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Net zero carbon office design will change the way workplaces get made, and how they work. David Thame talks to sustainability guru, Joanne Holden, about how to turn brown into green.
Birmingham is about to land its first net zero carbon office deal. The 60,000 sq ft requirement has been live since late last year, and it marks a turning point in the green building story.
With cities like Birmingham, Manchester and Nottingham all targeting early dates for their transition to net zero carbon economies, more requirements of this kind are inevitable. It will change the way office buildings are made and how they work.
But behind the glamorous prospect of designing and building new green workplace developments sits the more complicated problem of reducing carbon emissions in older, browner buildings.
Relatively few landlords have taken up the challenge. They can see the costs and the difficulties very clearly, but the payback is much harder to discern. The fact that low carbon buildings do not (yet) attract the premium rents and investment values many hope for adds to the disincentives.
According to Peel Land & Property Sustainability Director, Joanne Holden, this is just part of the story. As one of the handful of figures in the property industry pushing the case for re-greening older buildings, her testimony is powerful.
Peel Land & Property say their portfolio is the first in the UK to achieve net zero carbon status.
Grade A offices across Liverpool and Greater Manchester, and an historic building in Glasgow, have been third party verified against UK Green Building Council’s 2019 definition.
The 11 properties in the net zero carbon portfolio range in size from 25,000 sq ft to over 120,000 sq ft, dotted around Manchester and Liverpool.
They expect energy and carbon savings of 60% annually. But finding the right moment to re-green older buildings is a headache. There are only so many opportunities to take serious action during a 10-15 year refurbishment cycle, and for most of the time there will be tenants in occupation, limiting the scope of potential carbon-lowering works.
‘The problem with old buildings is that they are old buildings. The Vic, the 115,000 sq ft block we’ve tackled at Media City, Salford, was built in 1991 – a different era.’
‘For instance, there were issues ranging from the boiler to the kind of cellular office space that was originally installed. The air conditioning was installed for cellular offices, so take the partitions away and the aircon doesn’t work, you get surprising cold spots, surprising hot spots, which is a nightmare and expensive to put right,’ Joanne explains.
‘We were lucky at The Vic, we had the kind of opportunity to refurbish that doesn’t come around that often, meaning a building with pretty much all the tenants out.
‘We spent £9 million, including £1.1 million on energy saving equipment. It is still bedding in but already it is about 60% more efficient and reduced our carbon emissions by about 600 tonnes a year, as well as using less fuel,’ she says.
The Vic refurbishment has resulted in a staggering electricity consumption saving of 1 million KwH The payback is calculated over nine years, to allow for fluctuations (upwards, presumably) in energy costs – but with an energy bill down by £200,000 a year, the maths are convincing. Landlords looking at these kinds of numbers will be anxious to start retrofitting. The difficulty, says Joanne, is finding the right moment.
‘Getting possession of the building is the problem. And then getting control of the energy use, because often it is tenants who manage these issues. We are fortunate to have operational control of the building, and that means we can take a view of everything. Not every landlord is in that position,’ she says.
Peel L&P has a long track record of leadership on sustainability, being the first developer to achieve the BREEAM communities standard at MediaCityUK in 2011 and the first major property company to achieve the energy management standard ISO 50001 in 2015.
But newcomers need to be careful, Joanne warns. ‘Landlords and their advisors need to be aware of the need for really good communications on design and installation,’ she says. ‘Every building is difficult and you will inevitably have to tweak the design so it works for your building. If this doesn’t happen, if design and installation are not joined up to provide a bespoke solution, you risk disappointing results, even if you buy the best, most energy efficient equipment.’
Like so much in the world of sustainability, ‘net zero carbon’ makes a lovely slogan but a fiendishly complicated target.
Net zero carbon, zero carbon and carbon-neutral – they all mean slightly different things. Then comes the really tricky problem of deciding what carbon you count – and net of what?
Whilst there is growing demand from occupiers, the developers of new buildings (and landlords of existing buildings) are more cautious – going dark green comes with risks.
What they would like to see is a value-adjustment in the way the market views low carbon buildings. That means higher rents and improved investment values. Today that uplift is not easy to spot on a spreadsheet.
Research by Green Street Advisors showed that green buildings attracted tenants more quickly than their less-green peers, but not by a lot (under 1% improvement in occupancy rates, rising the greener your portfolio got). However, Green Street said it found no evidence that green offices command premium rents.
The big win was on heating, lighting and hydration costs, which could be sharply down.
Unfortunately, because heating, lighting and hydration are relatively small items in a new building’s capital costs, the overall effect was muted. It shaved just 3% off the capital costs – and most of that was enjoyed by the tenant rather than the landlord. And so long as its tenants – not developers or landlords – who benefit from cost savings, but not from higher rents, going dark green is always going to be a really big ask.
Even so, most observers expect more net zero carbon development in anticipation of a premium price, and under political pressure.
This trend is increasingly visible in Birmingham, where the city’s new clean air zone and proposals for a workplace parking levy are part of a package of measures intended to green the city centre.
‘We are currently working with a number of clients to navigate what net zero carbon buildings mean for their portfolios as it starts to become part of the mix of requirements, as awareness rises and new initiatives to tackle pollution in the cities come into force,’ JLL’s Birmingham office agency Director, Jonathan Carmalt, says.
One of the big hopes of the net zero carbon campaign is improved building management systems (BMS). The introduction of real time data, made possible by 5G telecoms, promises to transform the way buildings work (and, in consequence, how they look). But how to do this? Major landlords like LGIM Real Assets (Legal & General) are teaming up with proptech businesses to find a solution.
LGIM have signed up with award-winning tech start-up, Demand Logic, to monitor and enhance building performance across its property portfolio.
Demand Logic’s cloud-based software provides real-time intelligence to property stakeholders, helping improve productivity, save energy, identify faults and increase comfort and wellbeing among occupants. Whereas previously performance data would be visible only to a building management systems’ engineer, Demand Logic’s software creates an online forum for over 50 potential users, including asset managers, property managers and facilities managers, allowing issues to be addressed quickly and efficiently.
Demand Logic’s software has been deployed across seven of LGIM’s commercial buildings and will now be rolled across a number of other properties within the portfolio. Since June last year, Demand Logic’s software has helped reduce energy need by 1,547,826 KwH (£180,000 per year and a 400-tonne carbon saving), an outcome roughly in line with the Peel experience.
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