Green savings? but not for developers

Around the table:
Jerzy Kamiński
development manager, HB Reavis Poland
Jerzy has been woking in the commercial property market for 15 years. Specialising in the office and hotel sectors, he has been employed by HB Reavis since 2010 and has been responsible for the development of Konstruktorska Business Center, Warszawa Zachodnia (West Station) and a project on ul. Chmielna in Warsaw.

Patryk Kruszewski
regional manager, CBRE Corporate Outsourcing Patryk has been employed by CBRE for three years and has six years' experience in facility management. He is responsible for the management of over 35,000 sqm of office and technical space. In addition, he is responsible for the support and development of FM business in the CEE region.

Marek Dąbrowski
head of the sustainable design department, Buro Happold Polska
Marek has been working in the construction and investment market for over 15 years, specialising in mixed-use projects. He manages a team responsible for sustainable design, as well as the environmental and energy certification of buildings according to the BREEAM and LEED standards.

Cezary Kopij
project manager, Factory Warszawa Annopol, Neinver Polska Cezary has been employed by Neinver since 2006. As a project manager he is responsible for the Factory and Futura Park projects, among others. He is currently managing the Factory Warszawa Annopol project. He is also responsible for issues related to ecological construction.

Piotr Kroenke
general director and board member, Globe Trade Centre Piotr has been employed by GTC since 1995. He graduated from the Warsaw University of Technology's faculty of sanitary engineering. He has worked in the construction industry since the beginning of his career.

Andrzej Hyjek
LEED and HVAC coordinator, UBM Polska Andrzej has been working in the development sector for 12 years. He cooperated on the construction of UBC2 Warszawa, the headquarters of Agora in Warsaw, Stary Browar in Poznań and Andel's hotel in Łódź. Since 2010 he has been employed by UBM Polska and is responsible for the HVAC&FP coordination of the construction of Poleczki Business Park. He coordinates the implementation of the second stage of LEED certification.

Agnieszka Operhalska
OIH segment business leader, Philips Lighting Agnieszka manages a department specialising in lighting solutions for offices, industry and hospitals. She is an architect by education, with many years of experience.

Aneta Cichla, Eurobuild CEE': Is the development of green commercial facilities profitable?
Piotr Kroenke, Globe Trade Centre: Green construction requires a higher financial contribution. Ecological solutions are costly due to the additional investment expenditure, but also due to the labour and time that are needed in order to fulfil the formalities that confirm the implementation of such solutions. However, there is no turning back from green construction, despite the higher costs. Most importantly, buildings of this type benefit their surrounding areas and our clients.

Jerzy Kamiński, HB Reavis: I fully agree with that. However, the issue is much more complex. These profits are planet-oriented.

Andrzej Hyjek, UBM Polska: The investor of course bears the additional costs of green construction. We estimate that the costs of implementing ecological solutions amount to app. 2 pct of the total cost of a project. However, thanks to such operations the developer can count on a friendlier attitude from the tenants as well as a fully-leased facility. The investor can also count on the subsequent interest from funds, which, in the long run, will look for good quality buildings with certification as confirmation.

Aneta Cichla: Is the prospect of the subsequent sale of the facility the main reason for implementing ecological solutions?
Piotr Kroenke: Green building is becoming the standard. In the near future the key question will not be whether to build in such a way but how to do it. Two things are important for us: the actual solutions applied to a building - the equipment installed in a building, for example, in order to restrict energy consumption - and the relationship with the tenants. Soon, apart from lowering the energy costs, we also have to consider other parameters that determine the comfort of working conditions to a much greater extent. These include, e.g. the quality of fresh air in the building and the suitability of the lighting. Do ecological solutions translate into actual financial results? I don't think so, especially in the short- or medium-term. The investment only brings returns in the distant future. The rate of return as a result of saved energy, for example, is small. If an accountant was to make the decision about whether to construct a green building, his answer would be: no. So far, the buyers of commercial properties have not wanted to pay more for green facilities, but I think that will change in the future and they will target buildings of this type exclusively.
Andrzej Hyjek: Some certification criteria can be fulfilled without considerable costs. The LEED system, with which we are certifying the second stage of Poleczki Business Park, awards us points for things such as the location, i.e. reclaiming former industrial land, good access to the place of work, and access to services within the facility. Consequently, it is mainly the tenants who benefit from this, as their employees will feel more comfortable, while the bonus for the employer derived from the eco-friendly character of the building is in terms of the operating costs. Developers will benefit from this indirectly - they have a fully-leased building, and thanks to this a better chance of attracting the interest of funds prepared to invest in the project.
Cezary Kopij, Neinver: I would divide the profits into educational ones, which have a lot of significance and are efficient in terms of raising users' awareness, and investment profits. The latter are not so clearly visible. The investor wants to get their money back with a certain profit, whereas the requirements of green construction generate an additional cost without any guarantee of a return on investment. They often remain a cost with no financial profit. However, our business is going in this direction and we have to introduce the changes tenants require from us.

