Routledge Handbook of Sustainable Real Estate

Sara Wilkinson, Tim Dixon, Norm Miller, Sarah Sayce, Sara Wilkinson, Tim Dixon, Norm Miller, Sarah Sayce

• Publisher: Routledge
• Year: 2018
• ISBN:
  9781317223955
• Edition: 1
• Topic: Business
• Subtopic: Real Estate
• Index: Business

With the built environment contributing almost half of global greenhouse emissions, there is a pressing need for the property and real estate discipline to thoroughly investigate sustainability concerns. The Routledge Handbook of Sustainable Real Estate brings together the latest research of leading academics globally, demonstrating the nature and extent of the impact as well as suggesting means of mitigating humankind's impact and building resilience. Four sections examine the different aspects of sustainable real estate:

• governance and policy
• valuation, investment and finance
• management
• redevelopment and adaptation.

Covering all land uses from residential to commercial, retail and industrial, the Routledge Handbook of Sustainable Real Estate is an exciting mixture of received wisdom and emerging ideas and approaches from both the developed and developing world. Academics, upper-level students and researchers will find this book an essential guide to the very best of sustainable real estate research.

Part 1

Governance and policy

1

Sustainable real estate

A snapshot of where we are

Sara Wilkinson, Tim Dixon, Sarah Sayce and Norm Miller

The scope of the Handbook is set out in this chapter, which commences with a discussion about the differences between awareness of the issues amongst real estate stakeholders globally and levels of action taken. The overarching aim of the book, to help move us forward and to help educate and convert those with open minds to enable a more sustainable real estate sector now and in the future. Property (or real estate) is a major global fixed asset, with an estimated total value of US $217 trillion in 2015. The themes covered in the book are governance and policy issues, valuation, investment and finances issues, management and redevelopment and adaptation. The handbook aims to provide a lens on how a shared understanding built on better knowledge can be influential in addressing some of the challenges set out in this chapter. It does not present complete solutions: far from it; but we hope it represents perspectives to educate, inform and provide a platform for future debate.

1.0 Introduction

Even cynics about climate change should care about sustainable real estate because the market and governments care, not just about climate change, but also about air and water pollution and toxic substances that make us sick. We have knowledge about ecology and the importance of our environments sufficient to prompt real action, but it is the tendency of humans to maintain the status quo and ignore the long term. Rachel Carson wrote her book Silent Spring, published in 1962, explaining the problems with farmers using DDT, a strong pesticide that caused many health problems and had numerous unintended side consequences. However, the chemical companies tried to silence her and attacked her truths in the same way tobacco companies attacked the first critics of smoking who had claimed smoking was harmful to health. Eventually, both were proved right, but there remain many truths that are not yet widely accepted, even though strong evidence exists to support them. Among these are some of the following:

• We can use offices and other buildings more efficiently and use energy more effectively by turning things off when not in use.
• We can provide more productive working environments.
• We can do both of the above profitably.
• We can save energy in industrial buildings, apartment buildings and retail buildings while providing more pleasant environments in which to work, live, shop and play, and do so efficiently.
• We can self-produce energy in homes and commercial real estate, and do so with solid returns.
• We can store energy in various ways, and we are on the cusp of even more efficient storage.
• We can design buildings that are passively more efficient and aligned with local sun, climate and weather patterns.
• We can use materials that require less energy input and that are not toxic to humans.
• We can invest in ‘greener’ buildings and reduce investment risks while gaining rewards.
• We can profitably move up the waste hierarchy to recycling, reusing and resource reducing, and create a culture of doing less harm to our community and planet.
• We can produce better grids and better community systems to share energy, recycling and more.
• We can harness the use of smart and digital technologies to enhance resource efficiency.
• We can produce standards and measurements that, with more disclosure, will let the market work more efficiently in recognising the benefits, both financial and social, that arise from sustainable business strategies.
• We can recognise that all building uses are, fundamentally, connected with human behaviours.
• We can educate ourselves about sustainability, and that is the purpose of this text.

Here is the problem we face therefore: it takes more time for the majority to believe, accept and act on the above than it does for those who have studied sustainability, discovered new truths and recognise the need for action. There is an urge for those converts to shout at the entire world, ‘Don’t you see that with technology and systems and a caring culture, we can do better and live healthier and be more productive!’ However, reality then sets in and the engineer, who knows how to create a better operating system for a building, does not necessarily know how best to communicate to the facilities manager or the vice president of finance, who do not want to hear about kilowatts produced or saved, but would rather hear about the return on investment or the costs of a less productive environment. Alternatively, we face the problem of not knowing where to start. Do I need to learn about the state of the art of toilets, roofs and walls and windows, you might ask? And the answer is probably yes. Do I need to know what passive design is or what tenants really want in their space? And again, the answer is probably yes. Or do I need to know what is driving business decisions or motivating individuals? Emphatically, yes.

Some organisations also have directors of sustainability whose jobs are partially to educate everyone, provide resources on best practices, then measure and monitor performance over time. Yet many do not have such a resource, and it falls upon others in human resources, finance or asset and property management to learn enough to know that improvement is not hard, and that it can be continual. Best of all, for those willing to learn, we discover that we can make the world a better place while saving money and becoming more productive at the same time.

