Sponsored content: The most striking trend from this year’s NABERS Annual Report was the sharp increase in Energy and Water ratings for shopping centres.
The number of ratings nearly doubled, from 59 in FY2013/14 to 109 in FY2014/15. The growth was fuelled both by portfolios rating for the first time and by a major player coming back on board.
We spoke to key people in the industry to understand what has driven the increase in activity.
Investors are demanding sustainability credentials
Almost everyone we spoke to said that investors were demanding more information about the sustainability performance of their assets.
It fits with the many stories we’ve seen about the growing strength of the fossil fuel divestment movement – something that itself is just the dramatic edge of a wider movement towards responsible investment, a movement that has trillions of dollars behind it.
The difficulty for funds managers is that many “green” investment options are emerging technologies. As such, they are often also seen as high risk.
Green real-estate allows fund managers to invest responsibly in a traditional, reliable investment option. That is, so long as they have a robust method for benchmarking sustainability.
For property owners, this movement is important. Now more than ever, sustainability credentials mean a competitive advantage for attracting investment.
Sam Curry is the general manager, retail services at ISPT. His company has always had a strong connection with NABERS in the office market. They’ve shown particular leadership with the Indoor Environment tool. This year ISPT started rating their shopping centres, achieving 10 ratings in FY2014/15.
“Ratings provide value back to our investors, retailers and customers through improved operations and performance of our assets,” he said. “Investors particularly are showing interest in our sustainability performance at the moment, and our NABERS shopping centre ratings help us to prove our achievements in other reporting mechanisms – such as GRESB and the UNPRI.
“This is the first year we’ve been rating a portion of our retail portfolio but we intend to rate a larger number of assets going forward, as our NABERS targets are integrated into our broader sustainability strategy for retail.”
NABERS targets are valuable for strategies
In the office sector, NABERS ratings are well established as a management tool. They have become the common language for setting targets and prioritising upgrades.
Many of the portfolios that own both office and retail recognised the value of NABERS for shopping centres at the outset. They were quick to integrate NABERS targets into their plans.
Greg Johnson is the national sustainability manager for commercial property at Stockland. His company has a long history with NABERS in the office sector and has used NABERS for shopping centres since the tool was launched. They rated 18 centres in FY2014/15 and claimed the title of “highest major portfolio average for energy” at an impressive 4.27 stars without GreenPower. Stockland can also currently claim ownership of Australia’s most energy efficient shopping centre.
“NABERS allows us to set targets for performance in both our operating centres and those we’re developing. It then provides us feedback on the success of our efforts,” Mr Johnson said.
“Having our skill at developing and operating highly efficient assets recognised by an independent benchmark gives all the teams who work on our ratings a real sense of pride and achievement.
“We have a longstanding commitment to undertake annual NABERS ratings across our entire office portfolio, so the commitment to rating our retail portfolio was a natural progression. We have committed to rating 100 per cent of the rateable retail portfolio by FY17 and have made good progress, with 19 certified retail ratings in 2015.”
We asked Greg which technologies Stockland used to become leader of the pack.
“When it comes to implementing technologies we’ve had a phased investment strategy over both our office and retail assets,” he said. “We started by investing in high quality monitoring and sub-metering systems a decade ago; they allow us to track energy use as it happens and identify areas of waste so we can quickly resolve any issues. They also help us to measure our progress against targets.
“Over the last five years, we have invested heavily in LED lighting and HVAC plant upgrades, which led to huge energy reductions across our portfolio. After that, building tuning, lighting optimisation and HVAC control systems allowed us to go the ‘last mile’.
“The next step for us is renewable energy, which will see us reducing the amount of energy we draw from the grid. We recently installed Australia’s largest single rooftop solar PV system at our Stockland Shellharbour shopping centre, which already has a NABERS energy rating of 4.5 stars.”
Ratings assist continuous improvement
As well as setting targets, ratings help monitor and evaluate performance. Because ratings assess performance rather than features, they can be used to objectively measure the impact of different technologies and management strategies.
Many owners we spoke to attested to the importance of NABERS ratings in evaluating the performance of technologies and teams. Increasingly they were also using software to track their ratings in real time.
Benjamine Duncan is the energy and sustainability manager at Scentre Group (formerly Westfield). This year they rated 15 shopping centres.
“Energy use is an important issue for Scentre Group and as such it has been identified as a key priority of our sustainable business strategy,” she said.
“We find NABERS ratings valuable for our continuous improvement processes. This year’s ratings will become our performance baseline to inform future energy management strategies across the portfolio.
“The ratings are helpful for informing and educating our teams. We conducted a number of energy audits alongside our NABERS ratings this year, and we’ll be providing this to our centre management teams as part of a new reporting system we’re implementing. In this system, a predictive NABERS tracking tool will allow asset teams to remain focused on their NABERS performance throughout the year between formal assessments.
“Our NABERS ratings were also useful in our GRESB Survey submission and we provide our co-owners with details of NABERS assessment for assets owned in joint ventures.
“We’re part of the NABERS shopping centre technical working group and have been involved with the tool since its inception.”
The improvements that resulted from the benchmark review in 2012 meant that larger centres like Scentre’s are treated fairly in comparison to smaller ones.
NABERS helps build relationships
Terry Hollebone is the operations manager at Casula Mall and Crossroads Homemaker Centre for AMP Capital.
Casula mall was the most improved centre in 14/15, rising from a two star energy rating in 13/14 to 3.5 stars in 14/15. Just recently it pushed the boundaries even further to 4.5 stars.
“There were four major energy efficiency measures that had a big impact for us,” Mr Hollebone said. “These were:
- installing a new BMS
- using outside air for free cooling when possible
- improving the compressor sequencing
- staging start up times via the BMS to reduce the starting loads in the mornings
“We also started using sterile air to keep the evaporator coils in the HVAC systems clean. We installed variable speed drives on the supply fan and cooling tower, and we have sprayed the roof of the centre management office with ‘SkyCool’ thermal based paint, which reflects the solar heat.
“This has had a significant impact on the temperature of the office and the performance and running cost of the centre management airconditioning unit. We hope to roll this out in three stages to the entire shopping centre roof.
“Probably one of the most rewarding of the upgrades was when we replaced all of the internal and external lights, including the entire car park, with LEDs. It was great because the tenants saw these changes, and when we discussed the energy and maintenance savings that were gained it encouraged some of the tenants to convert to LEDs in their own shops.
“When we do upgrades like these that reduce costs for the tenants, it’s a great way of building our relationship with them. They really appreciate it.
“Working with your tenants to reduce their costs is rewarding for everyone.”