Sustainable buildings, not stranded assets

Industrial buildings that can’t show they are low- or zerocarbon run the risk of becoming stranded assets. That’s the conclusion of a report from the Australian and New Zealand Green Building Councils.

There are forecasts that the expansion of online retail will drive growth in the industrial building sector over the next decade. The report says New Zealand has an industrial building pipeline worth around NZ$13 billion.

Investors are increasingly unwilling to be stuck with properties that are polluting. This makes them undesirable and could inflict financial or reputational damage on owners.

At the same time, investors are becoming more aware that zero carbon buildings can open doors to the growing multitrillion-dollar green bond market, such as the $600 million Green Bond issued by ANZ in 2015.

Davina Rooney, who heads the Australian Green Building Council, says this gives the sector a valuable opportunity to build better assets. They could be designed to minimise embedded carbon and, when finished, cut operational carbon emissions.

The report says industrial buildings with Green Star certification produce 66 per cent fewer greenhouse gas emissions than standard buildings. The upfront cost of green design might only be 2 per cent, over the life of the building that can result in savings of 20 per cent of the total construction cost.