Real estate investor and fund manager Cromwell Property Group has started a multi-million-dollar electrification upgrade project of the facilities at its McKell Building in the Sydney central business district. It might cost more than replacing the gas but this is a decision in line with the company’s longer term sustainability strategy.
The project includes converting the 24-storey building’s existing commercial gas-fired heating system to an electric heat-recovery reverse cycle heating, ventilation, and airconditioning (HVAC) system.
Cromwell’s head of property operations, Tessa Morrison, said the upgrade will help “future-proof” the asset by replacing outdated, 1970s-era infrastructure with modern, energy-saving equipment.
“The McKell building is a 1970s-constructed building with an existing NABERS 5.5 Star energy rating, so while it is already significantly energy efficient, we are undertaking this project to reduce emissions and drive further energy efficiencies,” Ms Morrison said.
“This is the first time that a multistorey, 25,000 square metre commercial building in the Sydney CBD has undergone an electrification upgrade.”
Handling a big chunk of the work will be mechanical airconditioning contractor Velocity Air.
Upgrades to the building include:
- Efficiencies in the new reverse cycle HVAC system mean that hot air removed from airconditioning will be recycled back into the system for use elsewhere, such as heating water
- Seasonal efficiency – reducing energy consumption throughout the year
The Haymarket property is currently solely occupied by the NSW government including Service NSW and was acquired by Cromwell in June 2013. The upgrades, undertaken with the support of the building’s occupiers, are expected to be completed in early 2024.
“The infrastructure was 45 years old so there were already talks about a replacement and whether we could get through another winter when the discussion around electrification came up,” Morrison told The Fifth Estate.
“As we are embarking on our ‘full decarbonisation plan’, we also realised that since one hasn’t been done for this building, my idea was that we could decarbonise the property as well.”
There was a “shopping list” of work to get through
The upgrade aligns with Cromwell’s portfolio 2035 net zero targets for its current and future ESG responsibilities. The group manages operations on three continents with its market capitalisation at $1.8 billion as of end of last year. Its Australian investment portfolio is valued at $2.8 billion and total assets under management of 12.0 billion across Australia, New Zealand, and Europe.
Its spread across a range of sectors includes mostly office (64 per cent), with the balance in industrial/logistics (20 per cent) and smaller exposures to retail and property securities.
Morrison said, “We were very fortunate that full electrification could work on this building due to having enough roof space, as we were exploring options to do the same for a property in Canberra, but the property had space restrictions.”
Morrison also says that while the upgrade would cost significantly more than just replacing the boiler with another gas boiler, the company was committed to longer-term sustainability.
“While we recognise that the decarbonisation of the grid still has some way to go, we are future-proofing the building through our electrification project – and estimate that we will achieve an initial 5 per cent energy reduction of the total base building electricity consumption through the installation of a heat recovery chiller.”
The upgrades are already underway and estimated to finish next year in 2024. Cromwell is hoping to keep impacts to its residents at a minimum in the meanwhile.