A $2 million refurbishment of a brutalist C grade commercial office tower at 20 Macquarie Street in Parramatta has halved energy use and attracted new tenants prepared to pay higher rents for improved office spaces.
Co-owner Michael Peters told The Fifth Estate the project also involved minimising waste from the project strip out, with the bulk of defit materials including about three kilometres of copper cabling recycled or reused.
$1 million of the financing for the upgrade of the former AMP Building, now called M20, was provided under an Environmental Upgrade Agreement through bankmecu with the support of Parramatta City Council and the NSW Government.
The program of base building works carried out by Schiavello included the installation of LED lighting through all common areas, replacing the heating ventilation and air-conditioning system, replacing the vertical transportation and installing blinds to control thermal load.
“The plans for 20 Macquarie Street include the latest lighting technologies, and will make the building one of the first in Parramatta to extensively utilise LED lighting. Facilities such as air-conditioning and lifts will also be replaced,” NSW member for Parramatta Dr Geoff Lee said.
“EUAs are about making it easier for building owners to make environmental improvements to existing buildings that will also save businesses money.”
The new HVAC system comprises a zoned variable refrigerant flow system, with more than 50 diffusers installed throughout the building, and sensors installed to monitor air quality.
The new firm formed by the M20 owners, Praxis Capital, is also integrating a BMS system that will provide long-term monitoring and metering of energy and mechanical systems to ensure ongoing energy efficiency.
In addition to the base building works, a $400,000 new interior fitout has been undertaken for level five. Mr Peters said this is the “flagship” level for the building, and that it gives new incoming tenants a picture of what can be achieved with a quality sustainable interior. Already, a fashion college from Gordon has been encouraged to relocate and is taking up space on level one, which they will fitout in the new year.
The level five and common areas fitout includes all biodegradable low-VOC paints and low-VOC eco floor coverings that are fully recyclable. Mr Peters said one of the level five tenants, a medical legal firm, had set this as a requirement for the purposes of ensuring high indoor air quality.
All the tiles throughout the project are a natural kaolin clay with a natural glaze, and the foyer, common area and level five furniture are all Australian-made products sourced from Schiavello, which itself has a strong ethos around sustainable manufacture. The blinds added for thermal control are a fully recycled product from Europe with a five star thermal effectiveness rating, which absorb heat while still allowing light to penetrate and the view outside to be seen.
All the old fluorescent lighting, the majority of concrete, copper piping, 3km of cabling, gyprock and plaster of Paris ceiling panels were distributed direct to recyclers. The old linoleum was distributed to a firm that shreds it and then uses it as part of a fertiliser making operation.
The 100 tonne steel elevator carriages and 80 tonnes of plant room steel were to be recycled also, but the scrap metal merchant pulled out when the iron ore price fell. Mr Peters said the owners are still hopeful someone will take the metal and recycle it. The old Axminster carpets were one of the few items that went direct to landfill.
Mr Peters said the team are hopeful of achieving a 4 Star Green Star rating for the building, and a significantly improved NABERS Star rating.
“We have already cut 48 per cent off the power bill since we installed the HVAC system as part of the EUA package of works,” he said.
“That is about $5000 a month in outgoings being saved.”
Overall, the project has also lifted the building from being what Mr Peters said was “frankly awful” both in terms of appearance and energy performance to one that is now a quality B Grade building.
“The [previous owners] had just let it go, and the tenants were happy to pay very low rents – extremely low rents. And all the rent went into outgoings. So when we bought it we thought, we need to change the outgoings.”
He said they expect the payback period for all of the works to be around two years. They also expect the project will have a beneficial effect on tenant behaviour, and that tenants are willing to pay increased rents for better space.
“With a project like this, you increase the rent by a little, though the increase in capital gain is remarkable,” Mr Peters said.
M20 was instrumental in setting up Praxis Capital to manage the retrofit and building facilities. Praxis Capital has developed the knowledge and expertise, and hence formed a financial model to take equity in old property stock, inject its capital and EUA funds to enhance the value of a EUA building in both the reduction of operating costs and increase the revenue. This enables owners to benefit from the retrofit with little upfront costs and risk. Praxis Capital provides one point of engagement, funding and post EUA management.
- See our story Praxis in new finance model for retrofits
“Old buildings can perform as well if not better than newer buildings, and generate income and returns close to and in some instances better than new buildings,” Mr Peters said.
“There is little reason why owners should not retrofit to unlock the potential value and performance of their property.”