It's not easy being green, but it's worth it

There are more than 100 energy efficient projects in Romania out of which 40 are certified under standards such as LEED or BREEAM, totalling 2.4 million green square meters.

2015-02-06 22:53:42 - From the Print Edition

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In terms of green history, Euro Tower is known to be the first "green" building in Bucharest, signalling in 2009 the pioneering years towards the green approach in Bucharest and Romania. Where the market stands now and how green-driven it still is, were recently disclosed by general managers and experts of main consultants, developers, architects and tenants in the local market.

According to research conducted by the Romanian Green Building Council and NAI Romania, Romania's inventory available in May 2014 includes more than 100 energy efficient projects, 40 of which are internationally certified (LEED, BREEAM, DGNB etc.), thus totalling 2.4 million square meters of green areas. The "green hall of fame" comprises: Floreasca Park, Liberty Technology Park, Edenia Titan, Green Gate, Green Court, The Ofice, Afi Palace Ploiesti, AFI Park, Lake View, Hermes Business Campus, BOC and BOC Tower, City Offices, Euro Tower, Iulius Mall Suceava, Willbrook Platinum and Convention Center, Olympia Business Center, Bucharest Tower Center, Iulius Mall, Sigma Shopping Center, Sky Tower, Floreasca Business Park, Petrom City, and others. It may seem enough for a market such as Romania but, when we take a broader perspective as we should in a globalized world, it becomes clear that there are many steps ahead to be taken.

THE WORLD IS ROUND AND GREEN

The World Green Building Council states that the global green building market indicates strong growth as expected. Their study cites that professionals from firms around the world report plans to conduct green work at higher levels compared to their current levels of green activity. "This is particularly true of firms that are dedicating their work to be green, where 60 per cent or more of their work is green, with 28 per cent of firms reporting engagement in green at these levels in 2012, up from only 13 per cent in 2009. Looking forward, more firms (51 per cent) expect to be dedicated to green," their study in green building market show.

Regarding the variations by location, in the nine countries with a statistically significant number of respondents for analysis-the US, Australia, Germany, Norway, United Kingdom Singapore, South Africa, The United Arab Emirates and Brazil, growth is expected across the board, with firms in countries reporting the lowest current levels today more than doubling their activity by 2015. Of course, as the experts from the World Green Building Council say, "the growth around the world suggests that the green building market is not isolated to one particular region, economic condition or culture."

It is as simple as this: firms are expecting green building to yield financial business benefits. The World Green Building Council says that there is a number of benefits reported by those engaging in green building-both for new green buildings as well as the greening of existing buildings through retrofits and renovation projects (see the chart for median reported benefits). With these expected benefits, measuring the success of green building investments will become increasingly important-particularly to the investment community. "Despite this need, a sizable 37 per cent of firms are not using any metric to track performance. This is a critical gap and a need the industry must address in the future," they say.

Also, according to world institution findings citing UN statistics, by 2050 70 per cent of the world will be living in urban areas, while over 95 per cent of that growth is expected to occur in developing countries. "In China alone, about 18 million people migrate to cities each year. In India, the urban population has grown by more than a third since 2000, with a further 42 per cent of growth predicted before the century's first quarter is out. With the need to address the mobility of these increasing populations, developing countries enjoy an historic opportunity to bypass the blunders of industrial and post-industrial urbanism by committing to low-carbon transportation," The World Green Building Council states.

THE GREEN, FROM REVOLUTION TO EVOLUTION

In the last few years, a more focused approach of green projects can be observed, but, as most of the managers-in the form of developers, architects, consultants or tenants - say, only one segment showed a consistent interest in this respect: the office segment. Even so, the commercial segment has started to follow it closely. "Green building projects will continue to develop mostly in the strictly commercial development areas and mostly with office buildings. While there are some retail centres that are "building Green" and a few residential projects "going Green′ as well I don't expect to see a big surge in green projects growing in these areas very quickly over the next year," says Randy Tharp, managing director at Epstein Architecture & Engineering, the local branch of a US-based company with several significant engineering and certification projects in Romania.

Even if the benefits of building green are considerable in terms of operating costs, the general feeling, at least some time ago, was that these kind of buildings are more expensive, not only regarding their construction, but also leasing. This has changed, states Elsa Monteiro, Sonae Sierra head of Sustainability. "Today, green buildings can be delivered at a price comparable to conventional buildings and investments can be recouped through reduced energy and water consumption and lower long-term operations and maintenance costs," Monteiro explains. "As more international investors and retailers are entering the Romanian market, they become more concerned with the environmental and social impacts of the built environment, and more knowledgeable that buildings with better sustainability credentials will have increased marketability," the manager adds.

