Any new office building should be targeting good sustainability ratings. Take that as the baseline.
However about three quarters of Australia’s building stock are older, and quite a bit worse when it comes to carbon and water footprints.
Buildings consume about 40% of Australia’s electricity, so improving older building’s environmental performance is a powerful lever of climate action.
So, we were thrilled that 401 Collins St, a 70+ year old building that our community invested in, has achieved a 5 star NABERS Energy (whole building) rating.
For context, that’s a pretty good number for new buildings, let alone one that was built in the 1930s.
The business case supporting the environmental upgrades:
- Our community of investors bought the building in 2014 at a cost of around $32m.
- In 2017 we raised new equity and debt of just under $20m to fund a rejuvenation and upgrade project, equating to total capital cost of ~$52m
- The environmental works cost substantially less than the $20m we raised, which also included funds for aesthetic works and re-leasing.
- After the upgrade project, at EoFY 2018, the building was valued at $66m, equating to an equity uplift of ~$14m; far in excess of the cost of the upgrades. The building has continued to appreciate since then.
- 401 Collins St currently performs more energy efficiently than 86% of ‘Whole Building’ rated assets in Victoria.
- This means is emits 45% less CO2-e than an otherwise comparable building in Melbourne with average performance (ie NABERS Energy ~3 Stars). That’s an emissions saving of 683 tonnes CO2-e/year.
- We believe that buildings’ environmental performance is attractive to tenants and owners, especially as more people place more value on sustainability.
The Age ran a story on 401 Collins. They led with money side, to be expected in the business pages, but managed to cover the environmental story as well.