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Article
Publication date: 1 July 2014

Tim Dixon

Progress in retrofitting the UK's commercial properties continues to be slow and fragmented. New research from the UK and USA suggests that radical changes are needed to drive…

1955

Abstract

Purpose

Progress in retrofitting the UK's commercial properties continues to be slow and fragmented. New research from the UK and USA suggests that radical changes are needed to drive large-scale retrofitting, and that new and innovative models of financing can create new opportunities. The purpose of this paper is to offer insights into the terminology of retrofit and the changes in UK policy and practice that are needed to scale up activity in the sector.

Design/methodology/approach

The paper reviews and synthesises key published research into commercial property retrofitting in the UK and USA and also draws on policy and practice from the EU and Australia.

Findings

The paper provides a definition of “retrofit”, and compares and contrasts this with “refurbishment” and “renovation” in an international context. The paper summarises key findings from recent research and suggests that there are a number of policy and practice measures which need to be implemented in the UK for commercial retrofitting to succeed at scale. These include improved funding vehicles for retrofit; better transparency in actual energy performance; and consistency in measurement, verification and assessment standards.

Practical implications

Policy and practice in the UK needs to change if large-scale commercial property retrofit is to be rolled out successfully. This requires mandatory legislation underpinned by incentives and penalties for non-compliance.

Originality/value

This paper synthesises recent research to provide a set of policy and practice recommendations which draw on international experience, and can assist on implementation in the UK.

Details

Journal of Property Investment & Finance, vol. 32 no. 4
Type: Research Article
ISSN: 1463-578X

Keywords

Available. Content available

Abstract

Details

Journal of Property Investment & Finance, vol. 32 no. 4
Type: Research Article
ISSN: 1463-578X

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Article
Publication date: 1 July 2014

Richard Greenough and Paolo Tosoratti

The purpose of this paper is to identify the factors present in successful energy efficiency investments that might indicate how to resolve the landlord-tenant dilemma in existing…

1680

Abstract

Purpose

The purpose of this paper is to identify the factors present in successful energy efficiency investments that might indicate how to resolve the landlord-tenant dilemma in existing and new commercial property.

Design/methodology/approach

The paper reviews literature to indicate the importance of energy efficiency in buildings and to explore the barriers to such investments, including problematic landlord-tenant relationships. Such relationships have been investigated by the International Energy Agency, and a similar approach is used here in two case studies in new and existing buildings. These studies explore the nature of landlord-tenant relationships and the importance of policy and standards of building performance.

Findings

In neither case did landlord-tenant issues constitute barriers to investments in energy efficiency, however, these investments were made for other reasons than simple cost savings. Construction of new commercial property to Passivhaus standards ensures a high-build quality and a comfortable building with low-energy costs. The added value to tenants may justify the cost of construction. The cost of investments in energy efficient buildings can also be justified by the enhanced reputation of landlords which may be more valuable than a DEC rating. In neither case was the commercial Green Deal felt to be an attractive funding mechanism.

Practical implications

Conclusions based on these case studies must be regarded as tentative, so future studies of successful energy efficient buildings should be undertaken to explore the motivation to invest, particularly the relative importance of indirect benefits of energy efficiency.

Originality/value

One of the case study buildings is exceptionally energy efficient and is the result of a particularly open and effective contractual relationship. Further study of such cases may suggest a new approach to landlord-tenant problems of energy efficiency, even in refurbishment of existing buildings.

Details

Journal of Property Investment & Finance, vol. 32 no. 4
Type: Research Article
ISSN: 1463-578X

Keywords

Available. Content available
Article
Publication date: 26 September 2008

Paul McNamara and Tim Dixon

490

Abstract

Details

Journal of Property Investment & Finance, vol. 26 no. 6
Type: Research Article
ISSN: 1463-578X

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Article
Publication date: 1 July 2014

Kathryn B. Janda, Catherine Bottrill and Russell Layberry

The purpose of this paper is to present new empirical data on leases, energy management, and energy meters in the UK, with a particular focus on small and medium enterprises…

506

Abstract

Purpose

The purpose of this paper is to present new empirical data on leases, energy management, and energy meters in the UK, with a particular focus on small and medium enterprises (SMEs) and other “minor” players. The paper develops a new segmentation model that identifies six different combinations of energy and organizational conditions.

Design/methodology/approach

The authors surveyed participants in an online energy management and data analytics service. A 30-question online survey gathered data from 31 respondents on three kinds of infrastructure – legal, organizational, and technical.

