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4 Value case

A review of international trends in sustainable building in Appendix 1 highlights a compelling value case for sustainable building (Property Council of Australia, 2003) including:

  • tenant benefits:
    • lower operating costs for energy, water and waste
    • higher levels of occupancy satisfaction, health and productivity benefits
    • identification with corporate environmental responsibility
  • investor benefits
    • marketing advantages due to point of difference
    • a faster lease-up period
    • marginal increases in rental
    • higher tenant retention rates due to enhanced user satisfaction, health, comfort and productivity
    • higher loan value and lower equity requirements
    • higher building value on sale and appraisal
    • asset protection
    • overall greater return on investment.

Based on the New Zealand case studies and similar methodologies to those adopted internationally, this report provides a value case for sustainable buildings in New Zealand.

4.1 Whole-of-life costs

By the time the design for a development is completed, 80-90% of its life-cycle economic and environmental costs will have already been made inevitable. More importantly, when just 1% of a development's up-front costs have been spent, up to 70% of its whole-of-life costs may already be committed (Romm and Browning, 1998).

So decisions on sustainable buildings options should not be made on inadequate information or just in terms of simple payback, as is often the case. The investment return estimate from sustainable building should always be based on a sound evaluation of the life-cycle costs, including both initial capital and operating costs over a defined period or life (Standards Australia, 1990 and Competitive Australia, 1998). The 'period' or 'life' of the building could be considered to be the initial lease periods for a commercial building or its whole economic life for leases of public sector buildings.

4.1.1 Initial capital costs

Most detailed studies on the costing of sustainable building suggest no generalised premium can be identified for all buildings. It is very much about developing an appropriate budget for each individual project.

There is, however, a general perception that sustainable buildings cost more. The case studies show a fairly wide range - from 15% less to 10% more - in the initial capital cost compared to conventional good quality buildings, with an average initial capital cost premium for sustainable features of only 2-6%.

This suggests that clients and designers are finding ways to incorporate project goals and values regardless of budget, by making more appropriate choices.

The range of premium costs is largely determined by the baseline budget and building quality. Sustainable building can be achieved with relative ease for a good-quality building. For a low-quality building it will be difficult, if not impossible, to justify.

It is also important to look at the relative values of all the building elements as a whole, rather than as optional add-ons. Sustainable design strategies should be reflected at the outset across the whole budget. Each element can then be refined to meet the target budget.

When new technologies are being tried, or when buildings are over refined, the added costs and complexities may be wrongly attributed to sustainable building principles. However, in most cases it is possible to design attractive, uncomplicated sustainable buildings that operate in a straightforward manner, achieve high standards of energy efficiency, and incur little or no additional cost. This ideal is seldom achieved without the appropriate knowledgeable and open-minded consultants being involved at every stage of the design - particularly the early stages.

It is also important that quantity surveyors build up a database of sustainable building costs. This could initially be implemented through an industry publication such as Rawlinsons.

A recent survey of UK quantity surveyors revealed that they tend to over-estimate the on-costs of sustainable buildings, and underestimate the potential for cost savings as trade-offs. The study also concluded that quantity surveyors believed that sustainable buildings cost between 5% and 15% more to build from the outset. However, if sustainable design features are integrated into the design from inception and are actively value managed, then additional costs should not be more than 1% (Barlett and Howard, 2000). This is also the case in New Zealand where sustainable building strategies are often abandoned due to lack of appropriate costing information for anything out of the norm.

Capital costs for buildings have also been rising significantly over the past few years, owing to an overheated market and shortages of resources and labour. This may be a short-term supply and demand effect, but it is unlikely, based on previous experience, that costs will return to their previous levels. This is likely to help the case for sustainable building, with any premiums becoming more marginal in percentage terms or being absorbed within a similar cost envelope.

It is also probable that any downturn in the property market will hit the low-budget commercial market hardest, with a continuing demand in particular for higher value owner-occupied public sector buildings and good quality niche commercial developments. Sustainable building is ideally suited to these types of development.

4.1.2 Operating costs

The case studies showed that energy costs for mainstream sustainable buildings in New Zealand are likely to be 35-50% of those for conventional buildings.

Energy costs have moved well above inflation over the past 10 years and are predicted to rise by a minimum of 3% above inflation over the next 10 years. Carbon taxes and new generation charge increases may be added to this.

