Schneider Electric: How Sustainable Commercial Real Estate Can Make Your Business More Profitable

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In the first post in this series on commercial real estate, I spoke about the urgency of transforming real estate to support an “all-electric, all-digital” future. In this post, I’ll touch on a specific pillar of Schneider Electric’s vision for buildings of the future: the tangible value of sustainability.

The evolving role of sustainability in today’s buildings

Commercial real estate is at the intersection of high finance, the pursuit of productivity and ever-evolving regulations.

Sustainability affects each of these factors. As tenants and their employees increasingly seek spaces that support their own sustainability commitments and values, it has essentially become a requirement that all new builds incorporate some aspects of “green” design – and certification – to help the properties to compete and meet emissions regulations.

However, there are many other markets and business constraints that need to be considered. The most sought-after tenants, for example, also include those who want to minimize energy-related operating costs. They are increasingly aware that environmentally friendly certified buildings in many different countries have been shown to reduce energy consumption by up to 30% or in some cases by 50% compared to conventional buildings.

Maximizing occupancy continues to be a challenge as building owners find ways to attract and retain tenants while increasing rental income.

Additionally, real estate investors and owners need to keep real estate and stocks high in value while finding affordable financing when they need it.

ESG – creating long-term and short-term value

Larry Fink of global asset management company Blackrock said, “Throughout 2020, we’ve seen targeted companies with better environmental, social and governance (ESG) profiles outperform their competitors.” S&P Global reported that in the first 12 months of the COVID-19 pandemic, 19 out of 26 large ESG funds it analyzed outperformed the S&P 500, with one gaining 55%.

But how does ESG relate to sustainability and efficiency in commercial real estate?

The Head of Sustainable Investing for APAC Real Assets at BlackRock, Wincel Kaufmann, sees it this way: “On the ‘E’ in ESG, we focus on energy efficiency in all of the buildings we manage, as this has both environmental and financial implications.”

It’s clear that the benefits of sustainability go beyond a higher stock valuation.

In a report by Deloitte, UK director Jon Lovell said, “There is no question that sustainability is a fundamental concern of commercial real estate today, affecting long-term value creation and profitability, especially in the context of mature markets like the United States “. States, Western Europe and Australia. “Deloitte summarizes numerous sustainability benefits, including that green buildings” use an estimated 29 to 50 percent less energy … emit 33 to 39 percent less CO2 … write off less quickly than others … have higher tenant attractiveness, rents and sales prices … [and receive broader payback through] Lower cost financing, lower operating costs, property tax rebates and discounts on insurance premiums. ”

The Journal of Corporate Real Estate presented a review of over 90 global sustainability publications that Deloitte agreed on many points, citing a US study which found that “there is an average rental premium of 4-5% and a sales premium of 25-26 % for buildings with environmental certification. ” In contrast, a Dutch study found that buildings with “lower energy efficiency classes (EPC) achieve an average of 6.5% lower rental income”. A Finnish university conducted a recent review of 70 global studies and found that, on average, green certified buildings “enjoy rental rates between 0% and 23%. [and] between 1% and 17% more occupancy. ”

After all, green buildings have greater power to attract capital. As the New York Times recently reported, there is now “a bigger movement of investors pouring money into sustainable real estate thanks to new technologies and stricter standards that make it possible to better track a development’s ability to reduce its carbon footprint.” .

Sustainability is financially positive

Many commercial property owners and investors may still think that new construction or retrofitting is too expensive for better sustainability. But many studies have shown time and time again that the cost of a more sustainable building only increases marginally – or no statistical cost differences at all. In fact, a US study has shown that when all aspects of savings (energy, water, waste, operation, maintenance, etc.) over 10 times the average initial investment for design and construction.

A prime example of a new building that brings tremendous benefits is our Schneider Electric Intencity building in Grenoble, France. The digital BIM-designed building is expected to achieve the highest LEED platinum rating ever:

  • Consumes only one eighth of the average energy consumption of buildings in Europe and will soon be operated with net zero energy.

  • Can supply neighboring facilities and increase its own resilience with its renewable energy generation and storage on site.

This is a quantum leap in terms of sustainability, which is possible with only 3-4% higher construction costs and which pays for itself within 6 years.

But even with building retrofits, impressive profits can be achieved with minimal business interruptions. Schneider Electric’s 20-year-old Le Hive headquarters in Paris, where I work every day, has undergone massive sustainability improvements while the facility has been staffed and operational. By integrating all building systems into a single digital infrastructure and adding intelligent load controls, this system reduced energy consumption for HVAC and lighting by 50% to 78 kWh / m²2/Year. It also added on-site renewable energy generation and became the world’s first ISO 50001 certified building.

Decarbonising every phase of the building lifecycle

Many organizations make sustainability commitments and even post net zero targets. But it is the actions behind these commitments that determine their success.

Digitization and electrification offer opportunities for decarbonization in every phase of the building’s life cycle:

  • draft – Smart tools – such as simulation design software from ETAP and LayoutFast – help engineers design carbon from electrical distribution and switchgear by minimizing copper, eliminating waste and minimizing installation work.
  • construction – Thanks to solutions such as MTWO, Building Information Modeling (BIM) has developed from our partner RIB to 5D BIM (3D physical / functional modeling plus time and cost dimensions). These new tools help decarbonize by streamlining construction planning – orchestrating day-to-day development projects to avoid costly waste, unproductive site visits and postponing commissioning.
  • operation and maintenance – As I noticed in my last post, 82% of the energy saving potential in today’s commercial buildings remains untapped. This is a two-pronged opportunity as you reduce operating costs and energy-related emissions by minimizing energy consumption. The technology required for active energy management is available today and delivers a fast ROI. When planning new buildings or retrofits, use an integrated platform that combines building management, energy management and workplace management. Integrated workplace management systems (IWMS) such as Planon Universe help building owners, operators and company users to benefit from the integration of building systems and business processes and at the same time avoid overloading with “big data”. Data from multiple systems is converted into actionable insights and automated actions. Systems go beyond measuring energy consumption and emissions and help assess the sustainability of buildings, validate property performance and help make targeted improvements to save time and money. By using these tools – and the “digital BIM twin” created during the planning and construction phase – you simplify reporting for regulatory compliance and achieve energy savings of up to 30%. We are now seeing customers reinvest these savings in further decarbonization initiatives to achieve net zero or even positive energy buildings.

Another important step is minimizing gray carbon at every stage of the life cycle. It does this by sourcing products that have been manufactured with maximum efficiency and reporting their carbon footprint over the life cycle. Schneider Electric’s Green Premium products do just that – they ensure that the carbon curve is flattened at every possible point, while at the same time eliminating the headache of carbon disclosure.

3 steps to get started with sustainability

The above considerations may seem a little daunting at first. Fortunately, there is a simple 3 step path you can follow to make your sustainability journey easier:

  1. Learn for free. Schneider Electric University is a free, high quality resource where you can learn best practices to make your entire building portfolio more sustainable, efficient, resilient, and people-centric.
  2. Consult the experts. Host a workshop with an expert – such as your local Schneider Electric representative or EcoXpert partner – to discuss your sustainability strategy when you are ready.
  3. Connect to the cloud. Today’s most powerful sustainability solutions use the cloud for high scalability, from a single building to a growing portfolio. EcoStruxure Building Advisor and Resource Advisor can help you start optimizing in real time and remove carbon from day one.

In my next post, I will explain how digitalization helps ensure the resilience of your building operations against unforeseen events such as cyber attacks, pandemics and severe weather events. To see how Schneider Electric supports this new vision for the future, discover our EcoStruxure IoT solutions for real estate.

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