Aneta Cichla: What solutions make it possible to generate most of the savings in green buildings? How much can be gained from them?
Agnieszka Operhalska, Philips Lighting: Developers and investors have access to the latest technologies, whereas we additionally provide research aimed at demonstrating the benefits they are claimed to have. We are aware of the market not being educated enough when it comes to energy-efficient solutions. Because of this we have carried out tests aimed at illustrating the energy-saving properties of LED lighting control systems. In the case of LED lighting, the reduction of energy consumption exceeds 30 pct compared to conventional solutions, while a control system adds a further 35 pct. Another underestimated aspect of savings can resut from the greater utilisation of daylight. In time users and facility managers will see the difference in operating costs
Marek Dąbrowski, Buro Happold: There are many ways to make savings. The choice of what is most important depends on the type of a given project and its conditions. However, a lot of savings depend on the users. There is still a lot to do in this respect. I think that users are often unaware of a lot of the improvements and innovations they have at their disposal in a sustainable building. We designers keep introducing them, but users should be shown how many options they have and how to utilise them. This involves, for example, the appropriate usage of BMS (building management system) data. This is confirmed by our own experience of certifying our office. Presenting employees with readings for the water and electricity consumption has lowered the consumption by 20 pct. There is still a lot to do with regard to users' awareness and habits.
Jerzy Kamiński: Yes, this is all true but the developer's task is to erect a building and sell it. So the beneficiary of these savings will be the fund that buys the building, not the developer. So the question is: is the fund prepared to pay for its future savings? The answer is: no. The truth is that the managers of funds' only care about the cash flow as opposed to bills for utilities, which are paid by tenants anyway. This is further confirmation of what has already been said: profits and savings exist, but on a global scale, not directly for the developer.

Aneta Cichla: Some opportunities are being wasted due to the lack of knowledge among users...
Jerzy Kamiński: It often happens that when innovative devices are installed in a building they are used incorrectly, and our whole effort goes to waste because of people who do not use these innovations. It can also happen, for example, that air-conditioning is left on all night despite the fact that there is nobody working in the office. The proper use of BMS helps to streamline expenditures, but you have to use the possibilities it offers. There are a number of sensible approaches that users could employ that do not require a lot of money, such as the segregation of rubbish. Savings are more evident for the tenants, as they are the ones paying bills every month and can clearly see the savings. And these result from correct and proper usage. So far we have been losing a great deal due to the lack of knowledge.
Patryk Kruszewski, CBRE Corporate Outsourcing: It is important to know at what point to limit users' competence and at what point to extend it. This is where it needs to be seen what people's awareness is like and how much still needs to be done. And this is about general behaviour: few people segregate rubbish, the vast majority do not turn off the light and leave phone chargers in the sockets. What designers offer is one thing and what the user does with it is another. And this is where I see the facility manager's role - implementing best practices because users do not have good habits. The savings are not so clearly visible. They can be seen at the level of reporting, the cost level and while obtaining certification.

