Three Signs Real Estate Must Move to a More Sustainable Model

1. Governments are putting sustainability into law and regulations continue to tighten.


The response of the international community to Donald Trump’s decision to withdraw from the 2015 Paris agreement demonstrates that we (most of the rest of the world) have long since reached our ‘tobacco’ moment and acknowledged that climate change is real and we must respond with changes in our current models and behaviour. Examples of this include India’s and China’s current outperformance of the Paris goals, California’s and China’s agreement to continue working on climate change, and the UK Minimum Energy Efficiency Standards (MEES).

Commercial Real Estate can account for up to 50% of C02 emissions globally, and 88% of potable water consumption in the US. An industry that has such significant impacts on C02 emissions and energy consumption will continue to get scrutinized more and more as governments implement further environmental legislation.

[clickToTweet tweet=”Commercial Real Estate can account for up to 50% of C02 emissions globally” quote=”Commercial Real Estate can account for up to 50% of C02 emissions globally. An industry that has such significant impacts will continue to get scrutinised as governments implement further environmental legislation.”]

An example of this is the UK’s Minimum Energy Efficiency Standard (MEES) which comes into effect in 2018, whereby properties with an F or G rating are unable to be let. Amazingly one third of landlords surveyed by Property Week earlier this year were unaware of these new requirements.

Our EDGE team can develop a strategy for you to ensure you are prepared for MEES and de-risk your property portfolio.

Businesses have also responded in ways that exceeded my expectations (call me a pessimist) such as Apple’s commitment to the Paris agreement and ‘green bond’ environmental push, US auto industry’s commitment to Paris, and an impressive range of real estate investors have reaffirmed their commitments to match or exceed the Paris agreement’s goals. The NHS and several UK companies will no longer occupy properties with an EPC rating of a C or less, further emphasising the focus businesses and government are putting on their environmental responsibilities.

Further evidence of the increasing importance of sustainability within Real Estate can be seen through the exceptional growth of real estate sustainability benchmarks over the last decade such as GRESB, BREEAM, LEED and WELL.

Take away: Governments are committing to a sustainable future and are tightening regulations on energy efficiency and sustainability. A paradigm shift has happened where leading businesses are moving to ‘conscious capitalism’ where their contribution to society is considered and profitability is no longer the only goal, regardless of the consequences. The evidence to demonstrate that consumers will shirk environmentally friendly properties may be anecdotal for now, but I believe that soon we will have enough evidence to establish this as a growing trend within the real estate industry.

Real Estate investors and asset managers must recognise these shifts and make changes in the management of their portfolios. Those who stand still in sustainability will be moving backwards, and will see the value or their properties decrease and their economic/environmental risks increase.

EVORA can advise you on the best strategy to future proof your portfolio and minimise risks. Use our SIERA software to get in-depth insights into the environmental performance of your properties.

 

2. Space as a Service is the new way of working


The millennial generation has come of age and has joined the work force, and it isn’t working like the generations before it. This is the generation of Uber, Airbnb, and BorrowMyDoggy, and it will be sharing office space as well.

There is research that estimates that around half the UK workforce can work remotely, and around 40% of the UK workforce will soon be freelancers. Leases of 20-25 years are now the exception instead of the norm, with tenants putting a greater emphasis on flexibility. This has coincided with a boom in flexible office providers who are taking advantage of technologies which enable this new way of working. That this workstyle has caught on is demonstrated by the fact that WeWork was the largest new occupier of space in the USA in 2016, and British Land has also ventured into the flexible workspace section with its new Storey co-working offering in London.

Research by Knight Frank and the Instant Group shows that this market has grown by 16% in 2015-2016 and 18% in 2016/2017 in the UK. This combined with WeWork’s estimated valuation of $16bn demonstrates that Space as a Service is an evolution within real estate opposed to a fad.

The increased demand for flexibility from tenants represents a challenge for landlords as short-let properties generally underperform against long term lets. As explained in a recent Property Week article:

“While rental values have grown faster on shorter-let properties in the central London office market, where the demand for flexibility has increased significantly, shorter-let assets had delivered a cumulative return of 91% over the past nine years compared with 113% for longer-let properties.”

Take away: The ‘Uberisation’ of space means traditional landlords must move with the times and technology. There is a shift where they need to move from their existing model to becoming service providers of space. As an all-inclusive provider (rents, rates & services) the landlord will no longer be constrained by the ‘landlord-tenant dilemma’ of improvements and any energy efficiencies will help the profitability of their properties. Their self-interest will drive them to make their properties as energy efficient as possible.

Our EVORA EDGE technical engineering team can help ensure you improve the energy efficiency of your properties and maximise the lifetime returns of your assets.

 

3. The rise of Science Based and Carbon Neutral Targets


Real estate developers and companies with large property portfolios are committing to Science Based Targets (SBT) and recognising that sustainability is no longer just a Marketing and PR exercise, and that their environmental impact must be measured.

For those that don’t know, a SBT is a carbon emission target that is defined as ‘science-based’ because it is in alignment with the 2oC target set by the 2016 Paris Agreement. It involves companies assigning themselves a target in line with their proportional contribution to global emissions. This requires short and long-term planning when considering expansion plans in the context of carbon reduction commitments.

A range of business have made commitments from manufacturing, energy, industrial, telecommunications, to retail. Examples include Coco-Cola, Eneco, Sony, and Wal-Mart. In the UK real estate sector, companies setting themselves SBTs include Land Securities and British Land. So far it’s a small number, but I am convinced that this number significantly increase over the next 12-24 months.