Water charges have remained static in most parts of the country except for Auckland where they have recently risen from $1/m3 to $4.50/m3. The cost of water may also increase soon in supply-affected areas such as Christchurch. The effect of these increases has made and will continue to make sustainable building strategies more cost-effective in the long term.

Operating and maintenance costs are also likely to be reduced as sustainable buildings generally have smaller, less sophisticated and more integrated building systems.

Whole-of-life costing of some of the New Zealand sustainable case study buildings was based on the energy cost at the time rather than on predictions of energy costs, meaning payback periods were often over estimated. This may seem a sensible low-risk way of estimating return on investment but it means potential clients and investors have unreliable information, leading them to overlook sustainable strategies that may have been viable.

4.1.3 Productivity benefits

As well as the direct and more tangible energy and water cost benefits, there are potentially 'softer' and less tangible benefits due to improvements in occupancy comfort, heath and productivity (Commission for Architecture and the Built Environment, 2005, Allen et al, 2004 and Haynes et al, 2000). Using a cost formula to quantify the impact of improved user satisfaction is not yet possible (Lister et al, 1998). The intangible benefits of sustainability can be best illustrated in the following diagram.

 

Figure 2: Intangible benefits of energy efficiency

These benefits are difficult to quantify, but may be equivalent to 3-5 times more than the direct energy and water cost savings, based on a nominal improvement in productivity. Research has shown that effects of plus or minus 5% to 15% in productivity could be attributed to indoor environmental issues. Overseas post-occupancy studies suggest that sustainable buildings and user satisfaction are not generally mutually inclusive (Leaman, 2001). However, the New Zealand case study buildings that have been subject to post-occupancy evaluation have generally shown a positive correlation, with perceived productivity benefits of up to 10% (as seen in Figure 3 below).

 

Figure 3: Summary of perceived productivity benefits in New Zealand buildings

 

This graph is summarised in the text above.

Source: Centre for Building Performance Research (CBPR), Victoria University of Wellington

Productivity and user-comfort improvements benefit individual businesses and the economy. The price for consumer products declines as business profits rise. So increased user satisfaction, better productivity, sustainability and energy efficiency are inherently anti-inflationary, which benefits us all (US EPA, 1998). Further benefits of improved user satisfaction include better staff retention and the ability to attract more staff and more skilled labour from overseas.

If a defined process could capture these benefits, it would transform the economics of the commercial sector of sustainable building. If these 'soft payback' issues are taken into account, then overall paybacks of less than five years for sustainable buildings could be realised.

4.1.4 Present value analysis

In considering the benefits of a sustainable office building, the relative present values over a 20-year period are quite revealing.

Figure 4: Office building - 20-year present values

Salary cost, 18.29. Rental cost, 2.44. Initial capital cost premium, 1.00. Energy cost 0.24. Water cost, 0.01. Operating and maintenance cost, 0.36.

NB: Relative to the initial capital cost premium.

Figure 4 shows the importance of salary costs relative to the total operating costs associated with the building. The 20-year present value of salaries is around 18 times the value of the initial cost of the building, yet salary costs and productivity are rarely considered during the design process.

Figures 4 and 5 show the relative 20-year present values in more detail on an area basis per annum for a typical sustainable office building (with a capital cost premium of $200/m2), based on the following premiums and benefits:

  • rental premium $30/m2/year
  • energy cost saving $15/m2/year
  • water cost saving $1/m2/year
  • productivity benefit $75/m2/year

The 20-year present values are also based on an 8.5% discount rate, a 3% above real inflation rate for energy, water and rental costs, and a modest productivity improvement of 2.5%.

The extra paid upfront to construct the building by the developer/investment funder and the increased rental premium paid by the tenant are shown in Figure 5. Benefits for the tenant, including energy and water cost savings and productivity benefits, are shown in Figure 6.

Figure 5: Office building - 20-year present values $/m2 from developers'/funders' viewpoint

This graph is summarised in the text below.

Figure 6: Office building - 20-year present values $/m2 from tenants' viewpoint

This graph is summarised in the text below.

From this model, the 20-year present value for a sustainable office building is about 5.7 times the extra amount a sustainable building takes to design and building (initial capital cost premium). From a developer / investment funder's point of view, the increased rental premiums have a present value of around 1.8 times the extra it would cost to construct the building. From a tenant's point of view, the 20-year present value for a sustainable office building is around three times the 20-year present value for the extra it costs to rent the building.

