Office Building Profile

5 green star // Office Design V1

Meridian Building, Wellington

rating: 5 Green star The Meridian Buildig was New Zealand’s first
Address: 3 3 Customhouse Quay, completed 5 Green Star building rated under the
Wellington New Zealand Green Building Council’s (NZGBC)
Green Star - Office Design v1 certification scheme
Developer: DNZ Property Group and is Meridian Energy Ltd’s head office.
landowner: Wellington Waterfront Ltd
The building was the first to be constructed on
TENANT: Meridian Energy Ltd Wellington’s waterfront in a decade.
design: Studio of Pacific
The owner and the tenant both wanted a landmark
Architecture in joint venture
building, befitting the capital and the site
with Peddle Thorp Aitken overlooking the harbour, coupled with leading-edge
engineering: Dunning Thornton environmental performance. The architectural
(Structural); design is articulated as two separate forms - a
Beca (Building Services, glass pavilion that floats on the harbour edge, and
Fire Engineering) a smaller curved annex building that links to the
adjacent heritage warehouses.
ESD: Beca
construction: Fletcher Construction DNZ Property Group embraced the opportunity
Company to develop and own this high performance green
building, and the building aligned Meridian Energy’s
total nla: 5,246 m2 (Office 4,040 m2, accommodation with the company’s focus on
Retail 832m2, balconies, positioning itself as a global reference company in
storage etc, 374 m2) renewable energy.

5 Green Star: Office Design V1 Meridian Building www.nzgbc.org.nz

 Office Building Profile

POINTS ALLOCATION Meridian building, Wellington

total points: 70 Management
CATEGORY

• Two-year building tuning period.

5 10
0POINTS 15 20 25 30 • Independent Commissioning Agent appointed from design through to construction.
• Building User Guide provided.
Management • Comprehensive Environmental Management Plan and Waste Management Plan for the project
construction, more than 60% of waste generated during construction was diverted from landfill.

Indoor Indoor Environmental Quality

Environment • ‘Mixed mode’ ventilation system allows operation using natural ventilation when conditions are
Quality appropriate, or energy efficient HVAC mode with enhanced ventilation rates.
• Air quality monitoring and control provided.
Energy • Over 90% of office area within 8m of an external view, with high levels of daylight to over 60% of the
office areas.
• Two week purge period to improve air quality prior to occupancy
• Low VOC carpets and paints to office areas, and low formaldehyde products
Transport
Energy
• Climate responsive active façade that automatically adjust to suit ambient weather conditions, with
Water ventilated double-skin façades with automatic retractable blinds, plus fixed and motorised solar
shading systems.
• Active chilled beam HVAC system, with energy recovery ventilation.
• Solar hot water heating to provide 80% of domestic hot water requirements.
Materials
• Partially exposed structure to provide passive cooling effect.
• BMS control system monitors and controls opening windows, solar shading blinds and louvres, and
Land Use building environmental systems.
& Ecology • Efficient T5 lighting with dimmable ballasts provided with occupancy and daylight control.
• BMS energy metering.

Emissions Transport
• No car-parking provided, to encourage public transport use.
• Cycle racks, lockers and showers provided for building users.
Water
• Waterless urinals and, sensor taps.
Available Achieved • Rainwater collection and recycling to flush toilets.
• BMS water sub-metering.
Materials
• Fit-out requirements integrated with base building design and construction
• Cement substituted in structural concrete (volume substituted equates to >15% of precast and
>20% of insitu concrete used).
• PVC substituted for majority of uses.
• Timber specified from sustainable sources.
Land Use & Ecology
• Building developed on a brownfield site.
• Export of topsoil and fill material to landfill minimised.
Emissions
• Zero ODP refrigerants and insulants used.
• Silt arrestor provided on stormwater discharge.
Innovation
• Innovation points were awarded for the application of climate responsive active façade systems and
the ‘mixed mode’ ventilation strategy.

5 Green Star: Office Design V1 Meridian Building

The Value Case
for Green Building
in New Zealand
September 2010
01 Introduction
The environmental Studies have identified that industry take up of
benefits from certified green building ratings can be hampered by
building green are a lack of clear information on the business case for
beyond dispute. green buildings.
Internationally it Internationally a number of studies into the costs
has been proven and benefits of commercial green buildings have
that green buildings been completed, particularly in the United States
deliver a suite of of America (US), Canada and the United Kingdom
compelling economic (UK). Little comparable research into certified green
and social benefits buildings has been undertaken in New Zealand and
that conventional only a small amount of anecdotal evidence is currently
buildings do not. available.
New Zealand is
This document goes part way to closing this gap by
now moving in this
clearly detailing the compelling value proposition for
direction with an
certified green buildings in New Zealand through the
expanding stock of
consolidation of international findings, reinforcing
green buildings.
these findings with local examples and identifying
where further research is needed.
The value proposition for green buildings can be
addressed from a benefits perspective to:

INVESTORS 02

DEVELOPERS 03

OWNERS 04

GREEN STAR NZ EXAMPLES 05

TENANTS 06

CAPITAL COST IMPACT 07

 02
02 INVESTORS

Investors

Property investors Risk Mitigation

According to figures released by Ethical
are key players in NZ institutional investors, including the
New Zealand SuperAnnuation Fund have Investment Research Service (EIRS) the

the development of advised the New Zealand Green Building

Council (NZGBC) that certified green buildings
amount of money invested in Britain’s green
and ethical retail funds has reached an all-time
buildings, but they provide new opportunities for property
investors where these buildings meet risk/
high of £9.5 billion in 2010.
This is up from only £2.4 billion that was
also play a critical role return hurdles. These investors are expecting invested in 1999 and clearly shows the increase

in changing market property managers to give consideration to

certified green buildings and the management
of interest in socially responsible or ethical
investing.
behavior.1 Demand is of long term risks from climate change,
including understanding trends in energy and Reduced Carbon Risk
created by investors, resource costs, consumer demand and the
regulatory environment.
Worldwide governments are starting