[clickToTweet tweet=”Companies are committing to #SBTs and recognising their environmental impact must be measured” quote=”Real estate developers and companies with large property portfolios are committing to Science Based Targets (SBT) and recognising that their environmental impact must be measured.”]

Take away: Real estate does not live in a bubble. Leading blue-chip companies are setting themselves SBTs and most of them will have significant property portfolios. As mentioned earlier, if commercial real estate is estimated to account for up to 50% of global carbon emissions you can be assured that these companies are looking at the performance of their property portfolio and how they can improve the performance. For landlords that want to continue to have competitive properties that attract blue chip business (which often draw in more businesses) then they need to consider the environmental performance of their assets.

Contact EVORA to see how we can help you set Science Based Targets for your property portfolio and become an industry leader in sustainability


These are just three signs that real estate must move to a more sustainable model, to discuss this more in-depth, contact a member of the team.


 

How To Use A Data Management System To Improve Your ESG Performance

Data Management: stop guessing and start making informed decisions that achieve real results!


Antoine de Saint-Exupéry once said “A goal without a plan is just a wish”.

I couldn’t agree more. Without a plan, you’re basically lost and hoping you’ll get to where you want to go. But to make a plan you need to know where you are, what is on the road ahead of you, and understand if you’re heading in the right direction. In the world of sustainability this is where data comes in.

As I mentioned in my last blog, we create massive amounts of data in our buildings every day. The challenge is making sense of it all, allowing us to understand what the impacts of our actions are, and what we need to do (or not do) to reach our end goal.

A data management solution, therefore, is essential in helping you achieve your objectives – understanding your data will allow you to understand your challenges and make the right decisions.

Using SIERA, we have been able to identify energy savings of between 10-15% on average for our clients, without any CAPEX costs. Let’s put this figure into perspective for a moment: Investment buildings consume around 40% of the worlds energy and contribute up to 30% of Greenhouse Gas (GHG) emissions. Imagine what results we could achieve collectively, globally, with said 10-15%  energy savings!

More than 95% of the world’s building stock is in existing buildings, and although we are making great advances in green technologies for new buildings, we need to make sure that we optimise the use of our existing ones as well.

Besides the potential of energy savings and GHG reductions, there are many other benefits to managing and sharing your data:

  • You can find and understand your data, allowing you to make more informed decisions
  • Business continuity if staff leave or new team members join
  • Avoid unnecessary duplication e.g. re-collecting or re-working data
  • Sharing data leads to more collaboration amongst teams
  • Improved scores on sustainability benchmarks through better management/data collection

Data management is not just about collating and reporting out the data. It is about understanding the data you’re producing to make informed decisions based on the results of your actions.

“However beautiful the strategy, you should occasionally look at the results.” – Sir Winston Churchill


If you would like to learn more about the positive impact a data management system can have, please join our experts and GRESB on July 6th at 9.30 BST at our free webinar. More details on the webinar here.

In one hour, you’ll see how easy it can be to improve the energy efficiency and sustainability of your buildings, and achieve your ESG goals!



PS – SIERA is now on Twitter! Here’s our first Tweet, which has already got people talking!

Webinar: How To Save Up To 70% Of Your Time On GRESB Using SIERA

UPDATE: This webinar is no-longer GRESB specific. We will still be showcasing the GRESB automation functionality, but due to high demand we will also be demonstrating SIERA’s other features, such as its M&T module, which has been described as ‘groundbreaking’, ‘visionary’ and ‘the best system of its kind’. Trust us – you’ll want to see this! Scroll down to book now.


Goodbye spreadsheets, hello automation!

We are delighted to be partnering with GRESB on this upcoming webinar.


What?

How to save up to 70% of your time spent on GRESB using SIERA. Discover how SIERA automation saves you time and stress by delivering immense GRESB reporting efficiencies.

When?

Thursday July 6th 2017, 09:30 – 10:30 BST

Who for?

This webinar is for all GRESB participant organisations, or those who are thinking of responding for the first time in 2018.


Don’t let GRESB reporting and multiple spreadsheets cause you undue stress next year. There’s a better way!

This live demonstration will show you:

  • How simple yet powerful SIERA is, and why it ‘wows’ everyone who sees it
  • How SIERA has revolutionised the collation of data in a format that enables Performance Indicator reporting thanks to its highly efficient drag-and-drop functionality
  • How the responses for various questions, including R5.1 (portfolio characteristics) and Q31 (EPC coverage), have been automated, thereby delivering even greater efficiencies
  • How easy it is to get started and how our expert consultants and SIERA will do the hard work for you

Following the demo, there will be a Q&A session with a representative of GRESB.


If any of this sounds appealing, what have you got to lose by attending this short free webinar?


[clickToTweet tweet=”I’m joining @GRESB and @evoraglobal on this upcoming webinar about #GRESB reporting automation!” quote=”I’m joining GRESB and EVORA on this upcoming webinar to learn about GRESB reporting automation using SIERA!”]


GRESB Premier PartnerAs a GRESB Real Estate Premier Partner, we are perfectly positioned to provide GRESB support. View our official Premier Partner profile.

We can work with you to complete the submission and understand your scoring, as well as develop a sustainability plan that will improve your future GRESB performance and align with your organisation’s key environmental objectives.