A new report by the Australian and New Zealand Green Building Councils warns billions of dollars of industrial buildings face becoming ‘stranded assets’.
The ‘Green Star in focus: The case for sustainable industrial buildings’ report warns of the increasing risk of significant industrial assets becoming stranded if they can’t show that they are low or zero carbon. It finds that new Green Star certified industrial buildings produce 66 percent fewer greenhouse gas emissions than standard buildings, and shows that a minimal two percent upfront cost to support green design can result, on average, in life cycle savings of 20 percent of total construction costs.
The technology, design, materials and expertise are available now to build more sustainable buildings that will meet investors’ growing demand for future-proofed investments that uphold environmental and social governance principles.
Green Building Council Australia CEO, Davina Rooney, says the forecast growth in the industrial sector, driven largely by the expanding online retail market, creates a valuable opportunity to build better assets that are designed and built to minimise embedded carbon and carbon emissions in operation.
“The sheer size of industrial facilities means they can play a big role in increasing rooftop solar PV capacity,” Rooney says.
“If we put solar panels on all industrial facilities in Australia, we could almost double our capacity – from the current 6500 megawatts (MW), to 12,800MW.”
The report warns that key logistical and industrial buildings being built in New Zealand and Australia between 2020 and 2030, spanning tens of millions of square feet, and potentially worth trillions of dollars, could risk becoming stranded assets, undesirable for use or investment, if sustainable building and design practices are not embraced and independently certified.
Rooney says that as we accelerate towards a low-carbon economy and society, low and zero carbon buildings are the only choice for investors.
“We must act swiftly to ensure our industry plays its part in global efforts to avoid catastrophic global warming,” Rooney says.
“The science is clear, and there is growing financial pressure, political will, public demand and legislation driving us towards a zero carbon world. As this shift occurs, buildings that are not zero carbon have a real risk of becoming stranded assets.”
New Zealand Green Building Council chief executive Andrew Eagles says healthier, more efficient, low carbon buildings are on the way.
“They’re being backed by large financial institutions, international agreements, national legislation and by businesses who can see the all-so-obvious benefits,” says Eagles. “Most importantly, less polluting buildings are backed by the people working in them. Industrial buildings play a major role in providing our businesses and our families with the goods and services they need. And our families, our businesses and our economy need to slash climate pollution and be zero carbon as soon as possible. Industrial buildings have a key part to play to achieve this.”
Ian Barter, general manager – northern region, from Frasers Property Industrial, says Green Star industrial facilities save tenants an average of $1.11 per square metre, per year, in operational costs when compared with competitors’ non-certified warehouses. In a 20,000-square metre warehouse, this is a saving of around $22,000 per year.
“Obtaining Green Star certification is an incredibly important part of our business and demonstrates to customers that we are very serious about not only protecting the environment, but also creating greater energy efficiencies for customers to reduce their overall costs. Green Star highlights an alignment with customers’ corporate social responsibility programs, manifested in a physical building,” Barter says.
“As more customers seek validation for sustainability initiatives, Green Star certification provides proof of performance. Green Star contributes to a more resilient building that makes a portfolio of Green Star buildings more attractive to investors, particularly those seeking to invest in REITs (real estate investment trusts) that prioritise good environment and social governance activities.”
In addition to the life cycle cost benefits and added protection for investors, the report also identifies other pragmatic benefits from Green Star-certified industrial assets including the ability to tap into green loans and the health, retention and satisfaction of employees.