Property owners and their advisers will be watching closely at our Electro-Retrofit masterclass on 1 July. They’ll be on the lookout for how the clever tech-focused presenters on stage have pumped up the NABERS, Green Star and energy performance of big existing buildings around the country, and lifted valuations.
In this capital constrained, carbon challenged property world, they’ll be particularly keen to learn how to do more with less. Productivity. It’s the name of the game.
They’ll be paying close attention to the leaders panel, where Ben McCluskey of Charter Hall will be joined by Tim Wheeler of the Clean Energy Finance Corporation and Steve Ford, who recently stepped down from GPT.
They’ll want to understand from the panel about the mechanics of doing these projects – how they’re managed from a tenant perspective, how they’re financed, what the motivations are from leaseholders or valuers.
These projects can cause major disruptions to tenants. Entire building services may need to be reconfigured to fit in the new capacity.
It can be very invasive.
How do you keep tenants happy and minimise complaints? Will rents need to be docked to compensate for the inconvenience?
Why undertake the work in the first place?
Owners will often say they do the work because it’s tenant led, and environmental issues predominate. Some owners will not spend a cent on additional capex (capital expenditure) unless the tenants demand it.
When they don’t do the work, it’s because it’s too expensive.
In this era of tighter than normal capex, it will be revealing to take a peek into the lease structures of major tenancies and ponder how real life experiences might vary the outcomes presented in the document’s black and white clarity.
Leases might require the removal of gas by 2030, say. Meanwhile, there might be millions of dollars of lease incentives needed to haul in that big tenant, spent on fancy upgrades or replacing perfectly serviceable end of trip facilities that’s only five years old, because it’s all about luring staff back to the office.
Meanwhile, the degassing of the building is put on the back burner (so to speak), and by the time 2030 rolls around, the capex is spent, the tenant is stuck with higher energy bills while the owner has to tackle the very real possibility of lower valuations and a NABERS rating they’re not proud of.
Split incentives used to be the classic barrier to environmental upgrades – that’s where the owner is expected to pay for capex eco improvements but where the big beneficiary is the tenant. But in today’s version, both sides stand to win, or lose.
But where does the funding for the work come from? What are the government policies “sticks, stones and tambourines” that will motivate action, (to borrow a quote from Green Building Council of Australia’s chief executive, Davina Rooney.)
The CEFC has an array of examples of the kind of work it’s invested in in the past and what it’s looking for in the future.
Let’s share that it needs investments in the order of $20 million or $30 million. Single buildings tend not to cut it – unless they can become a brilliant exemplar.
The corporation works with a number of co-investors, and what building owners need to keep in mind is that these are commercial deals that need make commercial returns.
There’s a cool $12 billion in play from the CEFC for related industry wide work.
And there’s now a clear runway with a federal government committed to net zero, knowing that decarbonising the built environment is one of the fastest and easiest ways to get there.
But the CEFC can’t shift the dial all on its own. Which is where we circle back to the clever innovation people from the tech side.
Because in the built environment, like everywhere else right now, we’re looking for the magic of productivity – doing more with less.
And that’s what the audience will be especially keen to hear.
Early bird sales end soon, so book your tickets now!