Greener buildings produce strong investor returns and capital growth: Jason Huljich

Fears of property developers that withdrawal of the incentives associated with the scheme would slow the growth in the sector and result in environmental works slowing or ceasing altogether have proven unfounded, at least in Centuria’s case.

At the time the incentives provided by the fund were withdrawn there was considerable talk about the negative impacts such as unexpected costs and a danger that Australia would start to go backwards in its environmental building performance at precisely the time when energy costs are becoming an increasing issue for businesses.

At Centuria we have taken a longer-term view. While the loss of the benefits was not welcome, our considered decision has been that the long-term benefits of making sure the buildings we develop and manage are subject to continual environmental upgrades most definitely outweigh the short-term costs of doing the work.

There are a number of examples of commercial properties in Centuria’s portfolio currently undergoing environmental upgrades.

These followed outstanding results from a major upgrade of 607 St Kilda Road in Melbourne, including the building’s air-conditioning, controls, boilers and lighting.

By March this year, the building’s electricity consumption was down 56%, with its NABERS energy rating up from zero to 2.5, and on track to ultimately achieve four stars. Less than half of the $750,000 overall project cost was covered by the Green Building Fund.

Other upgrades currently underway are:

• improving the NABERS rating at 87 Mitchell Street, Darwin from four to 4.5 following a BMS, lighting, and lift upgrade, with estimated reduction to the building’s energy costs of $52,000 p.a.
• upgrades at 441 St Kilda Road, Melbourne, which are expected to improve the rating from 3.5 to 4.5.
• improving the zero rating at 200 Creek Street, Brisbane, with a four-star target following upgrades to the BMS, air-conditioning and lighting, which are expected to result in an energy saving of $48,000 pa.

Centuria recognises the importance of improving the environmental performance of its buildings to create long-term operational savings and potential increases in yield.

Office buildings with strong sustainability attributes such as higher NABERS ratings tend to have stronger capital growth prospects, thereby producing greater returns for our investors.

The fact that we’re at a point in the 21^st century when we have the knowledge and information we need to make better decisions about how we affect the environment means that it’s incumbent on us to do so.”

Jason Huljich is CEO of unlisted commercial property specialist Centuria Property Funds