Aneta Cichla: By the way, how can the costs be minimised?
Marek Dąbrowski: The simplest and relatively least expensive solutions are the best and these are the ones we want to implement first. Such solutions include: showing consumption readings, using inexpensive aerators on taps (the device aerates the water so that it seems as if there was more of it). More expensive solutions are employed later, including proximity batteries, waterless urinals and modern LED lighting with controls and sensors. Increasing energy prices will probably extend this list of solutions.
Andrzej Hyjek: We have managed to obtain 40 pct savings on water at Poleczki Business Park. It was possible thanks to placing greenery around the buildings, on the roofs and on the patios, which does not require watering. Moreover, we have installed toilets which need less water to flush. We have also installed button operated taps which pour a specific amount of water in a short period of time. We have also installed movement sensors which turn on the light in toilets and garages. External blinds have been installed on the façade of the building, preventing the interior from heating up. It also allows us to reduce the amount of air conditioning needed for cooling the building down in the summer period. We estimate an app. 25 pct reduction of energy consumption costs. And what will the real savings be? We will find out in a few years when the company managing the Poleczki Business Park facilities works out how efficiently the certified buildings are working and compares them to the buildings from the first stage. We did not certify the first stage buildings; we did not use some of the solutions either.
Cezary Kopij: The certification during the construction of Factory Warszawa Annopol, which we started early at the design stage, forced us to take a step forward. That is why I believe that the market and finances will force us to choose a suitable solution. For example, if the price of water is too high, perhaps it will be worth introducing waterless urinals. In such a case we will introduce them. But if the price of the urinals is too high for us and the profit is non-existent, we will simply not install them.

Aneta Cichla: So applying new solutions does not always translate into profits?
Jerzy Kamiński: The problem with innovative solutions is that their history is too short to be able to assess their efficacy. This applies not only to waterless urinals, in which case service failure may have repercussions far worse than conventional ones, but also LED lighting, which has not been fully tested on consumers and whose reliability remains doubtful.
Piotr Kroenke: We are currently considering introducing LED lighting because it does indeed consume less energy. However, it is not a fully tested innovation. It is not clear how people will feel in a place with such lighting, if they will accept such new work conditions. The way tenants receive a new solution and the avoidance of mistakes that might cost us a lot are more important than the price we have to pay for them.
Agnieszka Operhalska: I am going to defend modern solutions, specifically those related to lighting in this case. At this year's Light&Building fair in Frankfurt, nearly 80 pct of the solutions on show involved LED lighting and only around 20 pct featured conventional lighting. Each technology is continuously being tested by us in terms of its affect on human health and users' physical and mental states. It is a myth that LED light is cold and blue. On the contrary, current technology makes it possible to obtain warm colours, just like in the case of the traditional bulb. LED lighting works great when modernising facilities, particularly in older buildings. I see our role as educating the market and showcasing the existing possibilities.
Cezary Kopij: The supplier should be aware of the doubts that plague investors' minds. Firstly - is it worth it? Secondly - when will they receive a return on the investment? And most importantly - how will consumers receive it and how long will a given system last?
Agnieszka Operhalska: We are aware of the lack of adequate knowledge on the market, but we are trying to help during the whole investment process, involving ourselves in it and working out how to achieve the expected savings, providing the relevant data, devising projects and analyses aimed at dispelling investors' doubts.

Aneta Cichla: Can tenants make savings in terms of operating costs from leasing space in green buildings?
Jerzy Kamiński: Tenants are interested in a location with a certificate. They should be interested in things that translate into service charges, but are they? Whenever I participate in such negotiations tenants mainly ask about the rent.
Piotr Kroenke: Indeed, negotiations are different at the stage of a tenant entering a building and when they have been operating in it for some time. The service charge is treated in a standard way during negotiations. When energy consumption becomes part of tenant's budget, then they start to examine the expenses more carefully and look for savings. Tenants become more aware of the importance of having a friendly and ecological office. They rely on the developer preparing a building that will offer optimal working conditions. However, at this point they are not always prepared to pay for it. It is important though that they recognise the need for sustainable development and appreciate the profits. And they will see the savings after having been located in the building for time.

