Can the commercial property sector keep up with “green” demands?

There is growing recognition locally that sustainable buildings can lead to costs savings. As a result, commercial real estate owners, occupiers and businesses are now examining the need to develop plans to decarbonise portfolios far quicker, and at scale. The question then is, can the commercial property sector keep up with such “green” demands? And is there commercial viability beyond ESG indicators?

The clear answer is yes. While the transition to “greener” commercial properties presents challenges, the long-term benefits and opportunities for increased value, operational savings and market demand make it commercially viable. In pursuit of net-zero targets, substantial capital investment for projects must be made and should include not only strategic investments into solar PV technology, but also impactful initiatives into waste management and water reduction. These responsible practices need to be intrinsic to the way that business is conducted.

Liberty 2 Degrees (L2D) prides itself on being at the forefront of the environmental sustainability industry in South African real estate. In the South African context, legislation has been passed and building standards have improved to drive changes in the industry. L2D has always met, and normally exceeded, the requirements. Green Building Council South Africa (GBCSA) has also played a significant role in advancing green building practices, which are increasingly viewed as necessary for both construction, renovation of existing buildings and improving ongoing operational efficiencies. As a member of GBCSA, we have always worked closely with the organisation to ensure that our business pushes the boundaries of what is possible to drive change for good.

At L2D, our purpose of “creating experiential spaces for generations” is tied to an enduring legacy of positive impact, and the L2D portfolio is a prime example of the demonstrated commercial viability of going green. In pursuit of the portfolioʼs Net-Zero targets, substantial capital has been invested for several multi-year projects, encompassing the conversion of water to air-cooled HVAC systems, the installation of solar PV systems and introduction of rainwater harvesting systems.

With 5.2% of the portfolio’s energy base load met through renewable/clean energy sources in 2023, forecast to increase by almost double that to 10% by the end of 2024, L2D has invested significantly in clean energy production. There is also a focus on water resilience against water shedding, a reduction on the reliance on potable water and the achievement of Net Zero Waste where a waste diversion rate of 90% from landfill was attained. These initiatives collectively demonstrate a comprehensive approach to driving greener and more sustainable and responsible business practices.

By recognising that approximately 70% of the energy consumption in malls occurs in tenant spaces, the rise of green leases has become crucial to further drive sustainable practices. Energy-efficient practices should serve as contractual framework to promote awareness and encourage tenants to adopt more sustainable and energy-efficient operations. Through the efficient use of smart metering programmes, it is the intention to provide increased transparency to tenants regarding their consumption data, beyond regular monthly billing, enabling them to have a clearer understanding of their energy usage patterns.

The entire retail portfolio of L2D is Green Star rated by GBCSA. This ensures that building operations comply with Green Star standards. In addition, an understanding of climate change strengthens the portfolio’s resilience to climate change events through pro-active measures being taken.

As we move towards a green future, green buildings are becoming a catalyst for change, enabling planet and people to thrive while driving the commercial viability of the sector, going forward.