Green building, far from being an operational burden, is taking over as a driver of value for developers, investors and tenants of commercial buildings as the business case continues to crystallize, was the resounding message at the recent CEEQA RealGreen Symposium & Fair.
However, the private sector should not be left to find the solutions on its own and more regional and national political leadership is required to fast track this sea change in the green building debate.
More than 100 business leaders and sustainability experts engaged in the emerging Europe commercial property sector gathered for a series of presentations, discussions, panel debates and an exhibition of green building ideas and services at the Warsaw Marriott Hotel on April 17, for an all-day symposium preceding the ninth annual CEEQA Gala & Industry Awards. The event also saw the presentation of four new CEEQA awards for green building and commercial real estate investment in the region.
Lauralee Martin, Chief Operating and Financial Officer for global real estate consulting group Jones Lang LaSalle, supported the view that financial considerations were gradually superseding ethical considerations, citing the case of the green retrofit of the Empire State Building where only 12% of the retrofit budget was dedicated to green solutions, yet resulted in significant operational cost savings and contributed significantly to an improvement in tenant appeal resulting in almost a doubling of rental income from the building which she described as "true value creation".
Martin's presentation also focused on the long-term "future proofing" value to built assets as well as companies, in a changing business climate where failure to adapt to the new paradigm could be costly in the future, however unquantifiable that may seem today.
This point was echoed in a later presentation by Karol Bartos, Poland Country Manager of investor MGPA, which bought the sector's iconic new office building Rondo 1 in Warsaw shortly before the global economic crisis. Rather than a further drain on the investment, the company saw the first Leed Gold retrofit of an office tower in Europe as a value-add strategy to protect the value of the investment through lower operational cost savings and increased rental income, translating into improved asset value.
"Most of it was cheap to implement but produces big savings our target was to maintain price position in the Warsaw office market. Reduced occupancy costs can result in future rent increases," said Bartos.
The Head of Sustainability for global built asset consultancy EC Harris, Nick Hayes, provided a presentation focused exclusively on the value generated through operational costs savings, commenting: "The market recognizes green, but is still not certain how much money and effort to put into it, but it is becoming clear that it saves money, carbon and reduces risk and demonstrates brand leadership."
While panelists Luciano Capaldo, Chairman of RICS Europe, and David Chayton, Regional Head of Investor added a note of market realism, agreeing there was still a fear of the green premium that the business case has to answer in more quantifiable terms a point echoed by Roger Andersson, Country Manager of Swedecenter and developer of the ambitious 'Business Garden' project in Poland, who commented: "instead of stretching the technology envelope, existing building techniques used well can already deliver a green building."
However, Daniel Harris of Tristan Capital Partners said green building "is not the investment strategy itself but is part of our investment strategy we can't ignore it. Green will certainly be an opportunity for us to add value in the future."
Jeroen Van der Toolen, Head of Ghelamco, one of the most successful office developers in the region, said that while tenant demand was not yet driving his company's conversion to green, he was certain that his company is going to make money by going green: "We are still not seeing tenants and developers investing together. We are hearing from