The above scenario assumes a nominal 2.5% increase in productivity that dramatically improves the investment returns from a sustainable building. Taking advantage of this scenario will require a radical rethink of how buildings are financed, designed, procured and leased, with 'Tenancy Lifetime Care' and 'Total Occupancy Cost Neutral Green Leases' potentially transforming the property industry. The industry needs to move from selling 'bricks and mortar' to selling 'sustainable and productive environments'.

As the commercial market for sustainable buildings becomes established, their true worth will also start to be reflected in property valuation and analysis (Davis Langdon Australia, 2004). Historically a development is valued using any comparable existing building leases (Power, 2004). However, this reflects what the market has historically been paying and does not necessarily reflect the true worth nor what it should be paying for a new development concept such as a sustainable building.

The residual value analysis in Appendix 3 (based on a methodology by Robinson (2005)) suggests that if the benefits of a sustainable office building are fully taken into account, they could generate a residual land value of 30% more than that of a conventional office building - and a sustainable office building could be worth nearly 40% more than a conventional office building.

4.1.5 Cost benefit analysis of short- and medium-term payback sustainable building strategies

Sustainable buildings usually incur three types of premium costs - those with:

  • 'hard' returns (eg, energy and water costs)
  • 'soft' returns (eg, improved indoor environmental quality with cost benefits in terms of improved health, comfort and productivity)
  • no direct returns at all (eg, the use of environmentally friendly materials that are often more expensive initially due to a perceived niche market. Once the sustainable building market has matured many of these costs will reduce).

The return on investment on individual 'hard' sustainable strategies varies considerably. Some sustainable design features, such as lighting and lighting control, break even in around five years and provide a high rate of return (about 15%) over a relatively short life span of around 10 years. Others, such as a highly efficient building façade, only break even in around 20-25 years and provide a more modest but sustained rate of return (6-8%) over a 50-year building life.

An important consideration is to relate the investment criteria to the life-cycle of the component. In doing so, a sustainable building can be thought of as a portfolio of investments related to the component lives. Ideally, for investment returns to be realised, the break-even point should be 50% at most of the component life.

Table 1 in Appendix 2 is based on data from Davis Langdon in Australia (2004) for sustainable buildings and shows the cost premiums and investment returns for a range of short- to medium-term sustainable office building strategies. Data for New Zealand offices can be assumed to be similar.

However, any building is not only a portfolio of investments but also a portfolio of risks. Building providers invest in risk in many different ways without necessarily considering the risks of each investment. Unknown or unquantified investments are often made to protect the design consultants, the approving body, or the contractor without the knowledge of the building provider. For instance, over-sizing structure or mechanical plant, protection against flooding, and timber treatment are all investments to mitigate risks. On the other hand, greater and more short-term risks such as the future flexibility, adaptability, durability and operating costs of a building are often considered but not provided for.

4.2 Investment perspectives

Key decision-makers involved in the building process often have differing perspectives on the value of sustainable buildings (Bartlett and Howard, 2000):

  • Tenants pay the most for the use of a building over its life, often in leasing cycles of 5-15 years. However, operating costs are only a small proportion of the total costs of occupying the building. Considered in isolation, these have historically been unlikely to significantly motivate tenants towards a sustainable building. However, user satisfaction with a building may have a significant effect on the health, comfort and productivity of the organisation occupying it. The benefits associated with comfortable staff are significantly higher than the energy and water costs, and a building will become more desirable if it can provide a higher level of environmental quality (thermal, lighting, indoor air quality etc) for its occupants.
  • Owner-occupiers view all the costs and returns of a building as relevant. Owner-occupiers should therefore have a strong vested interest in sustainable building, particularly with its potential benefits of increased value, energy efficiency and low running costs. They might also be interested in the wider issues of sustainability if, for example, as a local council they have community and infrastructure obligations.
  • Investment funders also view all the costs and returns over the life of the building as relevant, including buying the site, constructing the building and maintaining it. They also benefit from the rent received as income over its lifetime and the residual value of the site and building at the end of its economic life. However, investment funders seldom pay for the running costs as these are either paid for directly by the tenant or indirectly as an operating charge, so the concept of a sustainable building tends to have less relevance. Investment funders are, however, interested in keeping good tenants happy and in owning a low-risk long-term value investment. Sustainable building can help achieve this.
  • Developers incur all the initial costs and risks, including site purchase, design and construction, and receive all their revenue (site and building sale) at the beginning of a 50-year life for a building (for example). The developer's interest in sustainable building is therefore likely to focus only on the marketing benefits at the time of sale - ie, will a sustainable building attract potential tenants, sell quicker and for a higher price.

