Green issues should top the Budget agenda
Apr 22 2009 by Kevan Carrick, The Journal
HAVING prepared this column in advance of today's Budget announcement, I thought it apt to turn my attention to a subject that will be with us long after the recession moves on – the environment.
Of course, I can only make a best guess that the Chancellor will focus his Budget on hitting a ‘green agenda’ and we have already seen the green car subsidy plans unveiled last week offering motorists up to £5,000 to encourage them to buy electric or plug-in hybrid cars.
A subject much closer to home however is what we can do to enhance our places of work and move towards carbon neutrality, not just in new-build commercial developments but also in existing buildings – which currently contribute to around a fifth of the UK’s total carbon output.
A recent report from the RICS showed buildings in the United States with a high energy style rating are attracting rental premiums of 3% more per sq ft compared with non-green buildings of the same size, location and function. This outlines a very important point and the long-term approach that we should all be embracing.
Whilst in recession it is very easy to use a sharp pencil to reduce build costs and forget about environmental matters. This is a knee- jerk reaction, a cost-cutting measure and short-term policy that will do nothing to help let buildings in the long run.
At a time when occupier demand is very low and the occupier is ‘king’, competition between one building and another (as well as one region and another), requires high quality standards as well as competitive costs.
A RICS report a few years ago showed that some £30bn was being lost as many businesses failed to recognise and properly manage the cost of property occupation. That day is long gone and with the recession biting hard, occupiers today are scrutinising their building operational costs more than ever before.
One way to improve operational costs is to ensure that a proper approach to providing a ‘green’ building is achieved, in turn providing high environmental standards and lower running costs, yet maintaining the same environment internally.
A new piece of legislation governing the energy performance of commercial property buildings came into force in October last year, requiring all commercial premises which an owner intends to sell or let to have an Energy Performance Certificate (EPC), which is helping to drive the green agenda.
This latest RICS report from the USA is also encouraging. By spending a little more (time and money) on fine tuning your green policy, you can increase income by 3%. The art, of course, is to make sure that this is endemic in all design and construction and right from the very start.
My hope is that the Chancellor uses this opportunity to encourage and motivate developers to provide higher green quality standards which will reduce running costs for occupiers and from which they can anticipate a better return.
The proof, as always, will be in the pudding.
Kevan Carrick is partner in JK Property Consultants LLP and policy spokesman for RICS North East
