Commercial tenants keen on green in response to carbon debate

Interest in energy-efficient commercial buildings is growing since the government released the details of its carbon tax scheme on July 10, according to Ray White.

Ray White Commercial office leasing director Anthony Harris says his office has fielded an increase in enquiries about sustainable office buildings since the government launched its energy plan.

"We have definitely seen a higher level of interest from prospective office tenants about building energy ratings," he says.

According to Ray White Commercial's John Skufris, sustainable buildings with high energy ratings are likely to become more attractive to both tenants and prospective owners.

"The increased demand driven by owners and tenants to secure properties with low operating and refurbishment costs may push up rental prices," he says.

Skufris cites the example of 189 Kent Street, a 15-storey commercial building in Sydney's western corridor overlooking Barangaroo, which upgraded its mechanical systems in late 2009.

The annual greenhouse gas reduction achieved was the equivalent of removing 9,500 cars from Australia’s roads.

“It has assisted our client reduce running costs and hold onto existing tenants for further lease terms,” he says.

"The increased demand driven by owners and tenants to secure properties with low operating and refurbishment costs may push up rental prices."

The sustainability message is also being pushed by CB Richard Ellis, which on July 6 became the first commercial real estate services firm in Australia to be certified under the Australian government’s carbon-neutral initiative.

CBRE president and CEO for Australia and New Zealand Tom Southern says the company wants to inspire clients to undertake similar activities and will assist them with introducing sustainability initiatives in their own portfolios.

“We seek to establish deep and lasting partnerships with our clients to enhance the efficiency of their buildings, reduce their environmental footprints and operating costs, and ultimately, add value to their business,” he said following the certification.

The proposed carbon tax is mooted to kick on July 1, 2012, and the government’s Commercial Building Disclosure Scheme will begin November 1 this year.

This requires current energy efficiency information to be disclosed to prospective buyers or tenants of office space.

"This scheme aims to ensure that credible and meaningful energy efficiency information is given to prospective purchasers and lessees of large commercial office space," Harris says.

A report by the Green Buildings Council of Australia says the proposed $23 per tonne of emissions charge of the nation's top 500 polluters will add to the operational costs of commercial buildings.

Buildings are set to become more expensive to refurbish due to price increases for emissions-intensive products such as glass, steel and cement.

As a result of these costs, Harris expects a greater demand for higher standards of efficiency and greener materials to not only reduce prices but to cut carbon emissions.

According to Low Carbon Australia CEO Meg McDonald, the introduction of energy-efficient technology into existing buildings will cut emissions dramatically.

“The potential for the commercial property sector is significant,” she says.

Low Carbon Australia estimates that buildings are responsible for about 40% of the world's current energy use and about a third of carbon dioxide emissions. This is more than any other sector.

A National Australian Built Environment Rating System rates a building on the basis of its measured operational impacts on the environment, and provides a simple indication of how well a building owner is managing environmental impacts in comparison with other neighbouring buildings.

Larry Schlesinger

Larry Schlesinger

Larry Schlesinger was a property writer at Property Observer

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