Victoria is set to reach out beyond the premium office sector to mid tier commercial properties that may have missed the call to be green.

This means focusing efforts on mid tier buildings such as suburban offices, hotels, suburban shopping strips and malls, regional hotels and backpacker hostels, with retail and hotel property in particular having huge opportunities for reductions in energy consumption and greenhouse gas emissions.

A new report that identifies the opportunities has been prepared by AECOM for Sustainability Victoria. The Next Wave Refresh 2018, builds on the initial 2013 Next Wave report, which focused exclusively on commercial office buildings.

The report says the single biggest opportunity lies with offices over 2000 square metres in the Melbourne CBD. Just one star average NABERS improvement for each building across the sector would achieve emissions savings equal to 103,947 cars being taken off the road.

Smaller buildings of less than 2000 sq m could also do their bit, with the same energy improvement yielding emissions reductions of 270,000 tonnes, AECOM says in the report.

And with many commercial buildings constructed between 1980 and 1989 this could be a good time to leverage upgrades needed on plant and equipment, nearing the end of their economic lives.

SV chief executive Stan Krpan said the opportunities were significant.

“These buildings have an enormous opportunity to both save money and cut CO2 emissions by simply upgrading their centralised heating, ventilation and airconditioning systems,” he said.

“If these upgrades result in a 1 star increase in NABERS rating, an emissions saving of 128,000 tonnes CO2 a year is possible.”

Extending the analysis outside offices revealed insights into where traction is needed. In the accommodation sector, which included hotels, student accommodation and hotels, there are only 11 NABERS rated buildings giving an idea of the sector’s overall performance.

However, the analysis of energy and use showed that just 60 large buildings in the City of Melbourne are responsible for the largest share of emissions – an estimated 174,000 tonnes per year.

Sustainability Victoria currently has funding available for upgrades to a diversity of commercial buildings.

“Commercial buildings provide great opportunities for energy efficiency improvements with short payback periods,” Mr Krpan said.

SV is currently calling for applications from commercial building owners, agents, tenants and facility managers in Victoria keen to improve building performance.

The report also took into account the recent change in the Commercial Building Disclosure threshold. Under the previous threshold of 2000 sq m in net lettable area or more, 752 Victorian buildings – 52 per cent of gross commercial office floor area in the state – were subject to disclosure.

The new threshold of 1000 sq m or more brings another 793 buildings under the scope of CBD requirements.

There are, however, still 15,027 buildings equating to 39 per cent of all office GFA across the state not impacted by the CBD disclosure rules.

The challenges of smaller buildings

Other types of commercial buildings such as retail and accommodation are more numerous and tend to be smaller, with most below the CBD threshold; most managed by a smaller companies, and varied in terms of location, size, age, ownership and management regimes.

This makes the drivers for environmental upgrades less clear.

“The challenge of working with smaller buildings is not dissimilar from the challenges of working with the domestic residential sector, and strategies additional to incentivising building upgrades may be required,” the report says.

Small to medium commercial buildings do not appear to have the same penetration of energy-efficiency technologies as larger buildings.

Reasons include the split incentive between owners and tenants, lack of customer demand and education, difficulty in accessing funds for retrofits and the relatively lower expenditures on energy management.

Another factor is the absence of green leases in many of these properties, noting that government requirements for green leasing have been successful in achieving energy efficiency improvements.

These principles could be more broadly communicated.

“As prices for energy continue to rise and the need to reduce greenhouse gas emissions becomes more pressing, the importance of energy savings across all building types will only increase; and the energy efficiency retrofit market for SMCB [small to medium commercial buildings] will also grow,” the report said.

“The focus on larger buildings which are able to generate greater benefits and shorter return on investment periods must continue and be supplemented by strategies to support energy efficiency retrofits for SMCBs.”

Strategies for improvements

Suggested strategies include encouraging staged approaches to improving performance rather than large up-front capital intensive projects.

Major opportunities the sector could embrace include:

  • Prioritising replacement of ageing or inefficient plant to focus on what will give the greatest energy use reductions
  • Building tuning
  • Upgrading lighting
  • On-site renewables
  • Improvements to HVAC systems or components such as fan systems

Is retail the sleeping giant?

The retail sector has been slower on the uptake in terms of sustainability than the high grade commercial office sector, according. But according to the report the opportunity it represents for emissions cuts is enormous, equating as it does to the largest share of Victorian gross floor area at over 20 million sq m of space across more than 50,000 buildings.

Most of the buildings were built after 1920, giving more opportunities for upgrades compared to offices.

One of the challenges is the smaller retail buildings of less than 1000 sq m, about 47,000 buildings, are typically tenanted with ownership structures that have few incentives to upgrade.

In terms of energy use, the relationship between the end user and the billing entity is closer to that found in the residential sector, with many retail owners selling energy to their tenants.

Green travel could incentivise hotels to upgrade

In its analysis of the accommodation sector, the report found that corporate sustainability policies are a major driver for the large chains such as Marriot Group and Accor to look at improving the energy efficiency of their assets.

Green travel policies such as government or corporate procurement policies can also be a driver.

The largest share of emissions overall in the sector comes from 60 large accommodation buildings in the City of Melbourne, between them belching out an estimated 174,000 tonnes CO2-e a year.

Upgrading these buildings to an equivalent 5 Star NABERS rating could result in savings of 93,000 tonnes CO2-e a year, the report said.

The second largest potential impact could be made in rural Victoria; however, the ownership structure here is more independent and a large number of buildings would need to be targeted – a combined 490,912 sq m of floor area over 1391 small buildings.

The report suggested that further pursuing initiatives such as government accommodation procurement policies that require staff to stay in accommodation that meets certain sustainability criteria could be valuable to drive appetite for energy efficiency measures overall in the sector.

  • Read the full report here