Retrofitting key to meet demand for net-zero carbon spaces – JLL PH
As businesses aim to achieve their carbon reduction targets, they must ensure that their real estate portfolio—which in the Philippines may include buildings over 50 years of age—can achieve a certain level of sustainability
The demand for sustainability is quickly shaping up today’s-built environment. According to the The Science Based Targets initiative (SBTi), more corporations are committing to climate action in 2021 than during all previous years combined.
JLL’s study, “Return on Sustainability: How the ‘value of green’ conversation is growing up,” states that the conversation on real estate climate commitments is changing in two ways. First, best-in-class is expanding beyond green considerations to include social and health ones. Second, the conversation is developing beyond value creation (green premium) to be about value preservation.
Growing climate commitments and a shifting regulatory landscape are making occupiers and tenants more carbon conscious. The challenge now is to find out how to make these commitments actionable.
Actionable plans for net-zero carbon
Developed with JLL, The Action Plan for Net-Zero Carbon Buildings published by the World Economic Forum offers a set of 10 principles to help companies deliver net zero carbon buildings and meet key climate commitments. Nix Garchitorena, JLL Philippines’ Energy & Sustainability Services Manager, explains that in a nutshell, the 10 Principles include understanding the baseline (Principle 1), setting goals (Principle 2), and developing the action plan specific to your portfolio needs (Principles 3 to 10).
“Usually, companies jump straight to creating targets without understanding their baseline. What we recommend though, is that our clients understand their data first and act on it accordingly,” says Garchitorena.
While these principles may be easily adopted in the planning and development of new properties, Garchitorena says that ensuring that the built environment is onboard is where the challenge really is. Simply focusing the carbon-reduction plan on new properties will be insufficient, as many corporate real estate portfolios include existing buildings, some built pre-2000s. Hence, retrofitting existing properties will be crucial in meeting market demand for net-zero carbon spaces.
Retrofitting: a local action to meet net-zero demand
Retrofitting or rehabilitation is an approach to increase the life span of an existing structure rather than redeveloping it. “There is a mis-match between what occupiers want and what existing buildings offer. Over 50% of buildings in major cities are over 20 years old and most have not been upgraded to meet post-COVID requirements,” says Calum Swinnerton, JLL Philippines’ Head of Project and Development Services.
In the Philippines, a sizeable percentage of the active property market constitutes the built environment. “The older business districts such as CBD Makati have a number of buildings between 40 to 50 years in age. These buildings tend to be between 6 to 12 storeys in height, have under-performing elevators, poor natural light, inherent problems such as leaking decks and aged facades, and not fully compliant with latest National Building Codes,” says Swinnerton.
Swinnerton outlines the key drivers for asset enhancement, which may serve as guidelines for clients who wish to improve the sustainability of their portfolio. These include green building and WELL certification, rental corrections, occupier demand for experience, aged assets and obsolescence, new supply and need to retain tenants, rebound of investment volumes, and a move up the risk curve.
“The option for building owners with aging assets is to demolish and redevelop, which could take an excess of five years and may not be the best move to achieve net-zero portfolio. Alternatively, we advocate that they rehabilitate or enhance their assets and address speed to market and at a lower—up to 70% cheaper—CapEx cost,” concludes Swinnerton.
JLL has been operating in the Philippines since 1997 as a 100% wholly owned entity and currently manages about 4.4 million square meters of real estate with a workforce of over 1,200 employees. With more than two decades of local expertise working hand-in-hand with its global legacy, JLL provides to the Philippine real estate market an unparalleled synergy of services with a strong commitment to achieve real estate ambitions through future-ready approaches. For further information, visit www.jll.com.ph.
JLL (NYSE: JLL) is a leading professional services firm that specializes in real estate and investment management. JLL shapes the future of real estate for a better world by using the most advanced technology to create rewarding opportunities, amazing spaces and sustainable real estate solutions for our clients, our people and our communities. JLL is a Fortune 500 company with annual revenue of $19.4 billion, operations in over 80 countries and a global workforce of more than 98,000 as of December 31, 2021. JLL is the brand name, and a registered trademark, of Jones Lang LaSalle Incorporated. For further information, visit jll.com.