Landlords looking to stay in the black and keep their tenants happy should start thinking green as organisations make better environmental credentials a priority. A leading independent survey of Australian office tenants commissioned by Colliers International shows a big increase in environmental awareness among tenants during the past three years, with many saying it is now a main consideration in choosing a building.
Just 9 per cent of respondents in the Colliers International Office Tenant Survey 2008, which quizzed 270 large office tenants from Australia's mainland capitals, say they are not willing or able to pay higher rent for a green building.
More than half believe there is strategic value for their organisation in occupying a green building and paying more rent.
Colliers International commercial research director Felice Spark says tenants are focusing on their employees' wellbeing and starting to see the value of working in an environmentally sustainable building, even if it means moving and paying more rent.
"Tenants seem to really be getting enlightened about the importance of wellbeing in the workplace and that it largely has to do with being an environmentally sustainable building, having an environmentally sustainable fit-out, all those things tend to contribute to good indoor air quality, which means staff health and wellbeing," she says.
"Overall, we found that tenants have noticed staff are not automatically accepting the traditional office set-up - they want to work in new, modern workplaces and they are very environmentally aware."
In Colliers' last survey of office tenants, conducted in 2005, a mere 2 per cent of respondents said they would move or redesign their office space specifically to improve their company's environmental performance.
That rose to 17 per cent in this year's survey, making it the fourth most-mentioned reason, behind business expansion (48 per cent), convenient location (24 per cent) and consolidating office space (21 per cent).
"It is of huge importance to landlords, to understand that tenants would actually be really willing to move because they want to improve their environmental performance," Spark says.
In the 2005 survey, 26 per cent of respondents said they evaluated environmental performance when choosing their building. This rose to 47 per cent in 2008, with 39 per cent of respondents saying they measured their carbon footprint and 35 per cent that they report their environmental performance publicly.
The number of respondents in a NABERS (National Australian Built Environment Rating System, incorporating the Australian Building Greenhouse Rating tool) energy rated tenancy rose from 8 to 17 per cent and 11 per cent of respondents said they occupy a Green Star rated building.
The survey shows tenants are also becoming more aware of property as a tool for recruiting and keeping staff, with more than half (54 per cent) of respondents indicating building selection is important in attracting and retaining staff - up from 44 per cent in 2005.
Spark says a building's environmental performance, indoor air quality, thermal comfort, security, onsite amenities and cutting-edge information and communications technology were ranked as more important in attracting and retaining staff in the latest survey than they were in 2005.
"Even though there may be more rent to pay, there's actually a lot of other benefits to their business," Spark says.
"There are operational costs savings - they may pay more rent but hopefully they will save on energy. They may attract and retain more staff and save on turnover costs." There are benefits for brand image, and there are a lot of soft costs that could improve a business and make paying more rent worth the value.
"Tenants are telling us that they would actually move buildings so that they could attract and retain staff, particularly the gen Y demographic."
Colliers International managing director of office leasing, Simon Hunt, says that over the past decade, there has been a marked rise in employers' recognition of the relationship between their building and staff retention.
"One of the most important things is staff retention and attraction and throughout the past 10 years, we've probably seen this real flight to quality," Hunt says. "Corporates really want to be in better buildings, better environments, better workplaces so their staff enjoy their business better. And it's better for them."
The facilities tenants are adopting to cater for staff include quality communal space for informal meetings, amenities such as gyms, mothers' rooms, bike racks and change rooms, he says.
Anne Skewes, chief executive of the New South Wales State Property Authority, which manages the state government's owned-and-leased property portfolio, says younger employees are more environmentally aware and have greater expectations about the environmental efficiency of their workplace and employer.
In finding accommodation for government agencies, the authority must consider the NSW state government's target for all buildings in its portfolio - a 4.5-star NABERS water and energy efficiency rating by mid-2011.
As well as assisting with sustainability, workplace design can play a big role in courting and keeping staff. "As attraction and retention become fairly critical issues in the workplace, particularly for organisations seeking to be responsive to the market, it's very important part of recruitment - the type of organisation you are, the branding, identity and reputation of your organisation are very important," Skewes says.
"Workplace design is really critical for a number of reasons around recruiting and retaining good staff, improving productivity, achieving organisation results. Health and safety issues in the workplace are very important, especially for government agencies."
The national sustainability manager for property group Stockland's commercial division, Greg Johnson, sees an increasing demand for "green" tenancies, but it is early days.
The first sustainability feature most tenants look for (especially among government tenants as well as among corporate tenants) is a sustainability rating. "They're looking for buildings with environmental ratings in the first instance, then beyond that, it depends on what type of commitments they want to make to achieving the same type of sustainable outcomes within their work space," Johnson says.
At "Stockhome", Stockland's new Sydney headquarters, a post-occupancy survey of staff is under way, and there has been a positive response to the sustainable design features the company has adopted, which include an atrium to increase natural light, energy-efficient lighting and the use of recycled materials in the building fit-out.
The company is also working towards installing an onsite trigeneration plant (the simultaneous production of electricity, heat and cooling from a single source, such as solar energy).
"With public consciousness now around climate change and environmental issues and social responsibility, there is a general trend [for people to] look for employers that have those values that align with their own," Johnson says.
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