Blog - Commercial

02 April 2019

The Rise of and Benefits of the Green Building

The Australian property industry has recently had an appetite for innovation. This doesn’t just mean utilising the latest technology. It means new ways of approaching solutions and new ways of dealing with very old and original challenges such as environmental sustainability. Consequently, we’ve seen the rise of smarter and greener buildings.

So What Is A Green Building?

A green building refers to the physical structure as well as processes that are both environmentally responsible and resource-efficient, which are implemented throughout a building’s lifespan. This covers everything from a building’s design, construction, operation, maintenance and renovation through to demolition.

Green buildings are also often referred to as ‘Sustainable’ or ‘Environmentally Friendly’.

One way in which Australia has encouraged ‘greener buildings’ is by introducing a National Australian Built Environment Rating System (NABERS). NABERS is a six-star scale that helps owners understand the impact that their property has on the environment. The rating measures things like:

  • Energy efficiency
  • Water usage
  • Waste management
  • Indoor environment quality
  • The building’s impact on the environment as a whole.

Many people view delivering an environmental boost to society, as well as maximising shareholder value or profits, as two competing objectives. More so, the baton of environmental responsibility is often passed on to the government as a greater social concern and essential public service.

However, it actually makes good business sense for building owners to go green. It’s also important for tenants to factor in a building’s green status when choosing space for their business.

What Makes A Green Building?

According to NABERS, “every building has an impact on the environment. Buildings use 40% of the world’s energy, emit 40% of the world’s carbon emissions, and use 20% of the world’s available drinking water.”

Luckily, we’re becoming more and more adept in reducing energy, waste and water use.

Ideally, a green building has a NABERS rating of 4 or above. A rating of 4 is equivalent to “good”, 5 “excellent” and 6 “market-leading”.

More importantly, the building owner should be committed to measuring and tracking energy and water use and waste reduction. All materials in the building should have been sourced from manufacturers who have third-party environmental certification. The building owner should also consider including clauses that improve the environmental performance of the building and occupied spaces.

For tenants, the building should:

  • be close to public transport
  • have access to fresh air and natural daylight with workers located no further than 10 metres from a natural light source
  • have a fit-out constructed with low use of toxic materials, including paints, adhesives, carpet and joinery
  • zoned so that lighting in unoccupied areas (such as meeting rooms) can be switched off when not in use.

What Are The Benefits Of Green (Sustainable) Buildings?

Positive Impact On Staff Acquisition And Retention

Nowadays, most people have a healthy environmental conscience. This means businesses can use their building’s green status to attract and retain staff.

For example, end of trip facilities, such as showers and bike racks, can be a key deciding factor in where employees want to work. And let’s be honest, most of us spend a considerable chunk of our week in the office. So, we’ll want to feel comfortable in our working environment.

A happy staff member

Increase In Productivity

For tenants, research has shown that staff who work in a green office that reduces waste and is fitted-out to increase productivity and promote staff wellness (such as the inclusion of break-out / meditation rooms and efficient IT technologies) are more likely to be proactive and happy employees.

Cityswitch have estimated that staff costs in office-based businesses can account for as much as 90 per cent of a company’s total expenditure! This is if you consider things like:

  • Recruitment
  • Salary
  • Staff benefits/programs
  • The commercial space you need to accommodate
  • IT and office equipment
  • Absenteeism (Sickness, annual leave or other leave reasons, costs Australian businesses over $32 billion a year!)

That means if companies can achieve a positive uplift in productivity, the financial benefits are significant. For example, one of Macquarie Bank’s Sydney premises, located at 1 Shelley Street, recorded a 15 per cent productivity uplift after just one group of employees moved into their new 6-star rated office.

More so, a building owner’s commitment to addressing their building’s inefficient IT and electrical equipment. This can be one of the main culprits that add to a building’s carbon footprint. Addressing inefficiencies can also see a significant financial and environmental saving.

Attracting Both Tenants And Buyers

More and more building owners are now making upgrades to improve their Green Star ratings to attract buyers and tenants. The Better Returns report carried out by the Australian Property Institute showed that Green-certified buildings can decrease outgoings by 1.5 per cent while increasing rental values by as much as 5 per cent and sales values by nearly 12 per cent.

So, for buyers looking for a longer term investment, buying into a green building means that your asset is future proofed and will have ongoing appeal to environmentally conscious buyers and tenants.

Lower Operational Costs And Reduce Wastage 

Waste reduction is of a growing concern for building owners. One of the principal driving forces behind this is the realisation that it is a commercial issue; the less waste that is created, the less you have to pay for its by-product and/or waste removal.

Thus, ensuring your building is a green one that reduces the amount of waste produced will help promote monetary savings.

A forward-thinking Queensland council has committed to waste removal and
unveiled plans for an automated, underground waste collection system which is set to eliminate wheelie bins, noisy garbage trucks, vermin and odours. With the construction of the first stage now underway, the waste of Maroochydore City Centre will eventually be transported through a 6.5km system of underground vacuum pipes, from commercial buildings and apartments at speeds of up to 70km/h.

A green building in the middle of the city

Moving Towards More Green Buildings: A Greener Future

Approximately 90% of the world’s largest corporations now see climate risk as a threat business. What’s more, it’s pretty rare these days to find employers who do not possess a heightened concern for their staff health and wellbeing.

So, we will continue to see an increase in green office developments and refurbishments in premium office markets around the country. However, the mid-tier office market is yet to see any notable shifts in energy and emission reduction. Nationally, these B-grade spaces make up an estimated 52 million square metres of the 64 million square metres of office space! (Can you say opportunity?)

There are still complex barriers affecting the adoption of energy efficient measures, notably the lack of knowledge, capital, resources and time faced by building owners and property managers. However, a number of initiatives are being rolled out to help address this, including:

  • The NSW Office of Environmental and Heritage ‘No more average buildings’ program, which will provide financial assistance for energy-efficient improvements in buildings with low NABERS energy ratings.
  • The City of Sydney’s Sustainable Office Buildings Plan, which sets sustainable targets to achieve by 2030 and provides action plans for owners, developers, tenants and the Government.

All in all, the benefits of a green building include substantial cost savings in utility bills and lower vacancy rates for building owners. For tenants, studies have shown that green offices help to create an environment that is both functional, collaborative and comfortable, bolsters employee’s productivity. And this, in turn, helps boost the bottom line.

Not quite there yet? Try these 20 simple tips to reduce your company’s carbon footprint.

About TGC

TGC Sydney Property is a boutique commercial real estate agency that specialises in commercial sales, leasing and property management. We understand that sustainable buildings can really impact your economic performance. Now you know about the benefits of a green building, let TGC help you buy or lease a building or space with sustainable qualities.

Want more information? Get in touch with our team today!



Date: 02 April 2019 Author: TGC Writer
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About the author:

TGC Writer

TGC is the largest privately owned commercial real estate agency in the Sydney CBD, with over 20 years experience servicing the CBD, City Fringe and greater Metropolitan property market. We’re committed to assisting you with your total property needs, including buying, selling, leasing and property management.

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