Delivering a sustainable future in real estate and the flexible workplace
In this article, we will discuss the path forward for delivering a sustainable future for real estate development in Singapore and globally, as well as innovations in the flexible workplace model that will better align it with the new green agenda.
Private office of Arcc Spaces One Marina Boulevard
Towards net zero real estate
Worldwide, the real estate sector is responding with an urgency and stepping up its response to the climate crisis and sustainable development because almost 40 per cent of greenhouse emissions globally is accounted to buildings. Investors, occupiers, and real estate companies all have an equal responsibility to support and drive the sustainable development cause.
With an aim to create a consistent agenda and definition, the World Green Building council in 2016 set up the Advancing Net Zero campaign. Since then it has gained enough momentum and has come to influence actions of all stakeholders including governments, city councils, property owners, investors, and occupiers alike.
New buildings are readily adopting low or zero carbon solutions; however, the challenge will be retrofitting older buildings as this may require upgrading traditional energy systems, as well as changing internal layouts and facades.
Achieving net zero, both in operations and construction, will mean re-thinking the way we approach design and construction. We will also need to introduce circularity in the planning phase as much of the future performance of a building is dictated by early decisions. Designs that use less materials and substitute virgin materials with recycled ones where possible positively impacts the embodied carbon of a building.
Finally, the real estate industry will need to recognize net zero not as a label but as process that demonstrates the performance of a building maintained at net zero. Thus, moving from a compliance focussed to a performance-focussed approach will become the key step in advancing the net zero agenda.
JLL's new office in Manila
Adopting a systematic approach
A systemic response to sustainable development requires that change be introduced not only at the building performance level, but also across all levels of an organization. This is why sustainability programmes must incorporate not only climate or economic impact, but also social consequences of assets.
Apart from measuring embodied carbon, incorporating circular economy principles, and identifying investment impacts, we must also recognise the link between buildings and employee well-being. This should become a core principle of sustainable development when working on sustainability and net zero journeys.
Uncovering and truthfully communicating how the buildings really function is the starting point of this journey. It goes unsaid that future technologies, research, and innovation will all play their role. However, we already have some tools and solutions like integrated building analytics that help us assess how optimally our buildings are operating at present.
Moreover, we can exploit the potential of big data and new analytical approaches to enable more agile, efficient, and evidence-based decision-making to prioritise sustainable investment, implement practical solutions, and ultimately reduce climate impacts of real estate.
How well all stakeholders across the real estate value chain respond will determine how well our sector succeeds in making the built environment a healthier ecosystem for humans – an ecosystem where we spend 90 per cent of our lives. We need healthy buildings to thrive.
Sustainable efforts post-Covid
Covid-19 and the lockdown has provided a sort of respite to global warming and air pollution problems in many parts of the world. The International Energy Agency (IEA) has forecast a 6 per cent reduction in global energy use this year versus 2019.
However, as economic activities ramp up post the pandemic, energy consumption and carbon emissions will be on an upward trajectory once more. What recovery path to follow will be a test of wisdom for policy makers around the world.
The WELL building standard has gained much traction around the world, particularly after the introduction of the WELL Portfolio scheme, which is a more streamlined and cost-effective way of improving the wellness standard for many offices and facilities.
Recognising the effects of real estate on people’s health and wellbeing, Singapore’s BCA launched the BCA-HPB Green Mark for Healthier Workplaces scheme to strengthen the business case of designing and building workplaces for better health outcomes. Also rolled out in the same year was the Green Mark for Super Low Energy (GM SLE) intended to provide recognition for best-in-class energy efficient buildings.
These initiatives were a timely response to the global trend of energy and resource efficiency being developed hand in hand with consideration for the health and wellbeing of building occupants. Going forward, we will see greater focus on environmental targets from governments around the world as they work hard to fulfil their respective COP commitments.
Some companies have taken up the responsibilities and challenges more proactively by enrolling in voluntary schemes like Science Based Targets, RE100, and others. We expect more companies to follow suit as a result of enhanced awareness of the need to protect the planet and pressure from peers in the industry.
JLL's new office in Manila
Flexible workplaces are part of the sustainability story
More flexibility and adaptability of workplaces will cater to fast changing corporate and consumer needs. Health and wellness will be further elevated as a key imperative in designing new buildings and setting up new workplaces.
Indeed, global demand for flexible and remote workplaces has risen in the wake of the pandemic, as more workers are forced to stay away from their traditional fixed office. At the same time, the longer-term trend has been slowly but surely away from fixed office locations and towards more flexible workplace arrangements.
This flexible workplace trend should be viewed as potentially helping, not hampering, broader sustainability efforts within the real estate sector.
While in cities like Singapore and Hong Kong daily commutes to the office tend to be relatively short, this is not the case everywhere. In some countries, commutes can require hours in the car, often stuck in traffic jams, to an office that is nowhere near where the employee lives.
Flexible workplaces are giving workers the choice to grab a desk closer to their own neighbourhood. Not only does this help cut down on carbon emissions from cars, trains, and buses, but it fosters wellbeing.
The trend has grown well beyond the tech companies of Silicon Valley. Many of the world’s largest companies are now embracing flexible workplace arrangements out of a need to evolve with the times and recruit and retain the best talent.
