In the complex world of real estate, building certifications are more than mere compliance markers; they are integral components in the evolving narrative of sustainable real estate. They guide investment decisions, influence design and construction practices, and shape the marketability of properties. The significance of such certifications has never been more pronounced.
This trend is not just a UK phenomenon but a global one, reflecting a growing awareness of environmental impacts and a shifting regulatory landscape. At Realcomm’s London CIO forum, Neil Pennel from Landsec; Helena Rivers from AECOM and Rob MacWhannell from Better Buildings gave us some key considerations when seeking out certification.
Diversity of Certifications
The landscape of possible certifications is vast and complex to navigate, with certifications from overall building performance (e.g. LEED or BREEAM) to specific components like timber, steel, HVAC (Heating, Ventilation, and Air Conditioning) systems, (e.g. ENERGYSTAR, EPDs and HPDs) to governance and reporting (e.g. GRI, CDP, ISO 14001). A quick Google produces tens of options for the UK alone, all with a slightly different angle. In some instances, certifications are seen as essential for construction compliance and building integrity. However, certain certifications are pursued primarily for marketing purposes, to enhance the attractiveness of a building to potential buyers or tenants.
This makes it hard to know which to prioritise, and that is before you consider the challenges posed by the varying international standards and regulations. Across different regions and countries, there are distinct sets of rules and criteria, which can create a complicated scenario for multinational companies and investors looking to maintain consistent standards in their portfolios.
Evolving Criteria and Retrospective Adaptations
Future developments are expected to focus heavily on integrating smart building technologies, emphasising net-zero carbon emissions, and enhancing occupant well-being. These trends not only reflect a shift towards more sustainable practices but also indicate a growing alignment of certifications with digital transformation and climate change objectives.
As standards change over time, maintaining certifications can become a moving target, particularly for older buildings that may require significant retrofitting to meet new standards. Paul Weston of Prologis and Andrew Waller of Remit Consulting examined the potential for sustainable retrofits or adaptations in the logistics sector. By fitting solar panels to warehouses, up to 15 GWh of electricity can be generated. This not only can power the buildings but can contribute excess power to the national grid. These efforts can make Prologis’ offer more competitive to occupiers than others, illustrating again the duality of sustainable adaptation’s benefits – environmental protection and marketing power.
Certification Market Maturity and Effectiveness
While the growing number of certifications promotes competitiveness, it does not always drive desired changes in sustainability and efficiency. The panel agreed on the need for fewer, more focused certifications that align closely with the industry's sustainability goals and practical realities.
There is also a critical gap in ongoing monitoring post-certification. More continuous and rigorous assessment is needed to ensure sustained compliance and performance, made harder by the ever-changing landscape. From an investor’s perspective, this is problematic as it becomes harder to justify or benchmark your investments in certifications.
Where to start
As this field continues to evolve, embracing these certifications is not just a regulatory necessity but a cornerstone of sustainable development and proof to a commitment to a greener, more efficient future. The panel at Realcomm’s London CIO forum gave the following pointers to help property companies achieve appropriate ESG certification:
A strategic approach is key, and the advice is to start by identifying certifications that align closely with your project's goals and values, particularly those focusing on sustainability and energy efficiency.
You do not need to secure every available certification. Prioritise certifications that offer clear benefits in terms of compliance, marketability, and operational cost savings.
Consider the long-term implications of certification choices, especially in terms of maintenance and potential retrofitting needs.
Engaging with a consultant who specialises in this area can provide invaluable guidance.
About Realcomm and its London CIO Forum
Realcomm's London edition of its CIO Forum, was held recently at Amazon's UK Headquarters in the City of London, is one of many annual conferences, webinars, workshops, and forums, that allow real estate executives to examine the convergence of technology and real estate. The events, including the annual conference [LINK], provide educational, networking and collaboration opportunities.
To have been a participant in the CIO Forum as Realcomm’s Education Partner, Remit Consulting is very privileged to have been able to gain insights into how the global property markets are being rapidly transformed by the integration of AI into real estate businesses. We are pleased to be able to share the day's key points with you: What links Formula One pit stops, warehousing roofs, and sustainability data sets? The answer is the Realcomm CIO Forum London.