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Greener leases

There is significant dialogue happening in the office sector currently around ESG – environmental, social and governance – and how these three pillars or performance indicators are used to assess a company or investment project to determine its sustainability.

Office tenants are increasingly seeking to adopt a strategic approach to sustainability, given expectations about carbon footprints and the balance sheet benefits that energy efficiencies can bring to a business operation.

With 40 percent of carbon emissions coming from the built environment, the “E” component of ESG and commercial property are firmly in the spotlight and the corporate world is transitioning to a lower carbon, more sustainable, and more resilient future where people and community are paramount.

Cost-effectiveness and energy-optimisation

Having an energy management plan based around cost-effectiveness and energy-optimisation is central to a business’ sustainability goals and Steve Rendall, Bayleys national director office leasing, said “greener” leases are becoming more prevalent – particular among corporate occupiers.

“Today’s commercial property occupants and their employees expect landlords to take meaningful steps to improve the sustainability footprints of the building they occupy.

“As awareness of climate change increases and the built environment comes under greater scrutiny, landlords will be under growing pressure to be proactive in the sustainability space.

“Larger public sector and corporate occupants are depending on measurable and reliable sustainability data for reporting back to stakeholders, so landlords and/or their facility managers, will need to be across the terminology, the standards and the expectations.”

Rendall said conversations around sustainability need to be upfront at the time of establishing or renegotiating a commercial office lease, with clear definitions around who is responsible for what.

“The more proactive tenants are, the more likely the sustainability narrative will get traction.

“Occupiers need to ensure that the leases they sign reflect the sustainability principles that are important to their business, their employees and stakeholders.”

The Covid-19 scenario has heightened the need for buildings to be healthy places for people to work in. Office occupiers need to be able to attract and retain staff and commit to the health and wellness of its employees, while doing the right thing by its community, and the environment.

Issues for the switched on landlord

A switched on landlord will need to consider many factors contributing to a building’s energy efficiency, from building design, operation and maintenance, to building management and occupant behaviours.

Energy performance needs to be trackable, measurable and tenants and landlords will need to work closely to achieve a common goal of energy efficiency.

New Zealand’s goal is to attain net-zero carbon emissions by 2050, so the government has tasked itself to make the public sector carbon-neutral by 2025, and to be an exemplar for the private sector to follow suit.

All government departments and ministries are now required to measure their emissions and offset the ones they cannot remove by 2025, and to only occupy buildings meeting energy-efficient thresholds with NABERSNZ ratings.

Paula Bennett, Bayleys’ director strategic advisory, said there is now a clear opportunity for the government to lead on the sustainability front and to be definitive in their expectations.

“More can be, and needs to be, done as we seek to lower emissions in New Zealand.”

www.bayleys.co.nz/workplace/office/insights

Read: BAYLEYS – Bay of Plenty’s largest full-service real estate agency

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