Can we afford to ‘think green’?
Properties are a long-term business in which a number of factors are important. For the owners, the most important considerations are present value, added value and exit value. The tenants primarily want lower rents. So where do Mother Earth and her needs enter the picture? After the recent economic recession in the Baltic economies – which very drastically affected property values and restricted exit possibilities for a while – can owners and tenants afford to ‘think green’ at all?
Green solutions are in demand
Public opinion about the protection of nature is creating new values in society. Individual consumers are the end-users of most products and services. More and more of us now care about the content of food products and the origin of materials. Our minds are already open – but how far does this go? Will we patronise shopping centres with retailers of ecological products in preference to visiting mass hypermarkets? Will we press to work in an office building with passive energy solutions rather than one heated by non-renewable fuels?
The evidence is that consumers are now prepared to demand declarations from property owners regarding their sustainability policies. As a result, the ability to make a sustainability declaration creates additional value both for landlords and tenants. The landlords are happy because the property’s exit value increases, while the tenants can expect a constantly rising demand from end-consumers, either directly or via business-to-business products and services.
Cost savings
A sustainability policy brings direct costs savings as well. Higher investment costs will of course be required to maintain the certification of ‘green’ buildings and ‘green’ products. But at the same time we can carry out a number of tests and calculations to value the efficiency of the various engineering systems in the property and thereby prove that service costs are lower.
Sustainability in the property business is not a ‘quick fix’. A property is not a separate, self-enclosed entity, but has links to the surrounding environment and society. Landlords and tenants are now being pushed by public opinion to be more and more ‘green-minded’ in order to protect the interests of this society. Only progressive and positively minded operators can expect to benefit from adjusting their property policy in order to obtain increased value and demand – and then only on a long-term basis.
Sigitas Jautakis
Head of Asset Management, Newsec Baltics