Presentatie van Jones Lang Lasalle tijdens overleg Platform Duurzame Huisvesting op 30 augustus 2011.

1. Value impact of sustainability
Linking sustainability and property value
Green Desk
Elsbeth Quispel
Ronald Bausch
30 August 2011

2. Content
• Introduction
• Sustainability impact for corporate occupiers
• Sustainability impact for investors
• Case: “Driving Sustainability Goals of Eco Company”
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3. Sustainability
Sustainability still hot topic, providing opportunities
Improves letting ability of current stock and provides opportunities for systemic
vacancy
Sustainability awareness of investors and occupiers:
Increasing energy costs
Reducing carbon footprint
Corporate Social Responsibility
Almost 90% of Corporate Real Estate executives consider sustainability aspects
as a factor of influence in their location decisions
100%
80% 89%
60% 50%
36% 40%
40%
24% 25%
14%
20% 11%
0%
Not a factor / not sure A factor taken into account “Tie-breaker” factor Major factor
2008 2009
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4. Sustainability impact for corporate occupiers
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5. Creating value through sustainability
Corporate and investor added value
Brand value Industry leadership
Reputation Innovation
Investor relations Regulation compliance
Productivity Recruitment & Retention
Corporate Sustainability Strategy
Strategy Benchmarking Reporting
Investor Sustainability Implementation
Acquisition/ Renovation/
Green Leases
Development Retrofitting
Compliance Planning approvals
Reduced operational costs Rental growth
Reduced insurance costs Meeting occupier demand
Valuation benefits Future proofing investments
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6. Corporate (occupier) sustainability
Added value for end-users (qualitative)
Productivity:
Research has shown that offering comfort and a healthy working environment results in a positive effect
on the well-being of employees. This may enhance health and satisfaction and thus increase
productivity.
Image:
A green corporate headquarters and the use of green space in general, may signal to stakeholders
(investors, financers, clients) and employees that the organisation has a long-run commitment to CSR
policy. If this translates into an improved reputation, such a policy may attract and retain employees and
clients.
Company risks and opportunities:
Sustainable real estate reduces the risk of reputation damage, but also provides opportunities.
Financers are more critical about the CSR policy of companies, when providing debt. Furthermore,
governments are increasing their criteria with regards to their purchases. And last, consumers are
increasingly demanding sustainable products.
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7. Corporate (occupier) sustainability
Added value for end-users (quantitative)
Efficient use of space:
By applying efficient and flexible workplace, savings on the total housing costs can be realised. By
efficient use of space, the energy consumption is also often reduced.
Energy reduction:
By using energy efficient and smart systems, or systems that generate or recover energy, energy
savings can be realised to an amount of more than 50% compared to a conventional building
Productivity:
There is a positive correlation between a building’s internal environment and employee health and
productivity. This may help to reduce labour costs.
Legislation:
There are plans on panelising unsustainable use of property. These plans are based on energy
consumption taxes and CO2 emissions. If these are introduced, this leads to a direct negative financial
impact.
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8. Sustainability impact for investors
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9. Value impact of sustainability
10 sustainability value factors
Positive value factors (8)
Rent value / income
Increased rent related to improved working climate and reputation
Service costs savings deducted in rent
Decreased vacancy risk
Other factors
Government and other organizations prefer ‘green’ leases
Smaller installations (less space /capacity required)
Write-off period increases
Future law and legislation
Tax and subsidies
Negative value factors (2)
Building costs (triple layered glass is more expensive than double)
In general, maintenance expenses are higher for a more expensive building
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10. Value impact of sustainability
Added value for investors
Higher rental income
Research has shown that companies are willing to pay higher rents for a ‘green’ building due in part to
the superior working environment (indoor air quality) and the positive impact of leasing a ‘green’ building
on a company’s image.
Lower risk of long-term vacancy
There is a lower risk of – long-term – vacancy due to the growing demand for sustainable office space
and the current shortage of such properties.
Lower energy consumption
Sustainable buildings are better insulated and consume less energy, resulting in lower energy costs. By
off-setting part of this savings via a premium on the basic rent (e.g. using a ‘green lease’ construction)
the actual market rent increases, which positively impacts the value of the property.
Lower maintenance and system replacement costs
As the buildings are better insulated, sustainable accommodation requires the use of fewer major
(heating and/or air conditioning) systems, or systems with a smaller capacity. As a result, the
maintenance costs and the costs associated with replacing these systems are lower.
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11. Value impact of sustainability
Added value for investors
Future law and legislation
A ‘green’ building more easily satisfies the more rigorous environmental requirements of the future.
CO2 emission requirements will become stricter in the future. By investing in sustainability now, fewer
additional investments will be required in the future.
Longer life cycle
The use of sustainable materials means the building will be able to be used for longer. As a result,
sustainable office buildings will have a higher residual value in the future.
Financing opportunities
Institutional investors like pension funds are increasingly seeking funds with a sustainable profile to
allocate their investments.
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12. Driving Sustainability Goals
sustainable
of “Eco Company”
30 August 2011
Elsbeth Quispel
Ronald Bausch

