41 Exhibition Street, Melbourne

21 February 2011 – Half of  the corporate real estate executives who took part in the  latest annual Sustainability Survey by CoreNet Global and Jones Lang LaSalle say they would pay more for green buildings, a huge jump on last year’s results.

There was also a leap in the number of respondents who placed employee productivity and health as their top sustainability concerns.

The survey, conducted in the fourth quarter of 2010, revealed a CRE industry “in the process of reconciling the focus on reducing environmental impacts of buildings with the need to control costs and support corporate financial performance,” Jones Lang LaSalle and CoreNet said.

Key findings of the survey include:

  • Sustainability is a critical business issue today for 64 per cent of respondents and 92 per cent consider sustainability criteria in their location decisions.
  • The number of respondents willing to pay more for green leased space jumped from 37 per cent in 2009 to 50 per cent in 2010.
  • 31 per cent of corporate executives ranked employee productivity and health as their top sustainability concern, and an additional 11 per cent rated employee satisfaction as the most important factor.

Vice President of Communications, Asia at CoreNet Global Michael Zamora said: “The high percentage of CRE executives worldwide who consider sustainability in making location decisions shows how deeply this issue is ingrained in the business community.”

Director of sustainability, Australia, of energy and sustainability services at Jones Lang LaSalle, Joel Quintal said the survey showed the industry was undergoing an evolution.

“Five years ago, a CRE executive might have thought sustainability was a costly way to make the company look good to employees. Two years ago, that same executive probably focused on energy management as a way to save money in the short run. Today, he or she may be pursuing green strategies that enhance employee productivity,” Mr Quintal said.

Following are highlights from the survey.

Paying for Green Space:

  • 23 per cent – said they would pay more in rent if it were offset by lower energy costs, reinforcing the idea that green space has financial benefits.
  • CRE executives are more willing to invest in space they own than they are willing to pay extra for leased space.
  • 57 per cent – confirmed anecdotal consensus of one to three years as an acceptable payback period for energy efficiency measures in owned space. J
  • 4 per cent said they expect strategies to pay for themselves the first year
  • 30 per cent said payback periods of three to five years may be acceptable
  • 9 per cent would consider sustainability measures even longer payback periods.

“Although a lot of energy management strategies pay for themselves the first year, many companies have exhausted those opportunities and want to go to the next level,” said Mr Quintal.

“By replacing lighting systems or putting in ‘smart’ systems, companies may see their investment pay off within three years. A more extensive retrofit or a solar power installation usually will take longer to pay for itself, but still makes sense in some situations for financial reasons, or as a way for a company to demonstrate a commitment to sustainability,” he said.

Employee Health and Productivity:

  • 32 per cent of respondents ranked energy cost as their most important sustainability metric, down from 37 per cent who ranked it number one in 2009.
  • 31 per cent ranked employee health and productivity was ranked as the most important measure of success, up from 29 per cent in 2009.
  • 11 per cent ranked employee satisfaction as the most important criteria.

Mr Quintal said the results reinforce trends that Jones Lang LaSalle had experienced. “The focus on containing operational cost remains a driver of many sustainability programs, but CRE executives also recognize the value of enhancing workplace effectiveness with strategies that promote employee health, well-being and productivity,” he said.

Additional findings:

  • Green building certifications are considered by 88 per cent and energy labels by 87 per cent in administering their portfolio.
  • 48 per cent of occupiers would pay up to 10 per cent premium for sustainable space, while 2 per cent expect to pay over 10 per cent.
  • Respondents still focus on energy efficiency program (65 per cent) and waste recycling (61 per cent).
  • CRE directors are highly involved in providing sustainability performance data and funding sustainability oriented investment with the purpose of reducing cost and increasing employee satisfaction.

The CoreNet Global Summit will be held in Hong Kong on 22-24 March. See www.corenetglobal.org.

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