Owner-occupiers and tenants, as users of buildings, are therefore the potential market makers for sustainable buildings. Owner-occupiers have provided the initial catalyst to demonstrate the benefits of sustainable building. This should then inform and stimulate demand by tenants, which will in turn influence developers and investment funders as providers of commercial buildings. This trend has been seen recently in the procurement of new commercial leases for government departments in Wellington, including new headquarters office buildings for the New Zealand Defence Force, Statistics New Zealand, Ministry for the Environment and the Department of Conservation. This is also beginning to influence the larger-scale commercial property market and may be the start of a the more widespread development of sustainable buildings in New Zealand.

4.3 Investment returns

The investment returns required for sustainable buildings will vary depending on building type and the nature of the client - eg, public sector or private sector (investment funder, developer or owner-occupier). The nature of the building and the client are broadly represented below in terms of public sector and private sector building types. Public sector buildings include hospitals, libraries, schools and university buildings while private sector buildings represent mainly commercial offices and retail centres. Within these broad categories the case studies provide more detail for individual building and client types.

4.3.1 Public sector buildings

Government buildings are almost exclusively procured on the basis of commercial leases for buildings from developers, investment funders and building owners. The Ministry for the Environment's Govt3 programme has been working with government agencies to improve the sustainability of their activities. As one of the largest collective tenants for office spaces, particularly in Wellington, government agencies are therefore in a strong position to influence the market for sustainable office buildings.

Key aspects of procuring a lease for a commercial sustainable building include:

  • The need to incorporate sustainable building requirements into the initial briefs/requests for proposals to developers, investment funders and building owners. This has been improving with each new government tenancy, but the value case for a number of recent buildings has been compromised by trying to add sustainable building requirements after the agreement to lease has been made. At this stage, the negotiating position on sustainable features is lost due to time constraints and premium pricing of additional features during building.
  • Support by performance measurements for key aspects such as energy and water use, and an environmental rating such as Greenstar or similar New Zealand-specified rating tool. A minimum Greenstar standard of four to five stars should be aimed for with the current level of commercial sustainable building in New Zealand.
  • Reviewing leasing proposals on the basis of total occupancy costs over the period of the lease rather than base rental rates, in line with Ministry of Economic Development requirements for whole-of-life costing. A recent review of office building costs on this basis has confirmed the validity of the sustainable building value case, with the 20-year rental premium likely to be repaid by three times over just from operating cost savings.
  • Extending the length of the lease period to accommodate the returns on sustainable building requirements for government tenancies.
  • Adopting performance-based 'green' leases (like Australia) for government tenancies to ensure sustainable performance based upon an agreed set of criteria is adopted by the provider and the government agency as the tenant.

For public sector organisations, recommended discount rates should be used (usually about 5% real) with a long-term (15-20 years) assessment period. Paybacks as long as 10 to 20 years and internal rates of return of 7-10% may be viable. Ministry of Economic Development rules also require governmental agencies to take into account a whole-of-life cost view. The economics for case study office buildings are taken from Table 1 and presented as Table 2 below.

Table 2: Indicative cost/benefits of case study office buildings

Building type

Benchmark building capital cost
$/m2

ESD building capital cost
$/m2

ESD building premium (saving)
$/m2

ESD building premium (saving)
%

Annual energy cost savings
$/m2

Annual water cost savings
$/m2

Total annual cost savings
$/m2

Simple payback
(years)

20-year NPV for ESD measures
$/m2

Office - low/ medium ESD

2000

2130

120

6.0

11.0

0.3

11.3

10.65

-3

Office - medium/ high ESD

2000

2230

230

11.5

17.0

0.6

17.6

13.09

-23

The value case for public buildings is more varied than for commercial buildings, due to the differing nature of building projects and client bodies, as shown by the following overview.