13. Sustainability case
• International property owner, with ambitious sustainability goals.
• Property is out-dated, with an Energy Label G.
• Jones Lang LaSalle is executing a sustainable retrofit, this includes:
- Sustainable scenario analysis
- Impact on value calculations
- Project management
- Agency services
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14. ‘Best fit' certification methodology
• Based on the location of the building in The Netherlands an EPA-U or BREEAM certificate is advisable
• For international acknowledgement BREEAM or LEED are preferred options
• Research on an other sustainability certificate is possible
The scenario’s contain both an EPA-U (C or A level) and BREEAM certificate
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15. Scenario analyses
Scenario Analysis
Scenario III: BREEAM (Very) Good • Technical analysis
Scenario II: A label - Implementation possibilities in occupied building
Scenario I: C label - Implementation of solar cells produced on Eco
Company equipment
• Energy savings
Current situation • Financials:
- Investments required
- Tax benefits and subsidies
- Impact on property value
• Certification options
• Implementation time frame
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16. Scenario I: EPA – U label C
Improve from G label to C label
• Total investment appr. € 350.000,- excl. VAT
• Investment expenses per m² gfa (9.130m²) € 38,50 per m²
• Calculated energy savings approximately € 19.000,- per year and 7,0% CO2 reduction
• Required adjustments:
- Upgrade current climate installation (e.g. heat recovery in airhandling, heat pump, HE-boiler)
- Replace conventional lighting by HF lighting (incl. occupancy detection, daylight compensation)
• Expenses from the current renovation plan include € 115.000,- to replace the current cooling unit and
central heating boiler in the coming 2 years. If scenario I is implemented these expenses are included.
• Therefore the total (additional) investement to improve from G to C label is appr. € 235.000,-
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17. Scenario II: EPA – U label A
Improve from G label to A label
• Total investment appr. € 850.000,- excl. VAT
• Investment expenses per m² gfa (9.130m²) € 93,10 per m²
• Calculated energy savings approximately € 39.000,- per year and a 13,7% CO2 reduction
• Required adjustments:
- Upgrade current climate installation (e.g. heat recovery in airhandling, heat pump, HE-boiler)
- Thermal energy storage with a well (a permit is required)
- Replace conventional lighting by HF lighting (incl. occupancy detection, daylight compensation)
- Replace glass external windows
• Expenses from the current renovation plan include € 115.000,- to replace the current cooling unit and
central heating boiler in the coming 2 years. If scenario I is implemented these expenses are included
• Therefore the total (additional) investement to improve from G to C label is appr. € 735.000,-
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18. Scenario III: BREEAM (Very) Good
Improve from G label to BREEAM (Very) Good (incl. EPA-U label A)
• Total investment appr. € 1.700.000,- excl. VAT
• Investment expenses per m² gfa (9.130m²) € 186,- per m²
• Calculated energy savings approximately € 39.000,- per year and a 13,7% CO2 reduction
• Required adjustments:
- Energetic adjustments according scenario II
- Several sustainable adjustments like re-use of rainwater, water- and energy (sub)metering, energy &
waste management
• Positive area / transport effects:
- Public Transport
- Bicycle shed
- Cycle and pedestrian safety
• BREEAM Very Good is not likely due to presence of tenants during renovation
• Additional expenses compared to scenario II appr. € 90,- per m²
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19. Value impact per scenario
Status building G label (current) C label A label BREEAM Good
Required investment € 115.000 € 350.000 € 850.000 € 1.700.000
Write-off installations n/a 20 25 25
Letting potential 9 months 9 months 8 months 7.5 months
Rent value € 320 per m² € 323 per m² € 325 per m² € 328 per m²
Rent growth 2.10% 2.10% 2.20% 2.30%
Yield 6.65% 6.60% 6.50% 6.45%
Average Nett Value € 23.500.000 € 23.700.000 € 24.000.000 € 23.600.000
• Starting point: total leased building for 5 years from now
• Not inlcuded:
- Subsidies
- Energy recovery
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20. Contact: Ronald Bausch
Sustainability Consultant
Strategic Advisory NL
Tel. + 31 (0) 20 5 405 405
Email: ruben.langbroek@eu.jll.com
Elsbeth Quispel
Head of Sustainability Services
Strategic Advisory NL
Tel. + 31 (0) 20 5 405 405
Email: elsbeth.quispel@eu.jll.com
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