Industrial Ecology Conference - Sept 2010

Preparations are well underway for the 2nd Australasian Industrial Ecology Conference will be held in Sydney from 2 – 3 September 2010.

The conference will bring together a collection of like minded professionals seeking to establish Industrial Ecology in the forefront of Australian consciousness.

See http://www.austindustrialecology.com.au/ for more information.

'Green' buildings key tenant demand: older office towers

LANDLORDS of older office towers are spending hundreds of millions of dollars to "greenify" older buildings in their portfolio in the hope of retaining tenants. (The Australian, 13 May 2010)

The joint owners of 20 Bond Street in Sydney are spending up to $66 million to strip the $170m building back to bare walls, upgrade it, and to push it up the sustainability rating scale.

The Commonwealth Office Property Fund recently completed the refurbishment of 175 Pitt Street at a similar cost (including leasing).

Another owner, GPT Group, is repositioning one of its core assets, 530 Collins Street, in Melbourne, with a $45m refurbishment to achieve a five-star rating under the National Australian Built Environment Rating System.NABERS Energy rating.

NABERS is a performance-based rating system for water and energy usage; waste handling and environmental standards.

A Victorian government department has renewed its lease at 570 Bourke Street after its landlord, Charter Hall Group, agreed to work towards lifting the green standards of the building, according to an industry analyst.

Buildings lacking green credentials are increasingly not making tenants' shortlists.

ING Office Fund chief executive Tino Tanfara said tenants, particularly government departments, required a minimum of sustainability standards in all the buildings they occupy.

IOF and Mirvac Group are joint owners of 20 Bond Street, Sydney, which was occupied by the Macquarie Group for 20 years. Mr Tanfara said the target was to achieve a five-star NABERS rating for the building.

"Government departments, particularly, require ratings of at least 4-4.5 star," Mr Tanfara said.

As well as the NABERS rating, he said the aim would also be to clinch a Green Star rating, which usually applied to brand new buildings that meet its standards on design and construction.

Green Star is a comprehensive, national, voluntary environmental rating system that evaluates the environmental design and construction of buildings

"If we didn't upgrade the building we would get lower rent for it. Now we can at least ask for market rent," Mr Tanfara said.

Colonial First State's head of commercial and industrial operations, John Dillon, said sustainability was an issue with major corporate tenants.

"This is the reason we undertook to obtain the NABERS and Green Star ratings for the building," Mr Dillon said.

Tenant representative Geoffrey Learmonth, principal of LPC Australia, said tenants wanted premises that would be conducive to attracting and retaining younger staff.

"At a meeting with a client this morning, he gave us a list of key considerations, including sustainability, for new space. But it is not the only thing on their mind," he said.

Mr Learmonth, who negotiated on behalf of law firm Clayton Utz for the lower floors of 1 Bligh Street, Sydney, a 6 Green Star building (being developed by Dexus Property Group) said its green rating was not the only factor for the firm's decision.

He said tenants expected landlords to meet their demand and it was "highly unlikely" that they would "pay a cent more" for being in a green building.

GPT's office investment manager, Luke Briscoe, agreed that while it would be difficult to quantify the dollar value of having the right green ratings, the reality was "we are able to do deals faster".

He said 70 per cent of 530 Collins Street had been leased at "high $300 per square metre".

"We can't quantify the value of the rating in terms of dollars per square metre, but we are definitely able to do deals faster than if we did not have such a rating," Mr Briscoe said.

Investa's general manager for sustainability, Craig Roussac, agreed, saying "instead of getting a building leased in six months, we are able to get it leased in two months".

"The biggest game in town for all large institutions is to keep vacancies low," Mr Roussac said.

Jones Lang LaSalle national director of leasing Stuart Colquhoun said tenants would seek discounts in rent if a building did not have the right sustainability standards.

Some were using sustainability as leverage to get landlords to refurbish an older building.

He doubted that a Victorian government department would renew its lease at 570 Bourke Street, if Charter Hall did not commit to achieving a minimum benchmark of 4 Green Star rating.

Mr Colquhoun said that, typically, tenants put forward a list of criteria, and sustainability would be one of them

Launch of Ffitch Solutions blog

Following the launch of Ffitch Solutions as a consulting practice dealing with the Built Environment, Sustainability and Industrial Ecology, it appeared appropriate to launch a blog of relevant information. Please contact Ffitch Solutions directly with any comments.