Local authority buildings

Unlike commercial clients, most local authorities take a longer term view as owner-occupiers responsible for whole-of-life costs. Balanced social, environmental, economic and cultural outcomes are important concerns for a local authority project. Many councils also adopt a public consultation process where sustainability is favoured. The client also has multiple stakeholders including:

  • the mayor and councillors
  • community board members
  • local trusts / societies
  • local iwi
  • council officers and staff
  • council specialists eg, sustainability
  • artists
  • the local community.

With so many stakeholders and competing interests, it is not uncommon for the sustainability considerations to be diluted during building projects. Local authority capital funding may also be more limited than for commercial clients. Budgets are often set for political expedience rather than the absolute needs of a project, which may limit developing a fully sustainable building project. The economics for community centres and libraries are not as strong as more intensively serviced buildings. The relevant economics are taken from Table 1 and presented below in Table 3. Value for money and getting the most for their community's dollar are therefore key concerns.

Table 3: Indicative cost/benefits for the case study library

Building type

Benchmark building capital cost
$/m2

ESD building capital cost
$/m2

ESD building premium (saving)
$/m2

ESD building premium (saving)
%

Annual energy cost savings
$/m2

Annual water cost savings
$/m2

Total annual cost savings
$/m2

Simple payback
(years)

20-year NPV for ESD measures
$/m2

Library

2384

2494

110

4.9

7.5

0.0

7.5

14.67

32

School buildings

Demographic changes in the Auckland region have triggered a major new school building programme, the first for nearly 25 years. The Ministry of Education was keen to implement sustainability and energy efficiency in the design of new schools.

The overall economic effects of including sustainable measures into a standard briefed Ministry of Education school were determined as follows (Connell Mott MacDonald, 2002):

  • capital cost increase 6-7%
  • energy cost decrease 40-50%
  • simple payback of measures 13 years
  • 20-year internal rate of return 5%

While the value case for schools, with relatively light usage patterns, was not particularly strong, the initiative has continued with the personal support of then Minister of Education Trevor Mallard, and a number of new primary and secondary schools have proceeded with a range of sustainable features included. The relevant economics are taken from Table 1 and presented below in Table 4.

Table 4: Indicative cost benefits for the case study schools

Building type

Benchmark building capital cost
$/m2

ESD building capital cost
$/m2

ESD building premium (saving)
$/m2

ESD building premium (saving)
%

Annual energy cost savings
$/m2

Annual water cost savings
$/m2

Total annual cost savings
$/m2

Simple payback
(years)

20-year NPV for ESD measures
$/m2

Secondary school

2430

2570

140

5.7

7.5

0.6

8.1

17.3

41

Hospital buildings

A similar initiative has not been widely implemented as part of the major hospital redevelopment programme. However, the recent redevelopment of Waitakere Hospital has pioneered the idea of a sustainable hospital in the 'eco-city' of New Zealand.

Encouraged by Waitemata District Health Board and Waitakere City Council, and funded by a grant from Energy Efficiency and Conservation Authority (EECA), a feasibility study was carried out to look at a range of energy saving strategies. The cost premium for implementing the proposed energy efficiency measures was $50,000 or 0.13% of the project budget. Predicted energy cost savings were $137,038 per annum, giving a sample payback of 0.33 years.

The feasibility study proved the excellent economics of energy efficiency measures for hospital-type projects with intensive uses and long operating periods. A Crown energy efficiency loan is funding the cost premium for the energy efficiency measures, with repayments accounted for by projected energy cost savings. The hospital also features water-conserving measures including the re-use of roof water for flushing and irrigation. Stormwater overflow from the recovery system and run off from the car parks and roofs is discharged into a stormwater treatment and retention pond that also forms part of a community reserve within the hospital grounds. Infrastructure Auckland and Waitakere City Council funded the cost premium for these measures. The relevant economics are taken from Table 1 and presented below in Table 5.

Table 5: Indicative cost benefits for the case study hospital

Building type

Benchmark building capital cost
$/m2

ESD building capital cost
$/m2

ESD building premium (saving)
$/m2

ESD building premium (saving)
%

Annual energy cost savings
$/m2

Annual water cost savings
$/m2

Total annual cost savings
$/m2

Simple payback
(years)

20-year NPV for ESD measures
$/m2

Hospital

2400

2435

35

1.5

9.5

1.0

10.5

3.33

-72

University buildings

University buildings are also good cases for sustainable building, with increasingly intensive usage and longer operating hours. Projects to date have tended to concentrate on energy efficiency rather than the full range of sustainable strategies. University academic offices have also traditionally been naturally ventilated, which complements sustainable building both environmentally and economically. Projects with sustainable strategies have been either cost-neutral or better, with significant energy savings making them an excellent investment. The challenge now is to increase the range of strategies beyond simply energy. The relevant economics are taken from Table 1 and presented below in Table 6.