"There is no difference from the previous year. For a Bucharest office market, a BREEAM or LEED certification is a must. This year I think the major cities will follow the same trend-Cluj and Timisoara because of the fiscal incentives, but also cities like Iasi, Brasov will follow the trend mainly because, the main developers have spread the Bucharest experience of higher standards for their project looking for the higher expectation from tenant side," states Razvan Nica, managing director of Build Green Romania, a company founded in Romania with a major inauguration; the coordination of the Cascade-EuroTower office building project-the first certified sustainable office building in Romania.

According to the Build Green Romania's managerial perspective in the last year, the reasons to demand green certification haven't changed - image and tenant request - but also fiscal incentives, where available, are main drivers. But, the developers have better knowledge and are more focused on the intermediary results of the certification process. "Here I refer to the result of the studies conducted in the early stage for the optimization of the design such as energy modelling and optimization, comfort optimization, daylight, etc, which become more important and may conduct on important adjustment over the design," Nica states.

THE BENEFICIARY PERSPECTIVE

From a tenant perspective, especially those tenants that play at international level, the green-certified office buildings can be a must. "I believe that once you go green, you can't go back!" firmly states Florentina Totth, country president Schneider Electric Romania and the Republic of Moldova. "Taking into account the international trends and concerns, and also the fact that Romania is part of the European Union and has to comply with all EU regulations and recommendations, I am confident that the green trend will continue also in the local market. In the near future, I expect all new buildings to be green, as Romania has to meet very ambitious targets set by the EU, such as the provision that all new buildings should be nearly zero energy by the end of 2020," the manager explains.

For instance, the effects of the green building trend on the client-owner relationship are greater in the office buildings sector. In fact, due to intrinsic efficiency of most power plants as well as losses in the transmission and distribution electricity network, 1kWh of usage in a building requires 3kWh of production. So, for each energy unit saved in the building, we save three times as many at the production level. These are facts which trigger some actions, according to data provided by Schneider Electric.

In the context of a high competition between developers and owners, a green certification is not only a very important asset in terms of image, but also an advantage during negotiations with potential tenants. For large companies in Romania, a green certification can make a difference between choosing one office building over another for their headquarters. And they have some good options in Bucharest, considering the existing offer of office buildings that already have or have applied for a green certification, and also in other large cities throughout Romania such as Cluj-Napoca.

Nowadays, tenants are valuing a building operational performance and safety much more than ever before, Sonae Sierra manager Elsa Monteiro states. "Efficient performances allow tenants to have more stable operational costs and are proven to be better fitted at times of change in terms of resource resiliency, enabling the owner and shopping-centre operator to attract more tenants and offer a safer and more sustainable business environment for their long term business activity," Monteiro explains.

Sonae Sierra has six projects under development, including three for clients. These projects are located in Romania, Morocco and Brazil. In Romania, the company is currently developing the ParkLake shopping centre in Bucharest, in a joint venture with Caelum Development. ParkLake represents 180 million Euro in investment and it will open its doors in 2016. The shopping centre will offer retail on 70,000 sqm GLA with around 200 shops and 2,600 spaces of underground car parking, according to company data.

Also, according Oana Stamatin, senior associate, LEED AP BD+C within Real Estate Management Services of Colliers International Romania, the certification of a building to an international standard became a necessity in an increasingly competitive market. According to data provided by Colliers, all office buildings delivered last year and planned to be delivered this year have run or are currently running such a process. Moreover, although office buildings were the first to start the drive for certifications, now the trend is slowly moving towards commercial centres. As the Colliers's manager states, the main benefit in the case of commercial centres is the decreasing operational and utility costs.

THE CALL FOR LEADERS

However, the market needs the example of a leader, in order to boost the movement towards green. "Clearly over the last couple of years, office developments are nearly all now either certified green buildings, either BREEAM or LEED, or at least sustainable features are incorporated in most new office developments in order to keep pace with the market," states Randy Tharp, Epstein's manager. According to Tharp, elite and multi-national developers like Skanska, Portland Trust, AFI and Vastint have been firmly committed to sustainable projects and have led the way in the market which others have had to follow in order to stay competitive. "The market needs developer leaders to show the way in other areas of development including retail, residential, and industrial. Such leaders who know that "building green′ increases profitability and offers cost, health and quality benefits to tenants and users will be the best way to increase more green building projects in Romania," Tharp says.

