Sustainability and resilience of buildings are now the top priorities for landlords and tenants as they recalibrate their properties to cope with extreme weather events and climate change.
In what was once a tick-of-the-box exercise as part of the sustainability rating aspect of a lease, the smoke that engulfed office towers in Sydney and Melbourne in December, has bought it to the fore of the 'must-do' list.
Owners of the many office projects are now working furiously to ensure the properties are weather-proof and can handle the changing climate conditions. And the assets being rebuilt are also under close scrutiny by investors, tenants and landlords.
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| Artist's impressions of AMP's new Quay Quarter Tower at Circular Quay in Sydney. |
The Sydney Law Courts and the home of the Sydney Morning Herald in Pyrmont were evacuated in mid-December when the bushfire smoke seeped in and set off the alarms.
Under the title of Environmental, Social and Governance, (ESG), buildings owners are being required to exercise social responsibility to ensure the comfort of their paying tenants.
In the same way owners are installing solar panels on the outside, it is future-proofing the internal aspects so that a building can last over 40 days of 40-degree heat, dust and smoke.
ISPT, as a large landlord, now has an average Indoor Environments rating of 5.3-stars across its portfolio of 26 properties – well above the national 4.7-star average. This includes sites such as 345 and 363 George Street, part of the George Place precinct.
Jenine Cranston, senior director, office leasing at CBRE, said the start of 2020 "has seen our clients respond to the catastrophic fires and the challenges they present to the built environment".
"It has put a particular focus on how they can prepare for climate-related weather events and the associated financial impact," Ms Cranston said.
"It is clear we are at a point of intersection where the evolving needs of clients and tenants are yet to be met in addressing and effectively managing climate-related risk in the built environment," she said.
AMP Capital managing director, office & logistics, Luke Briscoe said that sustainability is now an expectation by tenants and "is just one of many ways we need to differentiate our assets".
He said the number of investor requests, specifically asking about AMP Capital's ESG credentials, has increased "substantially".
"This trend highlights that ESG is increasingly becoming a factor for investors, when choosing a manager. Our ESG team, headed by Chris Nunn, launched the AMP Capital Real Estate ESG strategy late last year and he had two questions asked by tenants in 2017; 21 in 2018; 31 in 2019 and 6 so far in 2020 , meaning it's probably on track to exceed last year," Mr Briscoe said.
AMP Capital’s Quay Quarter Tower at Circular Quay has achieved a 6 Star Green Star – Office Design v3 rating from the Green Building Council of Australia, for its innovative environmental features.
Dexus chief executive Darren Steinberg, the country's biggest office landlord, says the Australian bushfire crisis has highlighted the importance of climate resilience across the group's property portfolio.
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| An artist's impression of 80 Collins Street, Melbourne. |
CBRE’s Emma McMahon, the national director sustainability, has also been preparing clients and investors who will be responding to the recently formed taskforce on climate-related financial disclosure.
"We’re seeing a lot of enquiry from landlords of commercial assets who are realising the importance of future-proofing their investments from climate-related weather events such as extreme heat and flooding," Ms McMahon said.
"We’re helping landlords identify opportunities for operational improvement or requirements for capital spend. For example, so that equipment in the building is capable of withstanding the more frequent extreme heat days or the heavy rainfall events."
Ms McMahon said failing to show measures to mitigate risks will have a direct impact on insurance costs going forward also, as insurance companies are also reshaping their risk strategies in response to extreme weather events.
"Tenants are also asking us – what is the energy rating of the building, are there facilities for organic waste management, and, during our recent period of poor outside air quality, what are the procedures being taken to ensure a healthy indoor environment?,'' Ms McMahon said.
Links
- Changes in building and construction have great potential to slow global warming
- Intelligent Buildings: A Crucial Ally In The Fight Against Climate Change
- Deflecting the heat of climate change
- How the Architecture Industry Is Reacting to Climate Change
- How The World Of Building Materials Is Responding To Climate Change
- Are buildings ready for climate change?
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