Table 6: Indicative cost benefits for the case study university building

Building type

Benchmark building capital cost
$/m2

ESD building capital cost
$/m2

ESD building premium (saving)
$/m2

ESD building premium (saving)
%

Annual energy cost savings
$/m2

Annual water cost savings
$/m2

Total annual cost savings
$/m2

Simple payback
(years)

20-year NPV for ESD measures
$/m2

University

2300

2000

-300

-15.0

6.3

0.0

6.3

N/A

-338

4.3.2 Private sector commercial buildings

The value of commercial buildings has traditionally been judged in terms of location, quality, function and aesthetics. This is then reflected in the rental return and capitalisation rate. It is difficult to set a value on commercial sustainable buildings until a fully established market exists. For the current market to expand there needs to be:

  • a stronger demand from users/tenants
  • a proven, authentic product from building providers including developers and investment funders. This should be defined by measurable standards and benefits over the term of the lease period. Measurement could be in the form of leasing specifications, auditing by rating systems at the design and completion stages, and by performance-based leases in operation
  • an investment scenario that represents true worth and good value rather than lowest cost, and provides an equitable rate of return for both the provider and user of the building
  • recognition of future environmental and associated economic challenges in which we are all stakeholders.

Developers will have little concern for sustainable building issues unless there is a marketing advantage, tenant and/or funder requirement and a short-term return. Little or no information is publicly available on the lease rates and resale of sustainable buildings. The demand from tenants for features of sustainable buildings is, however, growing, with a number of recent briefs for commercial buildings including a sustainable building component. With the likely introduction and acceptance of sustainable building rating schemes such as the Green Building Council of Australia GreenStar Rating Scheme into the marketplace, buildings with higher ratings will also start to realise market advantages.

The commercial property sector in New Zealand needs to redefine its standards, which tend to be followed verbatim by real estate agents, developers, investment funders and building professionals with little consideration for the relevancy or viability for the future. Leasing documents and specifications tend to be recycled from one project to the next, perpetuating short-term leases, built-in obsolescence and synthetic rather than real requirements. By contrast, The British Council of Offices (BCO) in the UK has developed a new standard office specification that addresses sustainable design issues from a commercially driven perspective. Encouragingly, a number of recent tenant briefs for office space in Wellington are attempting to redefine standards in a similar if not more advanced way.

Any cost premium due to sustainable building, however marginal, must be reflected in a higher building value, rental premium and also a commercially attractive return on investment. For commercial projects, higher rates of return are required. These will typically be around 6-15% with shorter investment horizons of five to 10 years. Returns will also be compared in terms of the level of risk and rates of return available (net of inflation) from alternative investments.

The duration of the lease period for a commercial building will also have an effect in terms of capitalisation and may need to be longer for sustainable buildings. Leases greater than 10 years might become more the norm for sustainable buildings. An interesting approach that might be adopted is the concept of 'whole-of-lease period cost neutrality' where the length of lease period is directly related to the payback period or net present value of the sustainable building features included. Alternatively a 'total occupancy cost neutral' (rental plus all operating and maintenance costs) approach could be adopted. These types of approaches are more equitable and create more incentives for sustainable building. When combined with a longer lease period, they represent a more binding partnership between the provider and user of a building.

The future introduction and marketing of environmental rating schemes also raises the possibility of 'green leases' (Power, 2004), which are currently being promoted for public sector buildings in Australia as a way to ensure initial and continuing environmental performance. These leases are being specifically developed for sustainable buildings, and place an onus on the building owner to achieve agreed environmental performance levels and on the tenant in terms of their fit-out standards and use of the building in relation to environmental issues. There is little point in demanding a sustainable base building only for tenants to introduce unsustainable practices during the fit-out.

For investment funders, sustainable buildings also have the advantage of medium to long term future-proofing and de-risking of their property portfolio/asset base. The 1960s and 1970s saw office developments become obsolete because they could not accommodate the 1980s demands for information technology and air conditioning. Adopting sustainable building safeguards against similar obsolescence related to a worsening energy and environmental situation in New Zealand over the next 15 years.