through increased to implement requirements and

legislation around carbon emissions.
Increased Return on
accountability Investment (ROI)
The Intergovernmental Panel on Climate
Change states that buildings account for
required of corporates, The ROI for green buildings has jumped 50% 8.6 gigatonnes of carbon dioxide emissions, or
almost one quarter of total world emissions.3
certification to in three years as building values rise and
operating costs tumble, according to a new An article in The Australian4 points out that
internationally survey of the commercial building sector in
the US. This report,2 produced in conjunction
“investors need to understand how our
decisions on where to invest our money expose
recognised standards with the US Green Building Council, states that us to carbon risk”. Investing in certified green
buildings helps to mitigate this risk.
green buildings now experience a 9.9% ROI,
and an increase in up from 6.6% in 2005. A 2009 NZGBC discussion paper found
competition through Enhanced Marketability
that 17% of New Zealand carbon emissions
are from the construction and operation of
sustainability indices. The public perceives certified green buildings buildings, which is a substantial emissions
total, with significant cost-effective reductions
as an environmentally responsible approach to
construction and development. Corporations possible. This is particularly significant given
that are associated with green buildings that almost half (48%) of New Zealand’s
(whether through direct ownership or via fund emissions are from agriculture and 20% from
investment) can benefit from this perception transport, both of which are difficult and costly
and use it to enhance their brand position as to reduce, thereby increasing the focus and
well as promote alignment with their corporate requirement for carbon reduction from the
social responsibility (CSR) programs. building sector.
In particular, investment funds can use this
association to market and attract their own
investors. Investment funds that brand
themselves as socially responsible or ethical
often enjoy strong consumer interest.
 0 3 D E VE LO P E R S
03 Developers

One of the major Capital Cost Savings Asset Protection

obstacles to Optimising building systems can lead to
substantial savings in capital costs. Davis
Government and large corporate organisations
are increasingly incorporating green principles
developers building Langdon found in Australia that a 4 Green Star
certified building could expect to experience a
into their property requirements. Developing
a certified green building anticipates
green has been the 2% – 5% saving on the up front capital cost.
For example downsizing HVAC systems
potential future changes in market demand
and legislation thereby protecting expensive
tendency to hold through energy efficient design not only developments.

a short term view, produces savings in ductwork, but by reducing

the requirement for bulky mechanical Compressed Schedule
i.e. build it, sell it equipment, more floor space can be made
available for leasing.
An integrated team approach to design (as
required when using Green Star) results in
and move onto the fewer design conflicts and subsequent change
Increased Sale Price
next development. It has often been claimed that certified green
orders.
American studies have shown that green
However, developers buildings have higher property valuations over
non-green buildings, however until recently
building projects are routinely coming in on
time and ahead of schedule. In New Zealand
have much to gain this claim has not been able to be robustly
substantiated.
local authorities are discussing accelerating

from going green and A recent RICS report,6 looking into sales prices
building approvals for projects going through
the Green Star process.
the following benefits of green buildings in the US market, found that
a 16% premium was being experienced over
have been identified business as usual buildings
“Upgrading the
for developers. Improved Marketability average non-‘green’
Green buildings are identified by the public
as being contemporary, leading edge and high building to a ‘green’
2 % TO 5 % SAVING
quality. one would increase
its capital value by
These buildings have a higher profile than
I N CA P I TA L C OST 5 other buildings and their owners enjoy the
well-deserved public perception of goodwill
toward employees and the community. some $5.5 million.”6
These qualities provide an excellent basis for
1 6 % I N C R E AS E marketing the building to potential tenants.
I N SA L E S P R I CE 6
Access to Capital
Debt funding may soon become easier and
ROI OF 9.9%2 less expensive for certified green buildings
in New Zealand. There is often less perceived
credit risk in the development of certified
green buildings, due to their ability to
command higher rents and better tenants.
 04
04 O W N E R S

Owners

Astute building Lower Operating Costs Reduced Liability and Risk

owners are Worldwide it has been proven that green
buildings have a lower operating cost. These
In the USA the insurance industry is becoming
increasingly aware of lawsuits associated with
7

increasingly reduced costs can be realised directly by

the building owner, but can also flow through
building sickness and other indoor air quality
issues, resulting in rising insurance costs.
recognising that to the owner by way of increased rent when
compared with non-green, and less efficient,
Some industry experts are predicting that
insurance companies will start linking lower
green buildings have but otherwise comparable buildings. insurance premiums to green buildings. 11

significant benefits. Tenant Attraction and

In New Zealand the insurance industry is
realising the benefits of green buildings
Green buildings may Retention and in 2008 NZI launched a new suite of
sustainability insurance products for use in
be self managed or Green buildings have significant benefits for
their occupants. As such there is increased commercial buildings. 12

managed through an demand for space in green buildings and this

is reflected in the increased pre-commitment Higher Lease Rates
independent facility or winning of tenants in comparison with non- Tenants want environmentally sustainable and
certified competitors. productive workspaces that demonstrate their
manager, however in The added attraction of certified green commitment to corporate social responsibility

many cases the drivers also leads to an increased retention of existing and
buildings over ‘business as usual’ buildings will pay increased lease rates to obtain
space in these buildings. International studies
for owning them are tenants. have shown that certified green buildings can
experience a 5% to 10% increase in lease value
similar. According to Paul Day from Savills Queensland,
“all tenants want to be a part of the green
over business as usual buildings. 7

solution, even small tenants, which has led to

an unprecedented number of new buildings
Increased Property Values
registering and achieving a Green Star rating In the US it is now the norm for certified green
in Queensland”. Mr Day believes, however, that buildings to command a 30% price premium
it’s not the new stock under threat, it’s the old over similar non-certified buildings due to the
stock that will have to be taken off the market economic benefits they offer.13 US experts
and retrofitted to Green Star.”10 believe that it is only a matter of time before
Grade A office buildings without certification
see their property value decline as LEED
5 % TO 1 0 % I N C REASE certification becomes the defacto benchmark
IN L E AS E VA L U E 7 in measuring quality in construction.

