Saatyesh Bhana. Photo / Supplied
Saatyesh Bhana says Argosy Property started on its sustainability journey some time ago.
The listed property company's head of sustainability says Argosy began refurbishing buildings because it realised early on that it was more sustainable to refurbish an existing building than it was to demolish it and build a new one in its place.
From there the company moved to target energy efficiency. "Again, we moved on this quite early on. More recently, we've gone on to look at reducing our emissions. Now we look at a building's operating emissions and understand the emissions in redevelopment or new development. Our goal is to target net zero carbon."
Today's tenants want sustainable buildings, but it wasn't always that way. Bhana says Argosy had to anticipate demand. "We were ahead of our tenants. When we did our first government building, the tenant, a government department, wasn't looking for a green rating at that time. We made the base building comply with the standard regardless.
"When we started working with government departments, they didn't jump on board with sustainability. Since then, the government introduced emission reduction policies, so the departments now need to do it.
"The most recent building that we've completed in Wellington is at 8 Willis Street. The tenant is the Department of Statistics which is now also going for an interior rating."
Bhana says Argosy uses two Green Star ratings for commercial buildings. One is a Design and Build rating, the other covers the tenant's fit-out.
It's not only government departments who want a sustainable building. Online retailer Mighty Ape needed an industrial building which became one of the first five Green Star industrial properties in New Zealand.
Tenants have looked for sustainable office buildings for a decade or so. The demand for sustainable industrial buildings is only emerging now.
"When we did the Mighty Ape industrial building, we offered the company five Green Stars as an option," says Bhana. "The tenant knew it wanted to be more environmentally conscious, so the building became a catalyst for the company to start its wider sustainability journey which extended to its procedures and policies."
Another example is the Panuku building in Auckland. "When Panuku came to our building it was targeting a 5-Star Green rating," explains Bhana. "Because the base building was going to be certified and met the requirements, they found their fit-out to get a green rating was substantially cheaper because the base building already complied."
Panuku's building also scores high when it comes to energy efficiency.
Bhana says refurbishing for energy efficiency gives tenants an obvious and immediate financial benefit as the costs of heating and cooling the building are substantially lower.
There's an art to getting this right. "You build it, you tune it and you take tenant feedback into account. There's no point having an energy-efficient building that's low on energy use if it's not comfortable for tenants."
Argosy environmental engineer Nathan Herbert says there's a clear long-term mega trend of companies moving to sustainable offices and industrial buildings, yet there is an emerging challenge. "People still want and need to keep manufacturing widgets but whether that is under a green roof or not is a choice they make".
The problem comes as the economy moves into more uncertain times. The cost of refurbishing a building is harder to control when inflation is at a high. Meanwhile, the recessionary forecasts mean companies and organisations are tightening their belts. One of the first things many look at is diluting sustainability goals. Energy efficiency remains popular with tenants, as some power prices rise faster than the broader rate of inflation.
Argosy is looking to add solar electricity generation to upcoming refurbishments and developments.
More recently the focus has been on a building's carbon footprint.
Bhana says Argosy now looks at the carbon footprint as it redevelops a building, as well as the amount of carbon associated with the building itself. "When you look at the models, 50 per cent is about the operation of the building so earlier work on energy efficiency comes back as well."
As a listed company, Argosy's sustainability track record makes it attractive to investors.
Says Herbert: "Our current investors are looking for our environmental, social and governance (ESG) guidelines and management procedures. We've begun to report to various standards and frameworks including GRI (Global Reporting Initiative), which aligns us internationally with measures our investors can now rate us against."
When it comes to the carbon footprint, he says the best buildings have already been certified; that's now being extended to all the company's properties. The company has been certified by ToiTū Envirocare. "By becoming net carbon zero certified we're committed to an emissions management reduction plan. This will reduce our emissions 30 per cent by 2030."
Bhana is positive about the trend for companies to allow more office-based employees to work from home. "One of the things we've found that's come out of Covid is that tenancies depend on where an organisation is placed. If it's growing, working from home does not give an organisation the synergies they need with people feeding off one another. They start to work in silos. If the team has worked together for years, being apart doesn't matter as much because the culture is embedded. We noticed that a lot of organisations that were outgrowing their space found they could change furniture or layouts and stay in the space they had. They just had to get more efficient at using it."
Another aspect of the work-from-home trend is the need to make office spaces more attractive to people who now have a choice.
Bhana says when a company has a Green-Star rated building, it will have a better air conditioning and heating system than most people have at home. There's a need to ensure spaces are well designed for social connections, something he says is often overlooked. But if an employer can get this and the physical environment right, people will want to return to the office.
• Argosy Property is an advertising sponsor of the Herald's Sustainable Business & Finance report
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