New research reveals that it’s not necessarily iconic ‘statement’ buildings that modern businesses want – it’s sustainable ones. And if developers don’t shape up now, they will soon find their buildings standing empty as rising energy costs force finance directors to seek smarter, more energy efficient alternatives to help kerb rocketing bills. Indeed if developers continue to ignore the importance of sustainable buildings, the cost won’t only be the earth, it will be their livelihoods.
In 2007 the EU introduced the Energy Performance Directive, making it a legal requirement to assess and display the energy performance of a building. Given issues raised by a recent Confederation of British Industry (CBI) survey, it seems that the marketplace will be placing specific demands on developers in the coming years.
The EU directive will put considerable pressure on developers, forcing them – whether they like it or not – to abandon the commission of cheap, disposable buildings. My advice is not to shy away from outlay costs of sustainable buildings, but consider the long term financial benefits of them.
Maintaining capital value
Commercial buildings with a comparatively poor energy performance are likely to be found to have a shorter lifespan and be harder to sell, thus leading to a decreased capital value, all as a consequence of the introduction of the EU legislation. It is therefore expected that demands for energy savings, coupled with the EU Energy Performance Directive, will come at a cost for commercial landlords and developers. If they do not respond, Britain’s major cities may soon become littered with hulking, empty, uninhabited shells of buildings as businesses seek more cost effective alternatives.
Over the past decade or so, the concept of sustainability seemed to many a concern only for environmentalists and eco-warriors rather than for commerce or small businesses. But recent initiatives seeking to understand climate change’s impact upon economics, such as last month’ Stern Review, have led to a distinct shift in attitude and it is not just corporate conscience driving this change. It is also cost.
Acting now
It’s practically official that the scientific debate about climate change is over, and with the release of the recent Stern Report, the debate about the economics of climate change is almost over as well. What this leaves us with is what is, in effect, the political decision of when we act.
The Stern Report makes it very clear that if greenhouse gasses emissions are to be brought under control, and limited to 550ppm, then we can not afford to act at some point in the future, we have to act now. The argument that Stern puts forth is not driven by a simple ecological argument but a careful study that considers the economic impacts for global warming. It is argued that if we act now we can spend a little as 1% of GDP on averting the consequences of a worst-case scenario for climate change. If we delay then the costs has been estimated to rise to 5% of GDP. If a broader range of risks are considered then this could rise to more than 20% of GDP. As an architect I have for many years taken sustainability and global warming very seriously. The Stern Report gives us the impetus to renew my efforts.
A number of recent studies assessing sustainable design in the property market have noted changes afoot. One, by Gensler, found that 65 per cent of property directors regard energy efficiency as purely a cost control issue, while 20 per cent see it as a corporate responsibility. Ninety per cent of businesses would be more willing to pay for energy-efficient buildings than for iconic ones – a larger number than developers currently believe.
This survey is backed up by research conducted by the CBI and property consultants GVA Grimley, with more than 75 per cent of respondents saying they are willing to pay more, through higher service charges or rents, to occupy premises that are environmentally friendly, energy-efficient and water-efficient. The statistics are revealing on paper, but whether or not businesses are willing to invest in such buildings in reality is another question altogether. Undoubtedly the risk is one of the reasons developers are reticent about commissioning such costly, sustainable buildings. The Stern report suggests that failure to act now will only incur further, and more significant, costs in the future.
The benefits boost
That said, popular opinion is starting to shift and it is not only cost driving new sustainable commissions, but a genuine recognition that we are sitting on an environmental time bomb. The research also showed that firms recognise other benefits of occupying ‘green’ property, such as raising staff satisfaction, increased productivity and improved company image. Firms in the finance and business service sector in particular placed a high level of importance on the corporate benefits of greener buildings.
Buildings consume 50 per cent of the energy generated in the UK and, as natural resources drain and energy prices rise, so do company bills. I have witnessed a gradual shift in emphasis as finance directors and MDs recognise that rising energy bills could have a serious impact on profits. Whatever the reasons for investing in a sustainable building, the issue is one that many companies can’t afford to ignore, especially if they want to remain profitable in the long term. Whatever the reasons for investing in a sustainable building, the issue is one that many companies can’t afford to ignore, especially if they want to remain profitable in the long term.
NOTE: This article was originally written when author worked at DEWJO’C Architects (which latterly became Devereux Architects). In 2011 Mark set up his own practice so that he could continue to pursue his interests in developing sustainable, low energy architecture.
About the author:
Mark Siddall, principle at low energy architectural practice LEAP, is an architect and energy consultant specialising in low energy and PassivHaus design. He was project architect for the Racecourse Passivhaus scheme and has a keen interest building performance. In addition to architectural services his practice provides project enabling and education for clients, design teams and constructors.
LEAP website: www.leap4.it