6 0 % O F AS I A PACIFIC
C O M PA N I E S W I LLING “When we started our search for new
TO PAY A P R E M IUM premises a number of requirements were
R E N T TO O C C U PY listed, one of which was a building with
S U STA I N A B L E S PACE 8 a Green Star rating. Sustainability is
important to our people and we recognised
this as we considered our building options.”
O P E R AT I N G C O STS SOPHIA GUNN
D E C R E AS E D BY 8% TO 9% 9 Chief Operating Officer / Independence Director of Deloitte
(tenant in the 5 Green Star – Office Design and Office Built rated 80 Queen St)
 05 GREEN STAR
Green Star NZ
05 Examples

C A S E S T U DY C A S E S T U DY C A S E S T U DY

CHRISTCHURCH CIVIC BUILDING MERIDIAN BUILDING

Christchurch’s new Civic Building The Meridian Building was
is the greenest building in New New Zealand’s first completed
Zealand, achieving a 6 Green Star 5 Green Star building rated under
– Office Design certified rating in the New Zealand Green Building
early 2010, with the highest number Council’s (NZGBC) Green Star -
THE DELOITTE CENTRE, 80
of points achieved, from the New Office Design certification scheme
Zealand Green Building Council.
QUEEN ST and is Meridian Energy Ltd’s head
“With 6 Green Stars and 83 points we The Deloitte Centre is one of office.
have designed the greenest building Auckland’s most well-known The building was the first to be
in New Zealand,” says Christchurch environmentally sustainable constructed on Wellington’s
Mayor Bob Parker. “This represents commercial buildings. It was one waterfront in a decade.
significant annual energy and cost of the first high rise tower in New
A post occupancy study of the
savings for our ratepayers and Zealand to achieve a 5 Green Star
Meridian Building showed that staff
reflects the Council’s commitment to – Office Design rating.
productivity has improved by about
creating a sustainable future for our The premium-grade office tower 9%. Employees are exceptionally
community and the region.”14 was developed, built, owned and comfortable in this building
The building is designed to save $1.3 managed by Brookfield Multiplex and are therefore productive.
million in energy annually through its and is tenanted by BNZ and Deloitte. Comparatively speaking the new
innovative Tri-Generation system, Brookfield Multiplex recently sold building outperforms the former
and 85 per cent of its hot water will 80 Queen St for just under $180 Meridian office building in all areas,
be heated by solar power. million, at a yield of about 7.6%.15 particularly in productivity.
 06
06 TENANTS

Tenants

Tenants are beginning Increased Productivity Corporate Social

to realise that, In commercial buildings, payroll costs greatly Responsibility (CSR)
overshadow all other costs for a business. A
Taking space in a certified green building
other factors being Californian report found that four attributes
17

associated with green buildings (increased

is a clear demonstration of a company’s

constant, green ventilation control, temperature control,

lighting control and daylighting) positively
commitment to CSR. Official certification
schemes, such as Green Star, verify and
buildings demonstrate and significantly correlate with increased substantiate green claims allowing tenants to
publicly report their achievements.
large financial, social productivity.
The Szencorp building at 40 Albert Street in
When IAG decided to build a new Green Star

and environmental
rated head office they saw it as an opportunity
South Melbourne was the first existing office
to demonstrate that CSR starts at home.
refurbishment in Australia to be awarded a
benefits when 6 Star Green Star – Office Design rating. Reduced Cost of Churn
compared with A 2009 workplace satisfaction study found 18

an 11.5% increase in staff productivity and Churn is defined as the frequency with

non-green buildings. that 54% of staff perceived that it was “more which building occupants are moved
healthy” working in the refurbished building. (either externally or internally). Research
New Zealand buildings are achieving similar in Australia has found that the cost of staff
levels of productivity improvement – see churn can be A$2482 per person.16 Green
Meridian Building. buildings often incorporate systems (such as
raised floors) that allow workstations to be
Reduced Operating Costs rearranged without costly rewiring and HVAC
U P TO 2 5 % I N C REASE Certified green buildings are designed and
modifications, thereby reducing the cost of
churn.”
IN P R O D U CT I V I TY 7 built for energy and water efficiency, making
them cheaper to operate. The Szencorp
building has reported energy savings of over
Future Proofing
Certified green buildings use less water and
1 5 % R E D U CT I O N IN 70% after two years of operation.
energy than conventional buildings, thereby
A B S E N T E E I S M 16 Reduced Absenteeism providing a buffer against future increases
in water and energy services costs and
It is generally accepted that buildings
protecting against services shortages. In
U P TO 6 0 % R E D UCTION with toxic substances, poor ventilation
New Zealand the insurance industry is realising
IN WAT E R A N D ENERGY and insufficient natural light can increase
the benefits of green buildings and in 2008
staff sick days. The ING headquarters in
USE7 Amsterdam claims a 15% reduction in
NZI launched a new suite of sustainability
insurance products for use in commerical
employee absenteeism due to improved indoor
buildings.22
environment quality. 19

Increased Staff Attraction 98% OF G E N Y

and Retention WOR K E R S
In aggressive recruitment markets tenants
are realising the benefits of a building’s ASPIRE TO W O R K
environment in gaining a competitive edge in IN G R E E N
attracting talent. A common view is that if you BUILD I N G S 2 0
fail to understand what drives Generation Y
you will fail to attract or retain the very people
who hold the key to an organisation’s survival.
A recent study has shown that 98% of
Generation Y aspires to working in a green
building. 20
 07 CAPITAL COST
Capital Cost
07 Impact

Several international To date New Zealand has not had the

penetration of certified green buildings to
In Australia Davis Langdon has undertaken
some research analysis on the construction
studies have focused conduct a similar analysis and therefore little
research has been conducted on the cost
cost impact of incorporating Green Star into a
project.
on the capital costs of impact in the New Zealand market. This research shows that a 4 Green Star
green buildings and Overall the international consensus is that
green buildings cost around 2% more to
building can actually be built cheaper than a
Business As Usual (BAU) building. It also shows
these studies have design and construct. In particular, since 2003,
the US Green Building Council (USGBC) has
that a 5 Green Star building need not cost any
more than a BAU building.
played an important studied more than 200 commercial office A study was completed in New Zealand in 2006
role in driving the shift
buildings across the US and determined the that found that the difference in the initial
cost premium to build green to be, on average, capital cost of the green case study buildings,
to building green. 1.84% across the various certification levels.
However, significantly, the USGBC found there
compared to conventional good quality
buildings, varied quite widely (from 15% less to
was absolutely no correlation between the 11.5% more), with sustainable features initially
amount of money that had to be spent and the costing an average of 2–6% more.21
shade of green. There is even some evidence With the numbers of Green Star NZ certified
to suggest that the integrated thinking, and buildings increasing further research will
solution driven design processes, associated soon be possible into the costs of developing
with green building means that you reduce certified green buildings in the New Zealand
the amount of risk, construction time, and market.
variations and the capital costs are actually
less.

