Business

Environmental rankings for older buildings win foothold in NZ

A year after their introduction to New Zealand, environmental performance rankings for existing buildings have established a strong foothold in this market – but the stellar take-up of such rankings in Australia shows there is significant scope for growth.

While new buildings have been able to seek environmental certification since 2007, it wasn’t until the launch of the Green Star Performance rating tool by the New Zealand Green Building Council in late 2017 that the owners and tenants of existing buildings could access a ‘health check’ for established properties. Green Star Performance has now been adopted by five projects encompassing a total of 21 buildings – covering more than 133,510 square metres of floor space.

In Australia, the Green Star Performance rating tool was introduced more than six years ago, and has taken that market by storm, with more than 994 projects seeking rating. In fact, 37 per cent of buildings in Australian CBDs have achieved green star certification through Green Star Performance and other rating tools.

The Green Star Performance tool gives building owners independent verification of their building’s efficiency, productivity and sustainability. To be eligible for certification, a building must have operated for at least 12 months under normal conditions, and its operational performance is assessed across nine categories: management, indoor environment quality, energy, transport, water, materials, land use and ecology, emissions, and innovation.

Building owners aren’t required to make the rating public, and it offers those with existing buildings with the opportunity to reduce operating costs and strengthen their appeal to tenants, while providing building occupants with healthier and more sustainable working environments which may in turn be a drawcard for employees.

Britomart Group was the first organisation in New Zealand to adopt the rating tool, applying it to nine buildings across Auckland. Six of the nine buildings in that portfolio now show a decrease in electricity consumption, along with decreased costs in other utilities such as gas and water.

One well-known building to adopt the rating in Australia is the Sydney Opera House. Opened in 1973, it obtained a 4-star rating in 2015, joining a number of World Heritage-listed buildings in demonstrating that older buildings can still be “green” and aren’t necessarily at an environmental disadvantage compared to newer ones. The Opera House’s lighting upgrade to more energy-efficient LED alternatives reduced energy consumption in its Concert Hall by 75 per cent, leading to a saving of around A$70,000 a year in electricity costs.

Across the Tasman, tenants have been the driving force in some cases. The National Australian Bank obtained Green Star Performance certification for offices in Bourke Street, Melbourne. When it came time to negotiate a new lease, the bank agreed with the building owner that certain best practice clauses would be included in the lease to ensure performance improvement in order for the building to maintain its Green Star standards.

Green Star certification offers owners of existing buildings a chance to level the playing field as they compete for new tenants with new buildings that are more energy efficient and sustainable from the outset.

Eligibility covers all types of existing buildings – from offices to big box retailers and mixed-use buildings, so could have a significant impact on the overall environmental footprint of older buildings if widely adopted. Again, early indications are promising. The 21 buildings covered by the new Green Star Performance programme are drawn from a wide range of property types, from offices and retail property to manufacturing and logistics facilities – even a crematorium.

Green buildings will deliver higher returns, healthier employees and reduced operating costs, which will be an attractive deal for all involved: from building owners and operators to occupants. Building owners are also supported in maintaining operational performance standards even after achieving certification, through the use of best practice lease clauses that will secure energy efficiency and lower emissions performance for the future.

With economic benefits sitting alongside environmental wins, there is a strong case for building owners and tenants alike to opt in. With over 41,000 existing buildings in New Zealand, it will be progress for all of us if they do.

Jane Holland is a partner with law firm Bell Gully, a foundation sponsor of Newsroom, and has recently been appointed as an independent director of the New Zealand Green Building Council, which runs the Green Star programme in New Zealand. Jane is the author of the current edition of the New Zealand Property Council Office Lease and has written a Green Lease Schedule on behalf of a number of major property companies. Britomart Group is a client of Bell Gully.

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