Profile:

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Respondent Profile Office Location & Property Type

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Reasons Respondents not involved

in Green Building

Green building is seen as a nice to have but not essential at this point

Green building is a “fad” A matter of economics

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Reasons for involvement in Green Buildings

Source of Demand: 47% said demand comes from the

client

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Preferred sustainable features

Building Design & Materials

Plumbing/Water Heating/Cooling Ventilation Air Quality

Lighting Daylight

Specialised glazing (e.g. Low E; double glazing)

Flow restrictors &/or efficient fixtures/fittings

Specialised glazing (Low E; double)

Low volatile organic compound materials

Specialised glazing (Low E; double)

Solar passive Waterless urinals Chilled beams Fresh air T5 lighting Large floor plates/campus style

Rainwater capture External & Internal shading blinds

CO2 levels constantly monitored

Maximise natural light by siting of building

Recycled timber; or sustainability harvested timber

Leak detection systems

Multi-zone tenant controlled

Opening windows

Ext & Int shading blinds (some sensor controlled)

Recycled materials

Sensor taps Thermal massing (e.g. limestone wall)

Indoor plants Motion light sensors

Reduction in use of PVC piping

Multi cycle systems for cooling towers

Perimeter water pipes to assist cooling

Low volatile organic compound materials

Solar chimneys (heat extraction & draw fresh air in);

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Results: Green Initiatives

Note: Features selected are motivated heavily by the GBC

rating tools & desire to achieve a certain Green *

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Campus style offices Plants (1 per employee) Interconnecting floors Open atrium - heat

chimney

Typical Green Features

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Black water treatment plant

Public display of energy/water use Self monitoring

incentive Recycling

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PV Arrays Wind turbines

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Air Con

Chilled beam technology Use up to 30% less energy

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Results: What worked? Reducing heat at the façade

Low-E glass blocks long wave radiation (e.g. infrared heat) & lets in short wave radiation (e.g. visible light)

80% more light No need for artificial lighting Daylight factor of 5

Inside Outside

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CH2 Melbourne, Australia Built 2006 6* As Built 2010

Source: http://www.melbourne.vic.gov.au/rsrc/PDFs/CH2/CH2PostOccupancySummary.doc [accessed 21 Sept. 2009]

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Existing Building: CCC Civic Building 6* Green Star

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Existing : CCC Civic Building

Redevelopment of Old 1970s P.O. Building

Tri-Generation system Generates electricity from

biogas from landfill site Solar hot water Automatic daylight

sensors Double-skin façade – CO₂ monitoring system

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Barriers to incorporation of sustainable features

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Drivers for Building Green

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Perceived Benefits of Green

Acceptable Cost Premium: 52.9% - clients would accept up to 5% 24% - a 5 to 10% additional cost

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Summary: Most Successful Approaches

An integrated approach to design Adopting tried & tested technologies Having a sophisticated Building

Management System (BMS) & skilled facilities management team to closely monitor the building to achieve peak performance

Ensuring the interior fit-out matches the base building

A building user guide & tenant education of how to use the building optimally

The Impacts of the Canterbury Earthquake on the

Commercial Office Market

Professor Sandy Bond

Costs of the Quakes Lives Lost: 185 Cost of the quakes: NZ$15 billion + Half of CBD buildings collapsed or unsafe 15,000 homes non re-buildable

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Draft City Plan

Central Christchurch to be redeveloped as a low-rise, resilient, safe & sustainable city

http://cdn.ccdu.govt.nz/video-gallery/introducing-the-christchurch-central-recovery-plan

Key Projects: Cathedral Square

The greening of the civic & cultural heart of Christchurch: Cathedral Sq

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Build Green Christchurch The draft Central City Plan proposes that

new office & mixed use buildings within the Central City must achieve a ‘Pass’ score under Build Green

http://www.nzgbc.org.nz/images/stories/downloads/public/Initiatives/Part_1_-_Overview_-__final_-_Build_Green_Christchurch-v6.pdf

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