Realestate execs now less likely to pay extra for 'green' office space

Of more than 400 CRE executives surveyed globally, 69 per cent said sustainability is a critical business issue for their realestate departments.

The results of the survey were announced at the CoreNet Global Summit in Orlando, Florida, on November 10. The survey was conducted in September and October.

When CoreNet and Jones Lang LaSalle asked the same question in 2007, 47 per cent said it was a critical issue. Furthermore, 40 per cent this year rated energy and sustainability as a "major factor" in their companies' location decisions, with an additional 36 per cent calling it a "tiebreaker" between locations that are otherwise competitive.

According to Chris Wallbank, Asia Pacific head of Energy and Sustainability Services - Property, Asset and Integrated Facilities Management at Jones Lang LaSalle, Asia is experiencing many of the same trends that accelerated the growth of the green building industries in Europe and North America.

"If you look across Asia at many of the higherquality commercial developments you'll find that most are being designed and built with sustainability as a major consideration. This shift towards sustainability suggests that those in the industry are recognising its value going into the future.

"However, within Asia, property markets vary significantly and in more mature markets, such as Hong Kong, Singapore, and Japan, the opportunity to implement sustainability into new developments is limited by the availability of land that can be developed. Landlords and building owners in these markets who are looking to "green" their existing properties can still do so by retrofitting them," he said.

Despite the high level of importance companies place on sustainability, the number of companies willing to pay more for sustainability has dropped since 2007.

Nevertheless, a significant 42 per cent of CRE executives are still willing to pay a premium (usually 1 to 5 per cent) to lease green space and 53 per cent said they would pay a premium to retrofit property they own to gain sustainability benefits.

In the 2007 CoreNetJones Lang LaSalle survey, 77 per cent said they were willing to pay some level of premium for green space.

"The survey results reinforce the idea that corporate realestate directors are continually looking for ways to deliver greater strategic value to their organisations at a lower cost," said Prentice Knight, CEO of CoreNet Global.

"They have climbed a steep learning curve on sustainability in the past two years, and have learned how to achieve the benefits of sustainability without overspending to get there."

"A year ago, most CRE directors believed that improving energy efficiency and reducing carbon emissions would cost money, at least in the short run," said Wallbank.

"Today, they realise they can meet sustainability goals and save money at the same time. In tough economic times the ability of efficiency initiatives to deliver bottomline returns is increasingly important," said Wallbank.

"The business case for sustainable realestate development is compelling when you take into account the evolving business landscape - occupier preferences, stakeholder demands, government regulations - along with immediate cost savings.

"We have seen that savings of up to 15 per cent are achievable in most existing buildings, using conventionally available technology. We're not talking rocket science here, it's a simple and straight forward approach to the basic fundamentals of how you run a building efficiently," he said.

A focus on costeffective strategies is evident in the responses to a question on how broadly companies have implemented various green initiatives. Recycling, a strategy that requires little upfront cost and engenders goodwill from employees, has been embraced by most companies, with broad implementation at about threequarters of firms and limited implementation at another 20 per cent.

Energy management, the strategy with the greatest potential for cost savings, has been broadly implemented at nearly 60 per cent of firms and implemented on a limited basis at another 30 per cent. Strategies such as purchasing green power and investing in renewable power sources - which may help the environment but offer companies lesspromising cost/benefit equations - are broadly implemented at less than 20 per cent of companies.