Angus Harvey Ross

20 February 2013  – One place to start to change the world is with tenants. Next in line, or perhaps even ahead of the tenants, are the commercial property agents who advise them.

So if owners drove the first iteration of the sustainability revolution in the commercial property industry, how are the tenants coming along? They are the ones meant to step up and match the owners’ green goals with their own operations and fitouts. But are they?

According to Angus Harvey-Ross of CBRE,  one of Australia’s most experienced corporate real estate advisers and tenant advocates, who recently advised Ernst & Young in Sydney on its intended move from World Square to Mirvac’s new development at 200 George Street, there are a lot of good green intentions. But some hitches as well.

One of the hitches is perversely born of the success of Green Star.

According to Harvey-Ross, the Green Building Council has done “a fantastic job” of lifting the benchmark for green office buildings.

Landlords want the maximum Green Star absolutely. And they want the highest NABERS energy ratings they can manage. The problem is that this ambition sometimes strikes a disconnect with the intentions of the tenant who may want to use the space in a way that blows out energy use in the building, for instance.

“If I [as a tenant]I want to put in a data centre, I’m restricted from doing so because of the ratings,” Harvey-Ross says.

“Owners of buildings with trading floors will try to restrict the opening hours because it improves the NABERS rating. So suddenly you’re being forced to pay for out of hours aircon because the hours of operation have been reduced.

“There’s got to be a balance between what’s reasonable and what’s good practice.

“Right now we’re reaching that point that as much as tenants want to be good corporate citizen and have, in many cases, led that process, there is a point at which the building becomes unusable, or can no longer be used for what the tenant wants.

“In terms of being good for the environment, yes, tenants are happy about that, but if I’m a Citi Bank or HSBC, and I need to assign a computer centre in this space, it can be a problem.”

Tenants will simply look elsewhere, he says.

Tenants are not backing away, he stresses. It’s a question of getting the use of the building aligned with the owner’s objectives. And that may not always mean reaching for a six star NABERS.

“Less experienced developers are saying you have to go to the highest possible rating.”

To do, but not to rate

Another problem is that while the majority of tenants want a reasonably green fitout, and will even follow the Green Star protocols for this, they may not go the extra mile and have their tenancy rated with Green Star because costs of doing so are seen as too high.

This backs similar comments by Knight Frank national director John Preece in a related article here.

The GBCA says it is working to bring down the costs of ratings for the industry.

On the other hand NABERS energy ratings, which are far less costly, are highly popular with tenants, and in particular because they point to long term cost savings of the occupier, Harvey-Ross says.

He’d like to see the NABERS water and waste ratings be implemented.

“I can’t wait for NABERS to get off their butt and get on with water and waste ratings. No-one is paying any attention to it at the moment. It’s not got the investors’ juices flowing.”

In the end he says, ratings are the way to “get things done correctly”.