“Green is only more Office – Design & As Built

expensive when “A major barrier Capital Cost Impact [%]5
the procurement to the greening of
the industry is the
8%

process is 7%

fragmented” misconception that 6%

5%

Peter Gomm the capital costs 4%

CEO Mainzeal Property and Construction
of green buildings 3%
2%
are significantly 1%

higher than those 0

-1%

of conventional -2%

buildings.”21
-3%
-4%
-5%

6 Star - Green Star 6%+

5 Star - Green Star 0%
4 Star - Green Star -5% – -2%
Current Business As Usual [BUA] 0%
Endnotes
1. Ethical Investor, July 2008 Issue 78
2. McGraw Hill Smart Market Report
3. Working group III: Mitigation of climate change, IPCC fourth assessment report, 2007
4. How green is your portfolio, The Australian, 30 July 2008
5. The Road to Green Property, Davis Langdon, Version 2.0 June 2010, Page 09
6. Doing well by doing good? An analysis of the financial performance of green office buildings in the USA, RICS research report, March 2009
7. The Dollars and Sense of Green Buildings, GBCA, 2006
8. 60 Percent of Asia Pacific Companies Willing to Pay a Premium Rent to Occupy Sustainable Space, Despite Tighter Economic Environment, Jones Lang Lasalle, MACAU, March 26, 2009
9. The dollars and sense of green buildings, GBCA, 2008, Page 46
10. The dollars and sense of green buildings, GBCA, 2008, Page 39
11. The dollars and sense of green buildings, GBCA, 2006, Page 51
12. http://www.nzi.co.nz/AboutNZI/News-and-Media-/NZI-launches-commercial-sustainability-suite.aspxhttp://
13. www.reuters.com/article/idUS54332971520100709
14. http://www.ngaitahu.iwi.nz/News/Media/Media-Releases/2010/New-Zealands-greenest-building.php
15. http://www.bdcentral.co.nz/afa.asp?idWebPage=8338&idBobDeyProperty_Articles=14145&SID=217718484
16. The dollars and sense of green buildings, GBCA, 2006, Page 56
17. The Costs and Financial Benefits of Green Buildings, A report to California’s Sustainable Building Task Force, Greg Kats,
October 2003
18. Encompass Sustainability and Building Use Study
19. Rocky Mountain Institute Case Studies, www.rmi.org.nz
20. Gen Y and the workplace annual report, 2010
21 Value case for sustainable building in New Zealand, Ministry for the Environment, 2006
 Future-Proofing New Zealand’s Commercial Property For A Sustainable Tomorrow

July 2006

Future-Proofing New Zealand’s Commercial

Property For A Sustainable Tomorrow
EXECUTIVE SUMMARY reduced greenhouse gas emissions and water
consumption, whilst providing both financial and
• An international focus has brought to attention the physical benefits to occupiers, owners, investors
commercial, social and environmental pressures and shareholders.
driving sustainability. In the last year sustainability
within New Zealand has gained momentum. • To improve a building’s sustainability, simple cost-
effective solutions can be implemented that will pay
• Organisations are increasingly implementing for themselves within realistic timeframes.
environmentally sustainable practices as a result
of demand from consumers, investors, shareholders, • The Wellington market has an increasing number
the community and government. of cutting edge sustainable buildings and develop
ments. Sustainability is potentially shaping the
• Investors, owners, occupiers and developers are future of the Wellington commercial property
recognising the benefits of sustainable practices that market.
can accrue to them through lower operating costs,
an enhanced brand and reputation and higher relative • Property owners and managers need to make
investment returns. sustainable practices part of everyday business and
future-proof their buildings.
• In Jones Lang LaSalle’s experience, a 20% reduction
in waste going to landfill can be achieved in large • In a market where the influence of sustainability is
commercial office buildings. Energy costs can be growing in significance, owners and investors with
reduced by as much as 20% - 50% through a range of a sound understanding of sustainability will be in a
initiatives. stronger position than their competitors.
• In addition, sustainable buildings can result in
2 Future-Proofing New Zealand’s Commercial Property For A Sustainable Tomorrow

Introduction can be applied within both new and existing buildings, at

varying levels of cost. The ability of sustainable build-
New Zealanders are currently the fifth highest
ings to attain the commercial benefits mentioned above
greenhouse gas emitters in the world on a per capita
and environmental objectives such as reduced energy
basis, behind Australia, Canada, Luxembourg and the
usage, water consumption, waste production and Green-
United States¹. The majority of gas emissions are CO²
house gas emissions, depends on the level of initiative
and methane. A substantial amount of the CO²
applied within the building.
emissions are generated by commercial buildings.
In this paper Jones Lang LaSalle will discuss:
In addition, commercial buildings use high levels of
energy, water and produce large amounts of paper waste,
• Why property owners benefit from investing in
contributing to 20% of landfill in New Zealand. In the
sustainable buildings and implementing
next decade and beyond, we will see the cost of water,
environmental programs
energy and landfill fees increase, as well as the potential
• Cost benefit analysis and saving examples that
introduction of carbon emission taxes. Incorporating
meet sustainable requirements that investors,
sustainable features in new or existing buildings is a
owners and tenants can benefit from
way of future-proofing against these rising costs, while
• Insight into the future development of sustainability
reaping environmental and bottom-line benefits now.
in New Zealand, particularly Wellington and the
potential impact on commercial property
Internationally, there are increasing commercial and
social pressures driving businesses to demonstrate their
commitment to the environment and to sustainable Drivers for Environmental
business practices, and this is evolving in New Zealand. Sustainability
The shifting focus not only benefits the environment but Organizations are increasingly being required to
also organisations that are seeing the financial benefits implement initiatives to demonstrate their commitment
from adopting sustainability initiatives. to the environment and sustainable business practices.
Some of the corporate drivers include:

An environmental study of the world’s • Consumers demanding ecologically sensitive

