Embracing the Green Revolution
Eco-friendly buildings are no longer a novelty in the Lion City. With more awareness about climate change, developers say tenants are now more receptive in embracing the green movement despite its higher asking price.
Before sustainable development became the buzzword, developers like City Developments Limited (CDL), who have been pioneering green buildings for over a decade, faced an uphill task in trying to convince tenants to move to a green office space. Fast-forward a decade later, however, green buildings are no longer a novelty in Singapore. In fact, under the Building and Construction Authority’s (BCA) new ruling, all new buildings will have to be eco-friendly. This means they need to comply with BCA’s Green Mark standards before they can attain their Temporary Occupation Permit (TOP).
Under the assessment framework for new buildings, developers and design teams are encouraged to design and construct green, sustainable buildings, which can promote energy savings, water savings, healthier indoor environments as well as the adoption of more extensive greenery for their projects.
Green awareness
Combined with the global awareness about climate change, developers say more tenants are becoming more receptive to green office spaces. “We see more tenants being receptive to embracing green offices in particular global multinational companies (MNCs) which have started tracking and reporting their carbon footprint. Tenants, especially like-minded businesses looking to enhance their position as an environmentally-conscious company and reduce their carbon footprint, have been drawn to Tampines Grande and Tampines Concourse,” says Corinne Yap, deputy general manager for leasing at CDL.
Tampines Grand and Tampines Concourse are two of CDL’s eco-friendly office buildings, launched in 2009 as part of its drive to attract like-minded tenants that are environmentally conscious. Netting Green Mark Platinum, 7 & 9 Tampines Grande’s stand out feature is their use of Solar Photovoltaic and Solar Thermal panels installed on the roofs and façade. Totalling 2,080 sqm, the panels are the largest use of its kind in a commercial property in Singapore.
Meanwhile, with Green Mark Gold, 11 Tampines Concourse is the first CarbonNeutral development in Singapore and Asia Pacific. The commercial building utilises innovative building materials to reduce the usage of natural resources in the construction process, and reduces its carbon emissions to “net zero” annually. According to CDL, 85 percent of 7 & 9 Tampines Grande and 97 percent of 11 Tampines Concourse has been let.
Existing buildings going green In addition, the BCA is also encouraging existing buildings to go green. Heeding the government’s call, CapitaCommercial Trust (CCT) in May this year, announced plans to retrofit its existing Grade ‘A’ office building, Six Battery Road. Retrofitting works commenced in October 2010 and will be executed in phases until 2013 at a total capital expenditure of approximately S$92 million.
“Given that Singapore’s office market is poised for rental recovery, we believe that this is an opportune time to undertake asset enhancement to Six Battery Road so that it will continue to offer value-for-money office accommodation to tenants, and sustain the building’s high occupancy and rental rates. We are paying attention to every detail that will create a more superior and conducive working environment for tenants such as improved indoor air quality, enhanced interior specifications, renewed lift lobbies and restrooms, and better quality supporting facilities,” says Lynette Leong, chief executive officer of CCT Management Limited.
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One of the building’s highlights is its iconic “green” wall with living green plants that will be constructed in the main lobby. Measuring 184 sqm, it will be the largest such wall installed in an office building in Singapore. CCT said based on the total estimated capital expenditure of S$92 million, its projected return on investment is 8.1 percent on a stabilised basis.
When completed, Six Battery Road is expected to improve energy efficiency by about 20 percent.
For its effort, Six Battery Road was awarded the 2010 Green Mark Platinum certification by the BCA, making it the first existing office building in Singapore to receive this accolade.
Commanding top dollar
Rentals for green office space, however, are not cheap.
According to CommercialGuru, the commercial arm of PropertyGuru’s portal, a Grade ‘A’ green office space is approximately 42 percent more expensive compared to traditional Grade ‘A’ office space. Citing its own research findings, it said the average per sqft price for traditional Grade ‘A’ office space in the Central Business District (CBD) is about S$6 to S$7 per sqft.
It said the average per sqft price for a Grade ‘A’ green office space in Tampines is estimated to be around S$5.50 per sqft but could go up to as high as S$10 per sqft in the CBD. “Green office space commands a higher price per square foot as it costs the developer more money to put the green elements in such as recycled glass for the windows or recycled steel,” says Tejaswi Chunduri, real estate analyst from CommercialGuru.com.sg.
Developers say the slight premium in asking price has not deterred tenants from moving in. “While there may be a slight premium in rentals for green buildings, tenants have generally been receptive as they stand to enjoy energy and water savings, thanks to sustainable design features and eco-friendly fittings, an improved corporate reputation and better occupant health and comfort — all which can also lead to long-term financial benefits,” says Yap. Perhaps, most important benefit is its effect on a company’s bottom line. Experts say workers in green buildings tend to be more productive.
“By improving ventilation and eradicating the use of painted surfaces that produce gaseous substances, for example, you can significantly improve the health of your workers. Health has a direct impact on productivity as it not only improves a workers ability to operate at maximum efficiency but reduces the number of sick days they take,” says Ishan Palit, president & chief executive officer of TÜV SÜD Asia Pacific, a firm that provides consulting and research studies on how to make a building green plus providing certification for green buildings.
How do you determine the right green office space for you? What are the long-term cost savings? RFP speaks to Ishan Palit, president & chief executive officer of TÜV SÜD Asia Pacific on what tenants should look out for.
As a tenant, what are the key features to look out for when looking to rent green office space?
There are a wide variety of features tenants should look out for when looking to rent green office space. These range from simple features such as LED lights, which can offer approximately 50 percent less energy consumption than conventional lights, to more complex features like rainwater-harvesting systems.
We recommend that tenants ask property agents/building owners to provide them with a list of the green features incorporated into the building before they sign a contract so that they can fully understand the potential benefits they will receive.
Importantly, we also recommend tenants enquire about the green standards, if any, the building is certified to. Standards not only provide tenants with a clear benchmark of the green credentials of the building but offer a guarantee of quality. The Green Mark from the Building and Construction Authority (BCA) in Singapore is a great example of such a standard. It is split into four categories: Certified, Gold, Gold Plus and Platinum, based upon the green credentials of the building. Details regarding the respective benefits of each can be found on its website www.bca.gov.sg.
Green office space commands a premium in terms of rent. What are the long-term cost savings?
Cost savings vary significantly depending on the extent to which green features are woven into the fabric of the building and the quality of the installation.
The best way to gain insight into the level of savings you are likely to achieve is to ask the property owner or previous tenant directly what savings they experienced. If this is not possible, the next best thing is to ascertain the green standard that the building is certified to and engaging directly with the provider of the standard. Most providers will have conducted some level of research into the long-term cost savings that buildings typically reap under their various awards.