An estimated 8.4 million days of personal time will be saved from reduced commuting times thanks to the rise of flexible workplaces. Meanwhile, over 2.5 million metric tonnes of CO2 will be saved globally as a result of the trend. That’s equivalent to emissions of 1,280 flights between London and New York.
The sharing economy as a green force
The basic premise of the sharing economy has been the ability to more efficiently allocate resources at scale and this is no different with the flexible workspace. It used to be even just a decade ago that corporate offices were built on the principle of being long term assets. Companies would be headquartered in the same location for decades.
This was reflected in the modularity of office furniture of the day. Furniture was marketed with long warranties of 10 years – to be disassembled and reassembled based on changing needs of the office space, whether it was the cubicle, partitioning, and office suites.
With the advent of the internet age and fast-growing technology firms, office design has likewise shifted to a more ‘disposable’ approach. With the typical firm planning for flexibility by managing their capex costs downwards, and planning for the need to relocate and redesign their office space every few years. This is similarly reflected in office furniture selection that is dumbed down, with speed and cost being the top consideration.
In response to sustainability touted as a marketing buzzword, there has been a lazy response to green washing projects with recycled or eco-friendly materials. While on the surface this has led to greater selection of products with sustainable qualities, what many do not address is sustainability measured on the full lifecycle of an office project – which has a far more considerable impact on the environment.
This is where flexible workspaces step in, providing companies with the option of taking only what they need at the time. Many corporates are now adopting a fixed and flex approach towards their real estate strategy. They may choose to build out a core headquarter location, but rather than risk creating shadow space by budgeting for growth, this expansion or seasonal requirement is passed on to a flexible workspace partner.
Even more can be said of the smaller start-up, which has traded upfront capex projects for flexibility in the size of office and lease.
Today, flexible workplace solutions have become an important part of the wider sharing economy, allowing for more efficient allocation of capex. This, in turn, leads to lower turnover of workplaces.
Moreover, these spaces can act as laboratories to showcase the adoption and trial of new technologies to a wider audience. They also allow us, the operator, to better understand user behaviour and trends through anonymous tracking of utilisation data.
Post-Covid, this need for data-backed decision making and new technologies in the workspace will come to the forefront more than ever. The World Economic Forum highlighted how the workplace will change for the better in this new era we are emerging into. Businesses that prioritise their return to work strategies and change how they operate will outpace their peers, WEF found.
Organisations should focus on a few key pillars to ensure a smooth transition of team members back onsite. According to WEF, this included starting from the top, with a leadership team and ethos culturally committed to increasing the company’s flexible workplace footprint, team member flexibility, and choice.
Business that lead in workplace flexibility with a goal of 50 per cent (or greater in countries with the right infrastructure) of staff members in flexible work arrangements, will retain and attract better talent in this new era where health must be put first.
If all this can be achieved sustainably with an emphasis on ESG principles, while showcasing that flexible workplaces can indeed represent the very innovation many of their tech-focused tenants are championing, it will go a long way to validating the model for years to come.
Arrival Lounge of Arcc Spaces One Marina Boulevard
Short-term thinking is the crux of the issue
Some of our peers in the industry have been criticised for taking a short-term approach to the office leasing business, looking to maximize profits by using cheap materials and cramming the maximum number of people into a space.
Built into the flexible workspace model must be a long-term view. Operators have an opportunity to carry the baton of sustainability that some (though not all) corporate office spaces have unfortunately had to relinquish. In our view, sustainability can be synonymous with thoughtful design and advanced planning for the way companies will approach work arrangements in the coming years.
At conception, spaces can be futureproofed on the design front, eschewing trendy design so that they do not become quickly outdated. Instead, they will only require minor updates to satisfy evolving tenant needs. The most sustainable flexible workplaces stand the test of time, as modern and relevant a decade from now as today.
As operators prepare for a green future, they must adopt this philosophy of a long-term lifecycle approach towards sustainability. Operational practices are important (for example, ensuring recycling bins are available throughout our spaces, or pooling resident tenants together for joint CSR initiatives) but are second to this vital first consideration.
Leveraging on data can provide insights into the design of the most heavily trafficked and used areas of an office, which informs the choice of appropriate and quality materials. This is a long-term view that consider ways to minimise replacement through good planning.
Moreover, reintroducing quality office furniture to the workplace through partnership with furniture providers ensures ergonomics are paired with durable materials. Changeable parts to be updated rather than replaced, further reducing needless waste.
Operators may also want to consider office furniture as a service, being able to offer just-in-time customisation based on tenants’ needs. Not only is it more sustainable, it reduces capex and the purchasing of redundant goods. It also allows operators to be more reactive to the needs of the day.
Finally, if flexible workplace operators do have objects that are no longer needed, end-of-life recycling and disposal programmes are the best approach. This way items can be repurposed, reused, or donated.
Getting to net zero in real estate and the workplace will require an industry-wide effort, but that’s not to say a few early champions can’t lead the way
About the authors
- Kamya Miglani, Director of Corporate Solutions Research Asia-Pacific, JLL
- Wu Xuchao, Head of Energy and Sustainability Services South Asia, JLL
- Justin Chen, CEO, Arcc Spaces
Arcc Spaces is a shared workspace brand with over 20 locations across Asia that works with corporates to transform the way they work and drive innovation through a network of hospitality-led spaces.