250 largest organisations showed that products
shares in companies that demonstrate • Shareholders demanding socially responsible
investment
the greatest respect for the environment • Businesses seeking to be an employer of choice
are valued at an average of between 5% and retain staff
- 10% higher than their competitors. • Pressure from the community for increased
business accountability
• Tangible and non-tangible benefits particularly
Research² has suggested commercial benefits from cost savings for owners, tenants and investors
investing in, occupying or owning sustainable buildings • Increasing environmental regulations
include: • Globalisation and international agreements such as
the Kyoto Protocol.
• Marketing advantages
• Faster lease-up period Already these drivers are impacting on larger enterprises
• Higher tenant retention rates due to enhanced user and institutions and will increasingly affect small to
satisfaction, health, comfort and productivity medium sized businesses.
• Higher building value
• Future-proofing (against emissions taxes, for Cost reductions can include lower energy costs, lower
example) waste disposal and water costs, reduced environmental
• Overall greater return on investment and emissions costs, lower operation and maintenance
costs, and savings from increased productivity and
There is a broad range of sustainability initiatives that health of workers .

¹http://globalis.gvu.unu.edu
²Value Case – www.mfe.govt.nz
 Future-Proofing New Zealand’s Commercial Property For A Sustainable Tomorrow 3

government delivers a strong message for New

Cost reductions can include lower Zealand’s future with sustainability. Bound by the
energy costs, lower waste disposal and Kyoto Protocol and its mandatory conditions, New
Zealand will be required to take action to reduce green-
water costs, reduced environmental and house gas emissions, or else face serious financial and
emissions costs, lower operation and environmental consequences.
maintenance costs, and savings from
increased productivity and health of Sustainability – Impact On Investment
workers.³ In Australia, a significant driver for property owners
to adopt environmentally sustainable practices is the
Many organisations have recognised the benefits that number of large public authority superannuation funds
can accrue to them from environmentally sustainable who have committed to investing in organisations that
practices, including enhanced reputation and brand, can demonstrate their environmental credentials.
being viewed as innovators by the market and operating International investment companies and large
cost reductions. investment funds are beginning to recognise the benefits
from investing in environmentally sustainable funds.
There are many easily implemented sustainable
initiatives such as recycling and energy-efficient use of An example of a serious Australian investor in
lighting and computers. Significant benefits come from sustainability is VicSuper, who currently invest 10% of
having a sustainable building that has been designed and their listed equity portfolio in large Australian and
operates in a way that enhances energy savings, reduces international companies rated as having the best
CO² emissions, conserves water and reduces waste. sustainable business strategies in their industry sector.4
Potentially, the building provides a better and more
productive environment for the occupants and enhances In the USA, the Dow Jones Corporate Sustainability
the reputation of owners, investors and tenants. Group Indicies have been developed to track the
performance of the top 10% of leading sustainability
In New Zealand, the government has taken a similar companies, in each industry group, in all countries
approach to those offshore, implementing strategies covered by the Dow Jones Global Index. Investors and
like: Govt3, the Energy Efficiency and Conservation fund managers also use this index as the basis to select
Authority’s (EECA) Energy Wise government the top performing firms for their sustainable investment
programme, Agenda 21, Cities for Climate Protection funds.5 The annual review of the components of the
programmes and the introduction of funding assistance Dow Jones Sustainability Index (DJSI) found that since
by the EECA. the last review in September 2002 the DJSI World (in
USD) has outperformed the mainstream market, rising
This proactive approach taken by the New Zealand 23.1%, compared with 21.2% for the MSCI and 22.7%

The Kyoto Protocol is a legally binding international agreement that will commit industrialized countries to reduce emissions of the six
greenhouse gases: carbon dioxide, methane, nitrous oxide, hydro fluorocarbons, per fluorocarbons and sulfur dioxide.

The agreement specifies that both developed and developing countries must follow a number of steps including: designing and
implementing climate change mitigation and adaption measures; preparing national inventories of emissions removals by “carbon sinks”;
implementation and cooperation in development and transfer of climate friendly technologies; and partnerships in research and
observation of climate science, impacts and response strategies. Developing countries are not legally bound to emissions reduction targets
yet because historically they have been responsible for only a small portion of the global greenhouse gas emission.

New Zealand signed the Kyoto Agreement in 2002. This requires New Zealand to reduce emissions back to 1990 emission levels by 2008
and keep them at this level until 2012, which is the first Kyoto target period. Currently New Zealand’s emissions are increasing and could
be potentially 30% over our emission goal level. This could result in New Zealand having to pay over $500 million for not attaining their
goal.

To achieve the emission goal level the government will possibly have to implement stricter restrictions on emissions and/or impose
emission taxes to reduce the levels of emissions created.
³Davis Langdon
4 www.vicsuper.com.au
5 www.sam-group.com
4 Future-Proofing New Zealand’s Commercial Property For A Sustainable Tomorrow

for the DJ Sustainability Index.6 These results highlight Climate change and global warming are now
the international interest and support for sustainability. internationally recognised as having a major impact on
the environment, particularly via rising average air and
To be included in the DJ Sustainability Index companies seawater temperatures. Climate change is caused by
need to demonstrate that they meet a number of sustain- excessive Greenhouse gas emissions produced by all
ability criteria, such as implementation of programs to sectors of the community.
lower Greenhouse gas emissions, reducing landfill and
water and energy consumption. In the property sector, New Zealand has very high emission levels on a per
these environmental targets can be achieved through capita basis, as a result of CO² and Methane
energy management, recycling programs and water production from buildings, transport, agriculture and
management programs, implemented at a property and industry. Unfortunately, agriculture is the backbone of
portfolio level. New Zealand’s economy and as stopping livestock from
producing Methane and CO² is inherently impossible,
Businesses in New Zealand that have actively moved to- New Zealand needs to examine other ways of reducing
wards sustainability include: Meridian Energy, the New methane and CO² emissions. Aside from the agricultural
Zealand Government, Mercury Energy, Westpac, ANZ industry, another major contributor of emissions is
National Bank, Museum of New Zealand (Te Papa), commercial office buildings.
Wellington City Council, Capital and Coast Health
(Wellington Hospital) and Christchurch City Council. Generally, New Zealand commercial building stock
is uneconomical and as well as producing high levels
of CO², uses exorbitant levels of electricity, consumes
Businesses in New Zealand that have excess levels of water and produces high levels of waste.
In addition, the facilities of our buildings, particularly
actively moved towards sustainability the air conditioning systems, frequently produce other
include: Meridian Energy, the New Greenhouse gases, often due to leaking coolant and
Zealand Government, Mercury Energy, inefficient mechanical equipment.
Westpac, ANZ National Bank, Museum
of New Zealand (Te Papa), Wellington City Commercial buildings are major users of electricity in
New Zealand, therefore, they are a major contributor to
Council, Capital and Coast Health
greenhouse gas emissions.7 If efficient electricity use is
(Wellington Hospital) and Christchurch undertaken in commercial buildings, this leads to
City Council. significant reductions in energy usage and greenhouse
gas emissions while lowering operating costs. An easy
cost saving is to turn off lights and computers at night
and on weekends and to turn off the air-
conditioning when the building is not
Figure 1: Typical Energy Consumption Break-up within Commercial Properties occupied.

