Bridging the Green Gap

Bridging the Green Gap

Energy efficiency may be business-as-usual in the premium office market, but a ‘green gap’ in the mid-tier sector is presenting a communication challenge for property professionals, says Savills national sustainability manager Dale O’Toole.

What are the average NABERS ratings?

There are an estimated 80,000 mid-tier commercial buildings around Australia – equating to 52,000 million square metres of space – most of which is in need of an upgrade.

While a 4 star NABERS Energy rating is the average for Premium and A Grade stock, the mid-tier – consisting of B, C and D Grade offices – averages just 2.4 stars.

In November 2015, the Green Building Council of Australia (GBCA) released the Mid-Tier Commercial Office Buildings Pathway report, which found these buildings tend to have lower levels of energy efficiency than Premium or A Grade buildings.

What are the barriers to improving energy efficiency?

The GBCA report identified a range of barriers, from split incentives to lack of skills and experience with building retrofits, with the diverse ownership profile of these buildings making it a challenge to gain critical mass.

“We’re talking about high net-wealth individuals, syndicates, small funds, developers and cooperatives. They each have specific drivers that influence the investment strategy for the buildings they own, although it’s fair to say they share a focus based more on stable rental income than CSR,” O’Toole says.

“The GBCA report is a great foundation piece, as it clearly articulates where the touch points exist with respect to engaging with the building owners around sustainability,” he says.  

“In terms of potential triggers for change, I do think there needs to be a balanced and considered use of carrot and stick mechanisms to achieve the outcomes we’re looking for.”

The proposed change in the mandatory reporting threshold for offices is a key case in point. 

“A reduced trigger of 1000sq m would have considerable implications for mid-tier building owners, although not all will respond in the manner we might expect. Some building owners at the lower end of the market don’t appear too concerned by having to disclose a zero or half star NABERS rating. Their primary interest may be to hold on to the asset for a period of time and then sell at a later date for future repurposing, such as residential,” he says.

“At the other end of the spectrum, we are starting to see financial incentives becoming more targeted towards mid-tier building owners. Sustainability Victoria’s Energy Efficient Office Buildings program and the more recent No More Average Buildings program managed by NABERS in NSW are definite steps in the right direction.”

O’Toole believes a general lack of awareness is ultimately holding the mid-tier sector back from broad environmental reform and the role property professionals can play is critical. 

What can we do?

“It comes back to effectively communicating the business case for green building initiatives – distilling the wealth of industry information into meaningful dialogue that mid-tier building owners can relate to.”

With more than 195 million square metres of property managed globally, Savills is committed to engaging with building occupants to improve corporate sustainability and environmental management.

Find out more on the Savills Earth service page.

The above article has been extracted from the Property Council of Australia.

The Savills Green Tenancy Guide provides simple tools and techniques to help reduce your business environmental impact. The guide has a focus on office equipment, lighting, water, waste, fit-outs and green leases. We hope you find this guide a useful tool and encourage you to contact Savills Earth on any sustainability matters.

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