Aneta Cichla: So tenant interest in certified buildings is on the decrease?
Andrzej Hyjek: Tenants pay a lot of attention to high standards. They want their place of work to be employee-friendly and built in a way that takes on board the latest solutions. The materials the building is made of are significant, for example, the paints, glues and varnishes used during the finishing work. The materials we use contain a limited amount of VOCs, volatile organic components. In this way we provide tenants with a healthier microclimate in the workplace. Some international concerns only take into consideration certified buildings already at the stage that offers are being made.
Patryk Kruszewski: Some tenants attach a lot of weight to green construction. It is even included in their statutes and plays an important role in training their new employees in the principles of working in a given office building.
Cezary Kopij: The role of the certificate is crucial for tenants. This is why we offer them help in certifying their own outlets by way of offering cooperation with our assessor for the whole building. The assessor who certified Factory Warszawa Annopol is currently preparing an offer for tenants. We do this as a favour to them, but it also has a measurable value for us. We will probably find out soon to what extent tenants' fittings in their premises impact savings for the whole building.
Piotr Kroenke: I am hoping that certification requirements change a little and become closer to people, friendlier and more precise. It is time we took a look at some of the criteria and adjusted them to our tenants' wishes in particular.

Aneta Cichla: Certificates guarantee cost-efficiency and eco-friendliness. How do they work on the ground in Poland?
Piotr Kroenke: We are about to receive a LEED ?Gold' certificate for the Corius building in Warsaw, and I should be able to boast completing the whole process within a month. We are also now submitting the final documents related to the Platinium Business Park V building. As I mentioned before, I am counting on the fact that the certification itself will change and take into account more practical factors.
Cezary Kopij: The developer and the investor always ask the question: what's in it for me? In order to see this you need to compare a green building to a standard facility without such a certification system. These standard buildings constructed on the basis of Polish ?Technical Conditions to be Met by Buildings and their Location' actually have no problem receiving the good grade of BREEAM, of course after fulfilling the necessary formalities. This is often done with attracting potential funds in mind. Green buildings are a response to a global challenge. We want to continue developing without exploiting larger and larger tracts of the environment. The spur for this was the energy crisis, when it turned out that natural resources are limited or not as cheap as everyone thought. I would like us to take what is best in the certificates and start to build according to these standards. And above all - to promote awareness and education, because it is hard to expect a man who does not pay for water in a shopping centre to turn it off.
Jerzy Kamiński: I believe that our buildings already include standard equipment which guarantees big savings, such as the BMS mentioned earlier, but they are often used incorrectly. We can reduce consumption based on this system.
Marek Dąbrowski: Certificates such as BREEAM, LEED and DGNB currently serve the role of a distinguishing characteristic on the market. I have observed that what interests investors most is the ?marketing' value of a certificate, with the idea being to distinguish yourself from the competition. The real value of a certificate will be proven when operating a given project. Increasing water and electricity prices will certainly influence the interest in this aspect of certification. Then we will be able to find out which buildings have been wisely designed. This is why we engineers are integrating appropriate solutions into our designs.

Aneta Cichla: What about the cooperation of the whole industry? Is this not having an impact on cost-efficiency?
Agnieszka Operhalska: Our complaint is that we are only invited to participate in a project in its final stages. We often have to correct somebody else's assumptions. The potential of leading manufacturers should definitely be utilised, not only in terms of lighting, because this involves expert knowledge, access to the latest technologies and the possibility of working with specialists as early as at the stage of discussing design assumptions. This generates even better results and protects against the costs of the assumptions changing, for instance. We are waiting for an open group that will say: yes, we want manufacturers to be included in this process from the beginning. In this way we can educate each other, and this education will translate into results.
Piotr Kroenke: Our problem is a little different. Basic electricity installations are often prepared for much greater energy consumption than the actual needs. This translates into the building's service charges later. We spend a lot of money on solutions that could be cheaper. Designers often follow older standards. We would definitely prefer to spend money on the lighting than on transformers. An ideal building for me would be one without a transformer [laughter]. I agree that we could invite manufacturers in at an early stage, but we have to be sure that they will provide realistic data.
Marek Dąbrowski: We need evidence, hard data from manufacturers and technology suppliers, in order to make a decision about inviting them onto a project. We have to know what savings they offer and how to minimise investment costs. But we have to ask ourselves the question: in relation to what? In comparison to what? Are international certificates a point of reference, or the Polish norm, or a foreign one? It is very important and needs to be emphasised that good standard Polish office buildings already meet the ?Good' requirement of the British BREEAM standard. This is very encouraging. At Buro Happold we strive to fulfil the requirements of buildings' green certification for our projects so that each of our buildings is prepared for auditing.
Jerzy Kamiński: In my opinion, architectural studios are the key element. They should be up-to-date and recommend the best solutions to us.