The issues at hand have never been so important, and this text comes at a time when the new US President (Donald Trump), in 2017, seems to care less about the long run, the place our children and grandchildren inherit, and more about the short run, the next four years or next year or next quarter. Scott Pruitt, who has historically denied climate change and previously sued the US Environmental Protection Agency (EPA), has been appointed as the EPA’s new administrator. Oil pipelines in the US are now being constructed under water reservoirs on open land, and the return of coal jobs has been promised. And in other parts of the world, we have seen some ‘rowing back’ on international endeavours. The UN Climate Change Conference (COP21) in Paris in 2015 signalled a hope for the future that was followed by far less optimism only a year later at COP22 in Marrakech.

We should sympathise with those whose jobs have been lost to cheaper natural gas or solar energy, but we cannot reverse history, and we should not revert back to what we used to do when fossil fuels were the only practical alternative. Today, we have so much ‘low-hanging fruit’ in terms of new designs, new technologies and new materials and nascent breakthroughs that can make life better for everyone, now and in the future, but we must invest in learning how to capitalise upon these trends.

That is the overarching aim of this book: to help move us forward, and to help educate and convert those with open minds. Those of you who ‘get it’ will become ambassadors to the stubborn and less knowledgeable. Those of you who ‘get it’ will become the enlightened diaspora of sustainability. Thank you for starting and continuing your journey with us. We hope it helps in enabling a more sustainable real estate sector now and in the future.

1.1 Rationale and aims of the handbook

1.1.1 Real estate and climate change

Property (or real estate) is a major global fixed asset. Recent research has estimated the total value of all developed global real estate (comprising retail property, offices, industrials, hotels, residential, other commercial uses and agricultural land) as $217 trillion in 2015 (Figure 1.1). This represents a value of nearly three times the annual global income, 2.7 times the global GDP, and 60 per cent of all main global assets. With a value of more than a third of all global equities and securitised debt, real estate plays a major role in many economies, with much of this stock classified as ‘investable’, and the majority of the stock being people’s homes ($162 trillion by value for residential real estate) (Savills, 2016).

Given the importance of real estate in the global economy, it is not surprising that buildings have come under close scrutiny in the battle to combat climate change impacts at a global scale. The real estate sector as a whole, for example, uses more energy than any other sector and is a growing contributor to greenhouse gas (GHG) emissions (WEF, 2016). Although the basis of calculation differs, Change (2014) suggested that ‘buildings’ accounted for 32 per cent of total final energy use and 19 per cent of energy-related GHG (primarily CO₂) emissions (including electricity-related) globally in 2010. Recent projections suggest that building-related CO₂ emissions are set to increase by 56 per cent to 2030 (WEF, 2016) and that the majority of this growth will be in developing countries (UNEP, 2009). Buildings also use a significant proportion of raw materials globally (40 per cent) and generate significant amounts of waste (25–40 per cent) (WEF, 2016). If this is not reversed, some of the worst fears regarding climate change are likely to be realised with devastating human consequences, as deltas flood and deserts spread.

Figure 1.1 Global asset universe

Source: Savills (2016)

A growing global population, which is set to be eight billion by 2030, with the majority of people living in cities (60 per cent), will also exert further pressures of growth on the construction and real estate sectors. The World Economic Forum (WEF, 2016), for example, estimate that the largest 750 cities will require by 2030:

• 260 million new homes;
• 540 million m² of new office space; and
• 60 million new jobs in industry.

This will have important implications for climate change, given that COP21 in Paris in 2015 agreed to limit global warming below 2º C and ideally 1.5º C. Substantial efforts will be required from the real estate and construction sectors, therefore, and the World Bank (quoted in WEF, 2016) estimates that to meet the 2º C threshold, a 36 per cent reduction in total carbon emissions will be required by 2030.

1.1.2 Sustainable real estate: A growing trend?

The response of the real estate sector to increasing climate change pressures has been to focus even more strongly on environmental, social and governance (ESG) issues, and essentially to try and protect and enhance the value of real estate assets from risks associated with these issues. There has therefore been an increasing focus on ‘sustainable real estate’. But what does this term mean?

As Sayce, Ellison and Parnell (2007) and Dixon (2010) point out, there is a lack of agreed definition internationally. Indeed, the terms ‘green’ and ‘sustainable’ may also mean different things to different people in different national contexts. This could, for example, relate simply to achieving a minimum environmental performance standard. One useful definition that perhaps best captures the perspective in this book, however, is by the UK Green Building Council (UKGBC, 2008), who suggest that ‘sustainable buildings’ are those that

(1) are resource efficient (physical resources, energy, water, etc); (2) have zero or very low emissions...

Table of contents

• Cover
• Halftitle Page
• Title Page
• Copyright
• Table of Contents
• Foreword
• Acknowledgements
• PART 1 Governance and policy
• PART 2 Valuation, investment and finance
• PART 3 Management
• PART 4 Redevelopment and adaptation
• Index