If Argosy Property chief executive Peter Mence has his way, everything he touches will turn to green.
Argosy, managing an industrial, commercial and retail portfolio worth nearly $2 billion, has embedded a sustainable, green reality into its business operating model. Its goal is to deliver better environments for tenants that promote productivity and minimise environmental impact.
"Investing in green space makes business sense," says Mence. "What we've found is that you get an improved rate of return through better rentals, happier tenants, longer leases and less vacancies.
"Valuers are starting to firm the cap rates for green buildings in the same way they value different seismic standards for buildings."
Mence says Argosy would like all its future refits and new projects to be green and sustainable — unless a tenant doesn't specifically want that.
"We changed our thinking seven years ago and it will be an exception if a project is not green.
"Tenants may make a relocation decision once or twice in 10-20 years, and our responsibility is to innovate and educate tenants on the benefits of green buildings.
"We want to have a closer working relationship with tenants so they get better accommodation. We'd like them to think of us as their own property department," he says.
"Our staff of 35 strong are proud of their green credentials and want to deliver green assets."
Mence says if a green plan is developed at the conceptual stage of a new building, there won't be additional construction costs.
"You place the building blocks around your green plan; not the other way around. For example, we are working on a green concept for our Mt Richmond industrial site. We are thinking about rainwater harvesting/retention and wastewater disposal — with clean water being recycled on site. What goes on the site only comes off in recycling or compost bags.
"The energy generation will likely be a mix of solar and wind and we will have to design a roof to carry the solar panels. The batteries and switching control gear for solar generation is now light years ahead of where we were four years ago."
Even refurbishing existing buildings to a green star standard doesn't have to cost much more if the timing is right — when the building services are coming to their end-of-life.
"Don't replicate the services there. Put in more efficient air conditioning and heating systems. Lifts nowadays have smart controls that operate on demand. Don't replace the lighting with the cheapest; use the best LED lighting. The operational savings will offset any additional costs."
At present, 23 per cent, or, $377 million of Argosy's portfolio value. fits within the Green Star rating framework, and the publicly-listed property investor and developer wants to lift green assets to 50 per cent of its portfolio in five years.
Argosy owns four of the 23 office buildings in New Zealand rated 5 Green Star and one of three industrial buildings — Mighty Ape's new 10,500sq m distribution centre in Silverdale.
The refurbished 6216sq m Te Puni Kokiri House, at 143 Lambton Quay, Wellington, was certified a 5 Green Star Built rated building in early 2014, and it has a 4 Star NabersNZ Energy rating.
The energy efficiency features are T5 lighting with daylight and occupancy sensors; increased fresh air rates with carbon dioxide control; high-efficient air-cooled chiller and electronically commutated fan coils; volatile organic compound material and peak energy demand reduction, with water efficient fixtures and fittings. These features created 30 per cent savings in energy use, representing $80,000 a year.
The former Defence House, now occupied by the Ministry of Business, Innovation and Employment at 15-21 Stout St in Wellington, has 20,709sq m of office space and has won excellence in sustainability awards.
Argosy's other 5 Green Star office buildings are at 107 Carlton Gore Rd and 82 Wyndham St in Auckland — both just over 6000sq m in size.
Argosy is redeveloping 8-14 Willis St and 360 Lambton Quay including the Stewart Dawson's Corner, in Wellington into a substantially new 11-level, 12,300sq m at a cost of $113 million, with a targeted 6 Green Star Built and 5 Star NabersNZ ratings.
The project, expected to be completed early next year, is reusing the existing building structure to reduce the carbon footprint. The building will be home for the Stats NZ ministry on a 15-year lease.
Argosy began life as Paramount Property Trust and listed on the New Zealand Stock Exchange in December 2002 following a public offering of 25.3 million units at $1 each. The trust was managed by entities controlled by the Symphony Group, ING and then ANZ, but in August 2011 the management was internalised.
In August 2011, Argosy's shareholders voted to buy the management rights, and adopted a company structure in February 2012. These transactions moved Argosy from an externally managed unit trust structure to its present, simpler, company structure.
Argosy now has 157 tenants and owns 55 properties, mainly in Auckland and Wellington — 16 office, 35 industrial and four retail buildings. It has immediate plans to turn two more buildings in Newmarket to green.
Mence says the country is only about 10 per cent along the way to where it needs to be in the green building revolution. "Argosy is ahead of that, but others are behind."
He is pleased the Government has decided that new leases for its departments and agencies in buildings more than 2000sq m in size will only be taken up if that building has a minimum 4 Star NabersNZ energy efficiency rating. "That should be made mandatory for all buildings. Let's do it for buildings newer than 10 years — that would be a good start."
Mence is astonished that, in this time of climate change emergency, there is no mandated requirement to build a Green Star rated building. "We have safety requirements for importing cars and we have exhaust emissions requirements, but we don't do this with buildings. We have earthquake strengthening requirements for buildings, yet there's no such requirement and threshold for reducing their carbon footprint.
"Any new or upgraded building ought to be green, and meet energy efficient standards. We have declared a climate change emergency at the national level, and doing nothing about it is not an option.
We have to think about the world we will be leaving our grandchildren.
"We have a vast amount of older buildings which don't fit into the category of institutional quality and limp from one year to the next. Achieving a 100 per cent strike rate with green buildings is achievable — it has to be," says Mence.
"What New Zealand does on the global climate change scale will not register by comparison with major countries. But we are small enough and agile enough to create results and show what can be achieved through innovation. New Zealand has the opportunity to take a leadership role — it's an exciting time."
Back to the Mt Richmond site: Argosy is thinking about developing a building that relies on natural ventilation by creating a window and facade system. "It's not as good as air conditioning but we used to survive by opening windows," says Mence.
"It would require a brave tenant. The site has to be appropriately located but we think the opportunity of natural ventilation might work." Now, that's thinking outside the square.