SURVEY: 1 December 2009 – Sustainability remains a key agenda item for CRE and for many it’s becoming a personal imperative, according to the third annual CoreNet Global and Jones Lang LaSalle sustainability survey released today.

Figures from the latest survey, conducted in September and October, showed that 70 per cent of 231 CRE executives responsible for real estate portfolios across the globe said that they still considered sustainability a “critical business issue today”, despite the deepening of the global economic downturn since the last survey.

Among the respondents, 74 per cent said they were willing to pay a premium
to retrofit owned space, up from 53 per cent in 2008. The majority (51 per cent)
were willing to pay 1–5 per cent more, up from 33 per cent last year, while 24 per cent
would consider a premium of 5 per cent or more, up from 20 per cent who said this
in 2008.

In an interesting twist to the business case for sustainability, the top-rated aspect “by far” was the implementation of sustainability as an expression of personal values, the survey report said. Over half of respondents rate this as “highly Important.”

Jones Lang LaSalle’s Australian CEO Stephen Conry the survey results were “an important prompt for owners and landlords of commercial buildings in Australia, particularly with the onset of the Federal Government’s Mandatory Disclosure of Commercial Building Energy Efficiency legislation, which is expected to take effect in the second half of 2010.

“This legislation will add a whole new level of transparency in the commercial building market, by requiring disclosure of the greenhouse performance of buildings over 2000 square metres upon lease or sale,” Mr Conroy said.

“This mandated level of transparency is something we haven’t seen before in the Australian commercial market and will enable tenants and investors to see at a glance the energy ratings of buildings, in the same way consumers currently assess the star energy efficiency ratings on household appliances.

“This combination of interest from tenants, backed by government mandating the disclosure of the energy efficiency of buildings through NABERS Energy ratings has the potential to fundamentally shift the property market in Australia.
“Building owners and those looking to lease or sub-lease space should be preparing now for the expected introduction of the scheme in just over six months time and have strategies in place so they can report on the energy performance of their buildings.

“NABERS Energy ratings, especially the initial rating can take some time to prepare, and many owners may be caught short as they are unaware that 12 months worth of historical building performance information is required to conduct a rating,” Mr Conry said.

Australian Head of Energy and Sustainability Services at Jones Lang LaSalle, Anita Mitchell said the 2009 survey found that sustainability was a critical business issue today for 70 per cent of respondents.

“This compares to 69 per cent of respondents in last year’s survey, which indicates that companies are continuing to focus on sustainability despite the tighter economic environment,” Ms Mitchell said.

Key findings of the CoreNet Global and Jones Lang LaSalle 2009 survey include:
? Sustainability is a critical business issue today for 70 per cent
of respondents and 89 per cent consider sustainability criteria in
their location decisions
? Green building certifications are always considered by
41 per cent and energy labels by 46 per cent in administering
their portfolio
? 74 per cent say they are willing to pay a premium to retrofit space
that they own for sustainability criteria
? 21 per cent would only pay more rent for sustainable space if
offset by lower operating costs, while 8 per cent expect to pay
less and 34 per cent expect to pay the same
? 60 per cent are adopting workplace strategies to meet
sustainability goals while reducing overall occupancy
costs
Respondents who think sustainability is a critical business issue
70 per net

The survey also found that despite the results respondents remained reluctant to pay premium rent for leased “green” space without some form of payback.

“Similar to 2008, only 37 per cent would consider paying a 1–10 per cent  premium in 2009, and 34 per cent expect to pay the same while 8 per cent would expect to even pay
less for sustainable space. In addition, this year, 21 per cent indicated that
they would only be willing to pay a premium if it was offset by lower
operating costs.

“Energy cost was the most important portfolio metric for 37 per cent of
respondents, while 29 per cent ranked employee health and productivity
as the most important. There was also a significant year-over-year
jump in the number of companies using workplace strategies in
areas that not only serve sustainability goals, but that also help to
reduce overall occupancy costs.

“This year, 60 per cent stated that they use
workplace strategies to help reduce energy costs by decreasing their
overall space needs (up from 54 per cent), while 49 per cent use them to reduce
employee commuting and business travel (up from 47 per cent).

“While a stable 89 per cent of respondents continue to consider green
building certification, the percentage that “always consider” them
rose from 26 per cent to 41 per cent. A new question in 2009 further revealed that
90 per cent of respondents consider energy scores or labels to be important
and 46 per cent “always consider” them in administering their portfolios.

“The importance of sustainability in real estate is not just being felt
at the corporate level; it is also a professional and personal issue
for CRE executives. Respondents indicated that they are more
highly involved in sustainability activities across the board.

“This year, CoreNet Global and Jones Lang LaSalle also asked
CRE executives to rate the importance of five different aspects
of their individual involvement in sustainability. More than a third
of respondents ranked each aspect as ‘highly important,’ from
enhancing their interaction with senior management to increasing
career development opportunities.

A few significant challenges remain on the sustainability agenda.

“One of the greatest right now is the difficulty in obtaining funds to implement sustainability
strategies—67 per cent of respondents said this is a “difficult or an
extremely difficult” challenge. Also identified as “difficult or extremely
difficult” challenges were insufficient comparable industry metrics
(63 per cent) and the availability of tools necessary for data collection
(59 per cent), as well as difficulty of both the building certification process
(56 per cent) and in calculating the ROI of sustainability initiatives (54 per cent).