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1 Introduction

The Ministry for the Environment commissioned this report to help central government organisations take practical action to reduce their impacts on the environment, economy and society. This report follows on from A Guide to Sustainable Office Fit-Outs (Ministry for the Environment, 2005a), and also links with the Value Case for Sustainable Building in New Zealand (Ministry for the Environment, 2005b) and Value Cases for Achieving Green Star NZ 4 Star, 5 Star and 5 Star+ Environmental Ratings (Ministry for the Environment, 2007).

The New Zealand Green Building Council released the Green Star Office Design rating tool (Version 1) in April 2007. The uptake of this rating tool has been a success, with around 40 to 50 per cent of new office buildings being registered for a Green Star rating. Further tools have recently been released or are in the process of being developed, including office as-built, office interiors, office in-use, residential, industrial and educational. All of the rating tools define a sustainable building performance based on the following 6-star scale:

  • 6 stars – world excellence

  • 5 stars – New Zealand excellence

  • 4 stars – best practice

  • 3 stars – good practice

  • 2 stars – average practice

  • 1 star – minimum practice.

Formal accreditation of sustainable office buildings can only be given to the top half of the rating scale; that is, 4-, 5- and 6-star equivalent buildings. This study investigates the value case for 4-, 5- and 6-star tenancy fit-outs. A further optimised 4-star with energy focus rating was also developed.

For new office buildings there is significant benefit in terms of the score on the fit-out tool if the associated base building has achieved the same or better Green Star rating. Note that it is theoretically possible to achieve any of the Green Star ratings on the tenancy fit-out regardless of the rating of the base building, but it becomes significantly more difficult to achieve a high fit-out rating with a low base building rating. A value case study has already been carried out (see Ministry for the Environment, 2007), and the previous government mandated a minimum 4- or 5-star rating for new leased government accommodation, for A-grade and B-grade buildings, respectively.

For fit-outs of existing office buildings it is likely that the base building will currently be unrated. Also, any retrospective rating using the existing building tool is likely to result in a rating less than 4 stars without a significant upgrade and re-investment by the building owner. Significant upgrading of an existing base building with a corresponding fit-out to achieve complementary Green Star ratings is possible while the tenant remains in situ, although a rating above 4 stars is unlikely.

Not all the costs associated with achieving a fit-out rating are building-related or involve capital expenditure. Other examples include:

  • the purchase of new computer equipment and the disposal of existing equipment (the costs of IT are generally accounted for outside the building fit-out costs)

  • a commitment to the ongoing monitoring and management of energy and water use and waste generation and to environmentally friendly operating and maintenance practices (the costs of these requirements are attributable to the operating costs of the organisation).

These costs have been excluded from this value case.

Costs of fitting out are usually split into hard fit-out and soft fit-out. Hard fit-out items include modifications to base building services to facilitate the tenant’s fit-out, together with base building changes such as permanent office partitioning, additional stairs, additional built-in joinery and high-load areas. Soft fit-out items normally include office furniture and fittings, screens, IT and audiovisual equipment, cabling and signage. Both hard and soft fit-outs will have attendant design, project management and contractors’ preliminaries, and general costs and margins in addition to the direct costs.

The cost of the hard fit-out can be met entirely by the tenant as a capital contribution, but more normally it is amortised into the rental with or without a building owner contribution. The tenant almost exclusively meets the costs of the soft fit-out directly, with no amortisation or contribution by the building owner.

Some potential costs of a Green Star fit-out rating will vary considerably while achieving the same number of points towards a Green Star rating. For example, reused furniture and screens and environmentally preferable new furniture and screens could score similarly under the Green Star system. However, the cost of the options will be either cost-neutral or attract a premium. The choice between reuse or new will be specific to each organisation and will depend on the products’ age, condition and suitability for refurbishment.

Care needs to be taken to avoid double counting of either the costs or benefits that are separately attributable to the base building and to the fit-out. The Value Cases for Achieving Green Star NZ 4 Star, 5 Star and 5 Star+ Environmental Ratings (Ministry for the Environment, 2007) recognised all the benefits attributable to the building, including those of the base building and fit-out. This fit-out value case considers the benefits attributable to the fit-out only.

Given the costs of full Green Star accreditation, it would be advisable to limit accreditation to fit-outs greater than 2000 m². This cut-off is consistent with other limitations on the application of government property guidelines. Sustainable fit-out features similar to those recommended by this report (but for building areas less than 2000 m2) should still, however, be included as far as practicable.

 

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