Findings

SMEs and other minor players are generally “data poor,” lack energy managers, and have legacy meters that are read only annually or quarterly; some rent via leases that inhibit permanent alterations to the premises, including the meter.

Research limitations/implications

The research is exploratory and subject to self-selection bias. Further research is needed into: lease language, governance structures, social practices to facilitate cooperation between tenants and landlords; the scope for energy management positions in small organizations; low-cost “smart-er” meters that can be reversibly retrofitted onto existing energy meters; and the combination of these areas.

Practical implications

Organizations may need to augment a combination of legal, organizational, and technical infrastructures to enable better energy management.

Social implications

SMEs and other “minor” energy users are important to society and the economy, yet they are often overlooked by government programs. This developing data set can help policymakers include these groups in their programs.

Originality/value

This paper presents a new conceptual framework for future research and new empirical data on understudied groups.

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Article
Publication date: 1 July 2014

Graeme Newell, John MacFarlane and Roger Walker

Green office buildings have recently taken on increased significance in institutional property portfolios in Australia and globally. The key issue from an institutional investor…

2369

Abstract

Purpose

Green office buildings have recently taken on increased significance in institutional property portfolios in Australia and globally. The key issue from an institutional investor perspective is the assessment of whether green office buildings add value. Using an extensive portfolio of green office buildings, the purpose of this paper is to empirically assess the level of energy rating premiums in the property performance of green office buildings in Australia.

Design/methodology/approach

Using a portfolio of over 200 green office buildings in Australia benchmarked against a comparable portfolio of non-green office buildings, the level of energy rating premiums in the property performance of green office buildings in Australia is empirically evaluated. Hedonic regression analysis is used to account for differences between specific office buildings and to explicitly identify the “pure” green effect in identifying the level of energy rating premiums in several commercial property performance characteristics (e.g. office value, rent).

Findings

The empirical results show the added-value premium of the 5-star National Australian Built Environment Rating Scheme (NABERS) energy rating scheme and the Green Star scheme in the property performance of green office buildings in Australia, including office values and rents. Energy rating premiums for green office buildings are evident at the top energy ratings and energy rating discounts at the lower energy ratings. The added-value “top-end” premium of the 5-star vs 4-star NABERS energy rating category is clearly identified for the various property performance parameters, including office values and rents.

Practical implications

This paper empirically determines the presence of energy rating premiums at the top energy ratings in the performance of green office buildings, as well as energy rating discounts at the lower energy ratings. This clearly highlights the added value dimension of energy efficiency in green office buildings and the need for the major office property investors to prioritise the highest energy rating to facilitate additional property performance premiums. This will also see green office buildings become the norm as the market benchmark rather than non-green office buildings.

Social implications

This paper highlights energy performance premiums for green office buildings. This fits into the context of sustainability in the property industry and the broader aspects of corporate social responsibility in the property industry.

Originality/value

This paper is the first published property research analysis on the detailed determination of energy rating premiums across the energy rating spectrum for green office buildings in Australia. Given the increased focus on energy efficiency and green office buildings, this research enables empirically validated and practical property investment decisions by office property investors regarding the importance of energy efficiency and green office buildings, and the priority to achieve the highest energy rating to maximise property performance premiums in office values and rents.

Details

Journal of Property Investment & Finance, vol. 32 no. 4
Type: Research Article
ISSN: 1463-578X

Keywords

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Article
Publication date: 1 July 2014

Jeremy Gabe and Michael Rehm

– Using a unique data set, the purpose of this paper is to test the hypothesis that tenants pay increased accommodation costs for space in energy efficient office property.

2683

Abstract

Purpose

Using a unique data set, the purpose of this paper is to test the hypothesis that tenants pay increased accommodation costs for space in energy efficient office property.

Design/methodology/approach

The authors obtain lease contracts for office space in central Sydney, Australia. Empirical data on annual gross face rent and contract terms from each lease are combined with building characteristics and measured energy performance at the time of lease. Hedonic regression isolates the effect of energy performance on gross face rent.

Findings

No significant price differentials emerged as a function of energy performance, leading to a conclusion that tenants are not willing to pay for energy efficiency. Six factors – tenancy floor level, submarket location, proximity to transit, market fixed effects, building quality specification and, surprisingly, outgoings liability – consistently explain over 85 per cent of gross face rent prices in Sydney.

Research limitations/implications

Rent premiums from an asset owner's perspective could emerge as a result of occupancy premiums, market timing or agent bias combined with statistically insignificant rental price differentials.

