Real estate is entering a challenging period of transition to net zero, where we need to re-engineer the way we value, finance, design, construct, refurbish, and operate our buildings. At the recent ‘Beyond Green’ conference we met Lucienne Mosquera and John Flexen of sustainCRE, a pacesetter committed to helping owners transitioning their properties through green retrofit and market re-positioning solutions that deliver buildings which are attractive to occupiers and generate long-term superior returns for investors. Here’s what they said.
In his presentation John Flexen shared the many challenges facing the real estate industry as it looks to transition existing buildings. One barrier is the landlord and tenant split incentive challenge, the deterrent holding landlords back from energy saving interventions as they typically pay the cost whilst the tenant accrues the savings that result from reduced energy use. sustainCRE champions a collaborative approach considering all the factors impacting landlord and tenant to arrive at a ‘win win’ solution.
Another challenge is the inefficiencies present in the construction supply chain due to missed opportunities and poor coordination, which sustainCRE is seeking to remove through their impact coordinated approach. This includes early stage optioneering of potential interventions giving a firm foundation for the delivery of an optimised green building transition. The biggest opportunities are in buildings that are already due for an upgrade, as green technology can be incorporated into the new design from the outset at little or no additional capital cost.
At the pre-planning and project structuring phases, landlords have a much higher ability to carry out green retrofitting at a lower cost. Those who consider it afterwards must be adapt at a higher cost, due to green technology being shoehorned into a design that never considered its incorporation in the first place. This also creates further disruption for landlords and tenants, carrying out a series of different works rather than a holistic plan at the renovation stage. Landlords should strongly consider the benefits of investing in green retrofitting sooner rather than later.
Despite the many challenges, sustainCRE point out that investment in green retrofitting presents an opportunity for landlords to increase rents, reduce vacancy rates, increase asset value and avoid ‘asset stranding’. At the same time, tenants benefit from sustainable, healthy fit for purpose workplaces enabling their employees to perform at their best. Another blog, published in March 2022 on the SHIFT website outlined an estimator tool to calculate the extent to which simply improving environmental performance in itself improves profitability through increased sales, reduced recruitment costs, and energy savings.
sustainCRE boasts a team of experts in delivering green optimisation at scale. Their founder, Lucienne Mosquera who has over 25 years of international experience in corporate finance and hotel asset management is joined by Sam Stacey a construction industry leader, Alex Ruis an international design & sustainability expert and John Flexen with over 35 years of global corporate real estate experience.
John and Lucienne are particularly interested in finding commercial landlords and tenants and who have a mutual interest in greening their building.