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uBREEAM in Use (BiU); uNon-Domestic Refurbishment & Fit-Out (RFO). The reason for this is that 80% of the life costs of a building are embedded in the operational phase and generally non- domestic buildings have a design lifetime of 20-40 years. With UK new built being approximately 1% per annum means the majority of the stock are in the operational phase with its associated costs.


However, poor operational management undermines the aims of asset management and leads to: uIncreased tenant complaints regarding comfort conditions and loss of reputation; uHigher service charges; uLonger void periods leading to a reduction of income; uLower and shorter rental values, because of higher service charges and poor comfort conditions; uCapital expenditure on Heating, Ventilation and Air Conditioning (HVAC) equipment failures, due to poor maintenance; uTenants wanting to renegotiate rent values based on maintenance issues.


Again, sustainable certification can be seen to reduce running costs as illustrated by the average reductions shown in Figure 3:


Conclusion


Sustainability in general and the third-party certification of sustainability is becoming more mainstream across


HIGH PERFORMANCE BUILDINGS BSEE


institutional grade real estate. In reviewing the latest literature and through our industry networks, we have noted a shift in the argument in recent times away from a “green premium” to a “brown discount”, especially within the London office market, that seems to indicate a shift from a developing market for sustainability to a mature market where sustainable credentials come hand in hand with top level assets.


Next steps


To reflect this ever-evolving issue, BRE is actively engaged with a number of industry partners to update the existing, empirical body of evidence that exists around BREEAM and a link to increased property prices. Over the next 12 months we plan on updating the work carried out by RICS in partnership with Maastricht University, “Supply, Demand and the Value of Green Buildings”.


In updating, we also aim to broaden the breadth of this work to include evidence and insights into the other factors mentioned above as well as including more lifecycle stages and locations for the first time. We are also actively exploring ways of communicating value to a wider selection of stakeholders by measuring value at a more aggregate level than just looking at individual asset value. We are exploring the feasibility of creating an index of publicly listed companies who have a commitment to BREEAM within their strategy against those who don’t.


The methodology for this piece of work is still taking shape but we anticipate an analysis of publicly available data on company value, such as market capitalisation of publicly listed firms. It would then be determined through reviewing company literature on strategy such as Environmental, Social and Governance (ESG) strategies and Annual Reports, whether the company has a defined strategy for implementing or investing in BREEAM.


uFigure 3: Reducons in operaonal costs for green buildings – Adapted from ‘Business case for green building’, World Green Building Council report, 2013 and ‘Towards a greener future’, DLA Piper report, 2014.


We would then compare those that do with those that don’t to compare profitability and market value. If available, we would like to explore comparative yields and other measures in addition to the standard metrics. uIf you are interested in taking part in this project, please contact Dr. Andy Lewry at andy.lewry@breglobal.com.


Case study: Increased yield with lower risk


uManfield House, Southampton Street, London  reproduced from BREEAM case studies, https://www.breeam.com/casestudies/.


F


rom an investment perspective, it also bolstered marketability and reduced obsolescence risk. On launch of Manfield house, we were able to advertise the letting at £65 per square foot – an improvement of some 20% on our expectations when we first undertook the project – Dr Steve Waygood, Chief Responsible Investment Officer Aviva Responsible Investment Update, Spring/Summer 2015


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BUILDING SERVICES & ENVIRONMENTAL ENGINEER NOVEMBER 2018 13


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