Practical implications

Tenants are likely indifferent to energy costs because the paper demonstrates that energy efficiency lacks financial salience and legal obligation in Sydney. This means that split incentives between owner and tenant are not a substantial barrier to energy efficiency investment in this market.

Originality/value

This study is the first to thoroughly examine energy efficiency rent price premiums at the tenancy scale in response to disclosure of measured performance. It also presents evidence against the common assumption that rent premiums at the asset scale reflect tenant willingness to pay for energy efficiency.

Details

Journal of Property Investment & Finance, vol. 32 no. 4
Type: Research Article
ISSN: 1463-578X

Keywords

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Article
Publication date: 1 July 2014

Pan Lee, Tsun Ip Lam and Ren Jye Dzeng

The purpose of this paper is to investigate the current market development of Energy Performance Contracting (EnPC) in Hong Kong and Taiwan, focussing on four key aspects: first…

564

Abstract

Purpose

The purpose of this paper is to investigate the current market development of Energy Performance Contracting (EnPC) in Hong Kong and Taiwan, focussing on four key aspects: first, the potential building energy retrofits as an investment for future savings; second, the motivations for building owners toward the use of EnPC; third, the reasons for building owners not using EnPC; and fourth, the different approaches of Hong Kong and Taiwanese governments toward the promotion of EnPC.

Design/methodology/approach

A dual-questionnaire survey was conducted both in Hong Kong and Taiwan, where the same set of questionnaire was sent to the key personnel of the energy services companies (ESCOs) in both regions as identified from the latest member lists of representative trade associations, supplement with 11 structured interviews.

Findings

Apart from explainable differences, the results show the top rankings by the respondents of Hong Kong and Taiwan as follows: “Potential retrofit works” including lighting replacement with efficient fluorescent and light emitting diode lamps and improvement of air-con system. “EnPC Motivations” including owners’ lack of upfront capital and use of energy savings for other purposes may yield better returns; ESCOs’ provision of turnkey services. “Reasons not considering EnPC” including worry about its complexities; lack of familiarity with EnPC and long payback periods. As for promotional efforts for EnPC, the Taiwan government has taken more initiatives to foster its use both technically and financially.

Practical implications

This study identifies market-related motivators and deterrents as experienced by ESCOs in implementing EnPC projects in two developed Asian economies.

Originality/value

This study provides insightful information for the stakeholders about the latest market development of EnPC in Hong Kong and Taiwan.

Details

Journal of Property Investment & Finance, vol. 32 no. 4
Type: Research Article
ISSN: 1463-578X

Keywords

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Article
Publication date: 1 July 2014

John Morrissey, Niall Dunphy and Rosemarie MacSweeney

The purpose of this paper is to investigate, the functioning of value creating configurations and stakeholder interactions in networks of organisations of the retrofit industry…

1743

Abstract

Purpose

The purpose of this paper is to investigate, the functioning of value creating configurations and stakeholder interactions in networks of organisations of the retrofit industry for commercial buildings.

Design/methodology/approach

A value approach was applied to develop a model of retrofit activities. A Europe wide stakeholder engagement, consisting of over 50 face-to-face interviews with key informants with energy efficiency retrofit (EER) knowledge and expertise, informed analyses on flows of both tangible and intangible value for commercial EER projects.

Findings

Given the need to expand the EER marketplace, the sustainability of EER processes is as important as the sustainability of EER project outcomes. Understanding value creation in retrofit processes is crucial to successfully harnessing the available energy savings potential from the built environment.

Practical implications

The increasing importance of externalities, such as carbon, means that previously unaccounted for costs are now being considered in business models. For EER projects, the challenge is to respond to this new business environment, while maintaining adequate value for stakeholders. For commercial property developers, this means a growing impetus to understand the value propositions of other EER stakeholders.

Originality/value

The evaluation of value creation across business relationships such as those of the construction industry has not been conducted in a systematic manner to date. This paper provides a novel application of value analysis. Interrogating materials and monetary flows, value interactions between stakeholders and stakeholder perception of value are vital in fostering the long-term capacity of the EER sector.

Details

Journal of Property Investment & Finance, vol. 32 no. 4
Type: Research Article
ISSN: 1463-578X

Keywords

Available. Content available
Article
Publication date: 5 August 2014

David Proverbs and Mark Shelbourn

87

Abstract

Details

Structural Survey, vol. 32 no. 4
Type: Research Article
ISSN: 0263-080X

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