Energy costs can be reduced by as much as

20% - 50% through a range of initiatives,
including: the integrated planning; site
orientation; use of natural daylight and
ventilation; suitable materials reducing heat
absorption and loss; energy saving
technologies that make lighting; HVAC;
mechanical equipment and appliances more
efficient; and on-site renewable energy
producing technologies.8

There are many areas where energy

Source: Jones Lang LaSalle
6 www.nzbcsd.org.nz/news.asp
7 Jones Lang LaSalle, Commercial Property Going Green, 2004
8 USGBC, Making the case for high performance green buildings
 Future-Proofing New Zealand’s Commercial Property For A Sustainable Tomorrow 5

consumption can be reduced; at Jones Lang LaSalle

we achieved a significant energy reduction through the
refurbishment made to an Institutional-Grade building
in Auckland. The refurbishment required a number of
building facility replacements, thus when deciding on
the replacements, energy efficiency was considered a
key aim of the project. With the replacement of one of
the chillers, a new BMS (Building Management System)
and new VSD (Variable speed drivers) installed in all
AHU fan units (Air Handling Units), as well as a few,
more minor alterations, Jones Lang LaSalle were able to
achieve a 23% reduction in common-area power costs in
this building.

Jones Lang LaSalle were able to achieve

a 23% reduction in common-area power
costs through implementing sustainable
Funding for Energy Initiatives
initiatives during the refurbishment of an
Auckland Institutional-Grade building. Funding for various sustainability initiatives is available
from EECA (Energy Efficiency and Conservation
Authority). Up to 50% of funding is available from
EECA to offset professional fees for design, auditing
and modelling the energy component of sustainable
building design and full or partial funding of government
Environment House, Kate Sheppard Place, Thorndon, projects to achieve energy cost savings is also available.
Wellington
Water Management and Savings
Environment House was completed in the first half of 2005 for the
Ministry for the Environment. Local developer, Mark Dunajtschik, Water is a precious resource, but saving water does not
in conjunction with the Ministry for the Environment implemented mean having to do without, but rather, doing the same
a number of sustainable initiatives within Environment House things more efficiently. In Jones Lang LaSalle’s
including: experience a 5% reduction in water consumption can be
• VRV air conditioning system rather than a VAV which achieved in large commercial office buildings through
reduces the amount of energy used particularly when run the implementation of water saving programs. The
ning at low levels effective use of water can mean savings in operating
• Limited car parking, but has a large secure area for cyclists costs such as:
to store bikes with showers and lockers provided
• Reduced water supply costs
• BMS (Building Management System) balances comfort and
energy use to the optimum levels, that controls after-hours • Reduced wastewater treatment and disposal
usage costs (including treatment and chemicals)
• Smart metering that allows individual areas to be monitored • Reduced energy costs for hot water
• Reduced maintenance costs for plant and
In addition to these building orientated sustainable initiatives, the equipment
Ministry for the Environment have implemented many of the prac- • Reduced need for future upgrading or replacement
tices set out in their Govt3 initiative that has resulted in a number of plant and equipment
of additional cost savings.
The majority of water usage comes from amenities
Mark Dunajtschik has future plans to develop more sustainable
(37%), cooling towers (31%) and leakage (26%).9
buildings in Wellington.
Various savings can be made through different strategies.

9 Jones Lang LaSalle, Commercial Property Going Green 2004

6 Future-Proofing New Zealand’s Commercial Property For A Sustainable Tomorrow

Figure 2: Average Breakdown of Water Usage in Commercial Buildings

Jones Lang LaSalle has found
that by refurbishing existing flush
valves, replacing the cooling
towers and installing additional
sub metering a 6% reduction in
water usage can be achieved.

These may involve structural work, or more

maintenance orientated procedures that will
reduce water consumed. In particular, to
reduce leakages, it is essential to identify the
location of all leaking fixtures. This might re-
quire additional metering to be able to identify
where water is being consumed the most, and Source: Jones Lang LaSalle
the balancing of the cooling towers and storage tanks to
minimise overflow wastage. In Jones Lang LaSalle’s experience, depending on the
current state of the building and operations, a 20%
Jones Lang LaSalle has found that by refurbishing reduction in waste going to landfill can be achieved in
existing flush valves, replacing the cooling towers and large commercial office buildings through appropriate
installing additional sub metering a 6% reduction in waste recycling programs.
water usage can be achieved.

In Jones Lang LaSalle’s experience,

Waste management and recycling
depending on the current state of the
In a typical commercial office tower 75% of waste building and operations, a 20% reduction
can be recycled and reused by implementing recycling in waste going to landfill can be achieved
programs. Waste management programs in commercial
buildings should be implemented targeting recycling of
in large commercial office buildings
paper, cardboard, glass, aluminium, PET plastics and through appropriate waste recycling
food. programs.

Kaitiaki Building, previously Mid City movie theatre, Manners Street, Wellington

The Kaitiaki Building is currently being developed by The Wellington Company Ltd. This project has involved the gutting and refurbishment
of the Mid City movie theatre into offices. The aim of the project is to minimise the environmental impact of the building during both con-
struction and operation and when complete, will achieve an Australian equivalent of a 5 star Greenstar rated building. This building, when
completed later in 2006, will be the Department of Conservation’s new head office.

