Energy prices might be going down in Adelaide but many tenants are still looking for office space with high energy efficiency ratings according to Nick Mavropsi, director, real estate management at Colliers.
South Australia has seen some of the highest energy prices in the country in the last few years, even making it onto the list of the world’s top 10 highest electricity prices in 2018, above other eastern states New South Wales, Queensland and Victoria.
Cognisant of the cost of doing business, energy efficiency has been a talking point for Adelaide tenants over the past few years.
This is promising for new buildings going in with strong environmental credentials, such as 120 Frome Street in development by South Australian-based Latner Property, designed to achieve a 5 Star NABERS Energy Rating.
The six-storey building will also have rooftop solar that will generate more than 20 per cent of its own electricity needs.
According to one of the leasing agents on the building, CBRE’s Michael Pfitzner, energy efficiency savings aren’t as high a priority as other features when selecting new premises.
“Features such as the floorplate size, location and finishes tend to be more prevalent in their decision making.”
But Pfitzner believes the 5 Star building will be attractive when tenants learn they can reap a financial benefit of 70 per cent, or around $35 a square metre per annum, compared to a 2 Star NABERS-rated building.
“The savings that developments such as 120 Frome can provide will quickly make energy a strong component of a tenant’s property selection and a compelling reason to choose these sorts of buildings.”
Another leasing agent on the building, Knight Frank’s Martin Potter, said that social responsibility is becoming more important for organisations, and that the 5 star NABERS building will “tick all the boxes”.
Good energy ratings perceived as a positive sign all round in Adelaide
According to Mavropsi, who is the former national director of sustainability asset management at Knight Frank, the Adelaide market tends to correlate high environmental ratings with a well-maintained, high quality building.
But there are different levels of interest. Some tenants just want cheap rent, meaning energy efficient ratings are undervalued.
However, Mavropsi suspects energy ratings might slip down the list of considerations as energy prices continue to drop. It’s a bit like the dissipating focus on water saving in NSW since it started raining, he says.