So I’ve been sharing a little bit about energy, from the cost of making a recovery to the importance of policymaking and how to properly demand it. Today I want to talk about something related to both topics, which will be the effect of the Real Estate sector in finding and developing the proper solutions from a People-Profit-Planet perspective.
Energy efficiency
The real estate sector uses more energy than any other sector (~40%) and is a growing contributor to Carbon Dioxide (CO2) emissions. On top of this, the construction industry consumes tons of energy and mineral resources every year. According to World Bank estimates, a 36% reduction in total CO2 emissions in the real estate sector is required by 2030 in order to stay within the 2°C thresholds, but thankfully sector has acknowledged environmental sustainability in its decision-making through the promotion and use of different certifications as LEED and BREEAM just to mention a couple. Nowadays, ~50% of new commercial builds are “green”, compared to only 2% in 2005, and we expect this number only to rise as new guidance on construction codes are enforced. So the industry has improved a lot in terms of efficiency and that is good news.
It is expected that, by 2030, the global population will exceed 8 billion and over 60% of the world’s population will be living in urban environments, this means a cities’ requirement for more houses, offices and industrial spaces. This necessity for new infrastructure highlights the challenge to mitigate these events when one realizes that the age of the fleet of buildings could be long periods of time, generally decades and even centuries. The question then is how much of these new measurements should be done through the improving and upcycling of existing structures or via designing better spaces from the ground up? There’s not a single answer for this question, but retrofitting and making more efficient old buildings have to be part of the conversation since 13% (293 Mt CO2 e) of total carbon emissions savings will come from retrofitted buildings.
Healthy buildings
As I mentioned we have come a long way to ensure that an important share of our buildings can be considered as green and efficient structures. But it is crucial to understand that green buildings are not necessarily healthy buildings. Just as Harvard Business School professor John Macomber says in his book Healthy Buildings: How Indoor Spaces Drive Performance and Productivity, we should focus on more than just energy efficiency, we also have to pay great attention to ventilation, air quality, moisture, dust, noise, lighting, security, etc, because the attention to these details will help business leaders to find new ways to attract, retain, and most importantly enhance the performance of their employees.
Let’s take a look at EDGE Olympic in Amsterdam, a large circular redevelopment. This building is based on an old, existing building that had exceeded its lifespan. Instead of demolishing the structure, it was redeveloped since the basic structure was still very much usable. As a result, no new raw materials were needed. Apart from these remarkable environmental key achievements, the developers focused their efforts on making this place an inspiring workplace through ventilation, lighting, and biophilic design. In this new type of office, employees have no set workspaces and can dial in their individual climate and lighting preferences via an app.
These efforts are done not just to have a nice magazine-kind-of office, but as I discussed, they are made to improve the top and bottom line of any organization. Several studies have shown that issues in such health indicators affect the performance of the employees:
– A 1F deviation from an optimal indoor temperature originated a 2% decrease in output.
– Every time companies double the rate of outdoor air delivered into an office, worker performance improves by 1.7%.
– More headaches and 6.5% slower work were reported, when employees were in a facility with a pollution source. The “pollution source” in question? A dirty carpet.
– Lower blood pressure, lower heart rates, and better performance on short-term memory tests of employees facing biophilic design.
Similarly to energy efficiency, there are a couple of certifications and codes that look out for the health of buildings such as WELL or FITWEL, but let’s remember that sometimes these regulations are meant to comply with the absolute minimum, so it is highly important that companies, universities, and public organizations engage in the commitment to create healthier environments.
Proptech
Just as we discussed, Real Estate is responsible for a big share of energy consumption and also, depending on the source, the sector accounts for between 38% and 44%. This means that any progress made in green Real Estate will have a bigger effect than reducing car gas emissions for example. Here’s where the PropTech industry can enter the discussion. In developed regions (like the EU), PropTech has the experience, innovation know-how, and potential to support the emissions cut on a large scale.
According to the European PropTech Association, the industry “is already working hard to meet the existing 2030 climate and energy targets and can add 1% of GDP, boosting economic growth, whilst creating almost 1 million new green jobs“. Nevertheless, it’s important to understand that these efforts are needed in the whole world, reason why new technologies and increased digitalization are needed, which could be provided by PropTech solutions. The link with governments, companies, and innovation networks will be essential to reach a frictionless implementation of these solutions.
In conclusion
We need to address solutions for existing and new buildings in order to reduce the negative effect of the real estate industry in our personal and societal lives. By doing this, we can promote greener, more efficient, and healthier spaces, and the nice thing about this is that we do not need to be engineers, architechts or politicians to engage in these conversations, because as recurrent users of buildings (whether they are residential, commercial, industrial or offices) we are stakeholders of the spaces.
-Carlos.
References
1. HBR IdeaCast (2020). “How to build workplaces that protect employee health”.
2. Edge Technologies (2020). “EDGE Olympic Amsterdam”. https://edge.tech/developments/edge-olympic-amsterdam
3. European PropTech Association (2020). “How the State of the Union Address relates to PropTech”. https://www.proptechhouse.eu/how-the-state-of-the-union-address-relates-to-proptech/
4. EY (2020). “Four pillars impacting sustainable sustainability in real estate”. https://www.ey.com/en_us/real-estate-hospitality-construction/four-pillars-impacting-sustainable-sustainability-in-real-estate
5. World Economic Forum (2016). “Environmental Sustainability Principles for the Real Estate Industry”. http://www3.weforum.org/docs/GAC16/CRE_Sustainability.pdf