Some of the sustainable initiatives used within this development include:

• The maximization of natural light through a glass façade and internal atria
• Energy consumption reduction through the use of lighting motion sensors and staff control of personal shading and lighting
• Natural ventilation with cooling being achieved through active chilled beams and heating through solar heated air in the special
glass façade
• Rainwater collection that will be used for non-potable purposes, such as flushing toilets, cleaning and other functional uses which will
supply around 77% of the non-potable water demand in the building and subsequently resulting in a cost saving.
• The fit out of the building will use non/low toxic paints, electrical equipment free of polychlorinated byphenyls and building material free
of formaldehyde, chlorofluorocarbons and volatile organic compounds.

Once completed the building will be operated by a highly advanced Building Management System that will ensure the efficient use of
energy.
 Future-Proofing New Zealand’s Commercial Property For A Sustainable Tomorrow 7

Figure 3: Composition of a “Typical” Office Tower’s Waste

Implementing effective recycling programs
has several benefits for the property such
as generating additional income through
reducing tip fees by diverting the
material from costly landfill and by
providing clients with measurable
environmental results to demonstrate their

Sustainable initiatives:
Costs and benefits
In considering new or refurbishment
projects, a number of initiatives can be
investigated to focus on sustainability.
Figure 4 highlights some of the more com-
mon sustainability options that may be Source: Jones Lang LaSalle

considered as part of that review. These

types of initiatives will have minimal tenant disruptions
and could be completed within a reasonably short time
frame. This list is by no means exhaustive and excludes
Significant sustainable measures can be
practical management programmes and more complex
solutions such as major plant upgrades or replacement incorporated into new and existing
and façade upgrades. buildings that will lead to long term
recurrent cost reductions, potential
Significant sustainable measures can be incorporated increased asset valuation and a more
into new and existing buildings that will lead to long attractive home for tenants for as little as
term recurrent cost reductions, potential increased asset
2%-4% additional capital cost.10
valuation and a more attractive home for tenants for as
little as 2%-4% additional capital cost.

Statistics New Zealand Building, Hinemoa Street, Centreport,

Wellington

The development by CentrePort Limited of the Statistics New Zealand Building was completed late in 2005 for Statistics New Zealand.

The building has a number of environmental initiatives incorporated into the design:
• A low pressure VAV system with economizer cycles, CO² control and free-cooling controls, reducing energy consumption by taking
advantage of Wellington’s mild climate
• BMS (Building Management System) balances comfort and energy use to the optimum levels and controls out of hours usage
• Natural lighting is used throughout the building with additional energy efficient dimmable lamps (T5) and day lighting controls
to complement the natural light. In addition, occupancy sensor controls turn lights off when there are no occupants in the room
• Water saving measures are fitted throughout the building with low-flow fitting for shower and taps and dual low-flow flush
cisterns for toilets
• Materials used in the building fabric enhance comfort and reduce energy consumption and the curtain wall is double glazed, allowing
natural light in whilst maintaining the internal environment of the building

10 Davis Langdon, 2004

8 Future-Proofing New Zealand’s Commercial Property For A Sustainable Tomorrow

Figure 4: Sustainable Initiatives: Costs, Savings and Payback

Building Services Element Savings $/annum Cost of Initiative Payback in Years Scope
Chilled Water Pumps $5,129 $13,524 2.64 Install variable speed drives
Condenser Water Pumps $4,760 $14,753 3.10 Install variable speed drives
Cooling Tower Fans $3,402 $8,606 2.53 Install variable speed drives
Water Cooled Chillers $17,640 $74,996 4.25 Increase efficiency of chiller
Primary Supply Air Fans $19,032 $23,974 1.26 Install variable speed drives
Base Floor Lighting $48,109 $226,973 4.72 Install higher performance lights
BMCS Commissioning $24,508 $30,736 1.25 More thorough BMCS tuning
Totals $122,580 $393,562 3.21
Source: Jones Lang LaSalle, Assessing the Value of Sustainability, 2006

Sustainability is not only about building design, once • Higher tenant retention rates due to enhanced user
operational, improved property and facilities manage- satisfaction, health, comfort and productivity
ment is required to maximise cost savings and • Higher building value
sustainable goals. • Future-proofing (against emissions taxes, for
example)
Traditionally the cost benefits of sustainable buildings • Overall greater return on investment11
has been limited to owner/occupiers. However, recent
research acknowledges that there are substantial benefits There has been a lot of talk about the costs of
for both tenants and investors of sustainable buildings. sustainable buildings. However, the type of sustainable
Tenants benefit from lower operating costs for energy, building developed will ultimately equate to the level
water and waste, and potentially higher levels of of cost. Current research suggests that to build a new
occupancy satisfaction and productivity benefits. building with a range of sustainable initiatives costs an
additional 2 – 4% compared to the cost of a conven-
Investors have a wider range of potential benefits that tional commercial building. The table below provides
are attributable to sustainability including: conservative figures to highlight payback paeriods.
However, this can vary dependent on the extent of
• Lower annual operating costs sustainability initiatives adopted within the building.
• Marketing advantages
• Faster lease-up period

Figure 5: Building costs, savings and payback for different ranges of sustainable options
Building Type Benchmark Sustainable Sustainable Sustainable Annual Annual Water Total Simple
Building Building Building Building Energy Cost Cost Savings Annual Cost Payback
Capital Cost Capital Cost Premium Premium Savings Savings
$/m² $/m² $/m² % $/m² $/m² $/m² (years)
Office - low/
medium levels
2000 2120 120 6 11 0.3 11.3 10.65
of Sustainable
Initiatives
Office - medium/
high Sustainable 2000 2230 230 11.5 17 0.6 17.6 13.09
Initiatives
Source: Value Case for Sustainability, www.mfe.govt.nz

