Executive Summary
Value case
The value case for sustainable building is now compelling:
- For owner occupiers, a 20-year whole-of-life cost view indicates the marginal cost increase of sustainable building is likely to be repaid between five or six times by operating cost savings alone.
- For tenants, the probable 20-year rental premium for sustainable buildings is likely to be repaid by a factor of approximately three from operating cost savings only.
- For owner occupiers, developers and investment funders, a residual land value analysis shows a sustainable office building may have a land value of 40% more than that of a conventional building. Its true worth is nearly 40% more than a conventional building.
- The case studies show that to achieve the above investment returns, the difference in the initial capital cost of sustainable buildings compared to conventional good quality buildings varies from 15% less to 11.5% more, with sustainable features initially costing an average of 2-6% more.
Sustainable buildings are intrinsically more economic to run over their whole lifetime. They reduce waste and are much more efficient in their use of key resources such as land, energy, water and materials. They can also be healthier and more comfortable, and support greater productivity, with improved levels of natural light, cleaner air and a higher degree of personal control. They are also adaptable and durable enough to meet the requirements for flexibility and needs of future generations of building occupiers.
Significant rises in energy costs and, to a lesser extent, water costs continue to make sustainable buildings increasingly attractive. This situation will continue, with additional user charges such as carbon taxes, making new generation sustainable building even more attractive.
Public sector clients have incentives known as 'Crown Loans' to offset any capital cost premiums associated with adopting sustainable building strategies. Part funding is also available from the Energy Efficiency and Conservation Authority (EECA) for design audits and modelling which test the cost/benefits of sustainable building.
Scope
Sustainable building principles can be applied to all building types. It is a proven technology with more than 20 buildings of varying types in New Zealand operating successfully. Many of these are award winning and are well liked by their users, with comfort, health and productivity benefits in comparison to conventional buildings.
The next few years will almost certainly see the introduction of an environmental rating system for commercial buildings into New Zealand, with higher rated buildings realising market advantages. 'Green leases' giving continuing certainty of environmental performance are also likely to be developed in response.
This Value Case for Sustainable Building in New Zealand provides material that can be used to demonstrate the business case for building sustainable buildings in New Zealand to key decision-makers including:
- public sector chief financial officers
- owner occupiers
- investment funders
- developers
- tenants.
Implementation
Government and the public sector can play a leading role in sustainable building, but the longer-term success of sustainable building will also depend on its adoption by the private sector.
Sustainable building needs to be implemented on a cooperative and integrated basis by client, design team and contractor. Planning for sustainable building needs to take place as early as possible; by the time the first 1% of a project's up-front costs are spent, up to 70% of its life-cycle costs may already be committed.
The future for sustainable building in New Zealand is bright. It lies in applying highly inventive and cost-effective approaches and technologies that are suited to our relative isolation, small population, benign climate, relative reliance on renewable energy, and economic agility. We are in an excellent position to create a new sustainable building paradigm.