11 Value Case – www.mfe.govt.nz

 Future-Proofing New Zealand’s Commercial Property For A Sustainable Tomorrow 9

Meridian Energy Site 7 Kumutoto, Wellington • Mixed mode natural and mechanical ventilation
• Demand controlled heating, cooling and ventilation
This Dominion Funds development, currently under construction is due for • Heat pump heating and cooling
completion in the third quarter 2007, with Meridian Energy being the major • Solar water heating
tenant. The development of this building has used the Australian Greenstar • Rainwater collection and recycling
rating tool as a guide to achieve the building performance aims which are: • Water efficient sanitary-ware specification
• High quality internal environmental • Environmentally preferable materials selection
• Enhancing occupant health • Materials
• Improving occupant productivity • Zero ODP Refrigerants
• Reducing energy use • Sustainability sourced timber
• Reducing water use • Low VOC finishes
• Environmentally preferable materials selection • Environmental Choice Paints
• Reduced environmental impact • FusioTherm Pipe System
• High quality built environment • Environmentally preferable specification
• CPTED - Crime Prevention Through Environment Design
• Reduced Wastage Once the building is operational the Building Management System will en-
able the building to achieve operational sustainability by having:
These aims will be met by the use of particular design features and • Automatic control of blinds, louvers and opening windows with
specialist materials including: manual occupant override
• Integrated design of building and services • Automatic control of plant and systems
• External and intermediate solar shading • Energy monitoring
• Efficient facades • Integrated with security system
• Natural light plus daylight compensation control • Integrated with lighting control system
• 100% outdoor air supply with heat recovery

nEW zEALAND’S SUSTAINABLE PRESENT AND FUTURE

Wellington has a number of commercial office buildings The sustainable future of New Zealand is being further
that have sustainable attributes, both built and under compelled by the formation of The Green Building
development. Currently, in Wellington, there are Council and their development of a New Zealand rating
various sustainable initiatives for buildings being system to assess new and existing buildings’
adopted. For example, one building has energy saving sustainability. Although this is not yet in place, the Green
equipment, while another has rainwater collection for Building Council has stated that New Zealand’s rating
non-potable building requirements. Within the next 24 tool will be implemented later this year, and will
months there will be at least two buildings completed resemble a combination of an office rating tool
in Wellington that could achieve high Australian Green developed by BRANZ and the Australian Greenstar
Star ratings. assessment tool.

Figure 6: Some Current Sustainable Projects in Wellington

Project Location Completion Investor/Developer Tenant Type Size (m²)
Meridian Site 7,
3rd Quarter 2007 Dominion Funds Meridian New 4200
Building Kumutoto
Department Of
Kaitiaki Building Manners Street December 2006 Wellington Company Refurbishment 6600
Conservation
Hinemoa St,
Statistics House 2005 CentrePort Limited Statistics NZ New 9400
CentrePort
Night and Day
Gilmer Terrace Unknown Cheops Holdings Limited ANZ Refurbishment 9700
House
Environment Kate Sheppard Ministry for the
2005 Mark Dunajtschik New 5450
House Place Environment
No. 1 & 3 The AMP New Zealand Office
The Terrace July 2006 Ministry of Health New/Refurbishment 18702
Terrace Trust
Source: Jones Lang LaSalle
10 Future-Proofing New Zealand’s Commercial Property For A Sustainable Tomorrow

The government occupy 40% of space within the About the Authors
Wellington commercial office market and their Georgia Myers is a researcher and
sustainability requirements will further determine the qualified Valuer in Jones Lang LaSalle’s
direction of the sustainable building market in Wellington office. She undertakes
Wellington. The New Zealand government is at the and provides assistance with all forms
forefront, proposing policies and initiatives for a more of commercial, retail, industrial and
sustainable future. cashflow valuations as well as market
research and specialised research projects. She also has
Sustainable practices are becoming established within a major input into research of the Wellington property
the Wellington property market and are forecast to market.
continuing growing. A growing number of Wellington
investors, tenants and developers are committed to Georgia is currently studying for a PhD in the field of
implementing sustainable practices within their build- Sustainability at the University of Melbourne, having
ings and businesses, reaping the commercial and completed her dual degree at the same University in
environmental benefits while future proofing their Property and Construction.
buildings.
Prior to working at Jones Lang LaSalle, Georgia worked
In a market where the influence of sustainability is with the Mirvac Group in Melbourne, as a graduate
growing in significance, owners and investors with Development Manager, where she provided assistance
a sound understanding of sustainability will be in a in the areas of New Business and Acquistions, Project
stronger position than their competitors. Management, Project Design Concepts, Project Pro-
gramming, Project Delivery, Property Management and
Research.

Kim Bannon is Jones Lang LaSalle’s

Research Manager, and is based in
the Auckland office. She has had over
nine years experience in forecasting in
New Zealand and the United Kingdom.
Before joining Jones Lang LaSalle, Kim
had worked for prestigious property investment
company Mapeley, based in London, whose current
portfolio value is $2.4 billion.

As well as being an experienced financial analyst, Kim

is Chartered Management Accountant and holds a Mas-
ters degree in Mathematics (1st Class Honours).

Kim also has experience working for Jones Lang

LaSalle overseas, having been a financial analyst for its
London office.
 Future-Proofing New Zealand’s Commercial Property For A Sustainable Tomorrow

About JONES LANG LASALLE

Jones Lang LaSalle (NYSE: JLL), the only real
estate money management and services firm named
to Forbes magazine’s Platinum 400, has more than
100 offices worldwide and operates in more than
430 cities in 50 countries. With 2005 revenues of More than ever before, your
approximately $1.4 billion, the company provides
comprehensive integrated real estate and invest- success depends on the quality of
ment management expertise on a local, regional and
global level to owner, occupier and investor clients.
Jones Lang Lasalle is an industry leader in property your decisions. As the global leader
and corporate facility management services, with a
portfolio of 923 million square feet worldwide.
in real estate services and money
In 2005, the firm completed capital markets sales
and acquisitions, debt financings, and equity place- management, Jones Lang LaSalle
ments on assets and portfolios valued at $43 billion.
LaSalle Investment Management, the company’s
investment management business, is one of the is positioned to partner with you to
world’s largest and most diverse real estate money
management firms, with approximately $30 billion provide the quality advice needed
of assets under
management.
for making quality decisions. The
For further information, please visit
www.joneslanglasalle.co.nz. world’s best real estate intelligence

and knowledge base puts our

clients in the best position to make

the right decisions.

 Future-Proofing New Zealand’s Commercial Property For A Sustainable Tomorrow

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