But definitely, there is a growing change in developers, tenants and users understanding the need and benefits of green building projects. But there are still areas of the industry that look at sustainable building design as a fad or trendy marketing ploy. While building green can have increased costs, a sustainable building's emphasis on energy efficiency, water reduction, transportation access, day-lighting and indoor air quality will save money for tenants or buyers in the operating costs of a building or home. More and more developers and building users are seeing this and recognizing that if they do not change with the leaders they will be left behind.
"These benefits also go beyond specific buildings because they have impacts which support sustainability of our environment worldwide. Transitioning to a greener way of life reduces our consumption of resources and impacts on the environment which makes them available for future generations to use and enjoy. "Leaving a world better than we came into it′ should be the legacy of each generation," Tharp concludes.

THE LOCAL INPUT

According to Elsa Monteiro, Sonae Sierra head of Sustainability, "on the legislative side, building codes around the world have become stricter, so the transposition of the European Energy Performance of Buildings Directive into the Romanian legislation and the new version expected to come into force this year, will stimulate both owners and developers as well as authorities and suppliers towards a skilled green buildings market."

In Schneider Electric country manager opinion, the main challenges are the existing buildings, many of them needing to improve their energy performance. Florentina Totth explains: "If office buildings have to adopt new trends and keep up with the market in order to attract and maintain their tenants, other types of commercial buildings are not that eager to upgrade themselves and to become greener (mostly due to the high costs required by such an upgrade)." The manager considers that specific attention should be paid to the residential sector, where most of the existing buildings are losing energy and need various improvements. In terms of regulations, a first step ahead is the energy performance certificate, which is compulsory for any real estate transaction.

"This step is already done with the several rehabilitation programs started in Bucharest and other cities in Romania which have helped owners make their apartments more efficient. Another helpful initiative is the Green House national program which offers financing for owners who implement in their homes heating systems based on renewable energy," as Florentina Totth says.

There is a law, but it may not be enough, as the manager of Schneider Electric says. "I believe that laws are no longer enough unless they are integrated in a coherent and well thought out frame and enforced properly. Also, a very important trigger will continue to be incentives and dedicated programs that stimulate investments in green building projects-both for commercial and residential buildings. It is important that the existing projects are continued and upgraded (to keep up with new technologies), but also complemented with others that offer benefits to a wider range of investors and house owners," Totth explains.

According to Randy Tharp from Epstein, besides the EU 2020 energy strategy for the development of more sustainable buildings, it is crucial for the local authorities to understand the importance of sustainability and offer different facilities to owners and investors, to accelerate the process. The manager calls to mind the initiative of the City Council of Cluj, which passed the law on property tax reduction for green building owners, as a good example. "Since then, there have been a number of investors in Cluj registering their planned developments under LEED or BREEAM. A number of other city councils intend to follow this example and the next important step is to apply similar sustainability-boosting fiscal incentives in Bucharest. It proves that smart tax incentives could lead to the greening of the construction market," Tharp states.

Also, as Epstein's GM shows, the embracing of green philosophy may have effects in gathering financing. "The financial institutions are increasingly becoming interested in supporting the construction and refurbishment of green buildings because of the higher asset value which results. Innovative financial products like green mortgages are already available in Romania on a small scale for homeowners," Tarp explains.

Also, as showed by Oana Stamatin, the senior associate of Colliers Romania, if, until last year, only the county council of Cluj-Napoca supported the green initiatives by reducing the property fee for internationally green-certified buildings, as of April 2014 the county council of Timisoara acted the same. Also, another step ahead is the opening of a local branch in Moldova by the Romania Green Building Council (RoGBC). "This branch will benefit from the infrastructure and the activities already developed elsewhere in Romania by the institution," Oana Stamatin says.

THE GREEN LEGISLATION

Last year, Steven Borncamp, president of RoGBC, took a significant step in "building tax reduction for Green Buildings," as the institution calls this endeavour. According to Romanian Green Building Council data, Lawyer Luiza Manolea along with Steven Borncamp presented on behalf of RoGBC a proposal for a legislative guide aimed at recognizing achievements in green building tax reduction for green building owners. "The RoGBC initiative to propose property tax reduction as a mechanism to promote green building is based on: the results of the report "Measures to attract investment in local green buildings", which indicates the property tax reduction or exemption for a period of time, as forefront among the most relevant and easy to implement measures for encouraging the development of energy efficient buildings by public authorities; and on the existing legislative framework regarding establishing property tax by local decisions, but within the limits set at national level on the Fiscal Code," declared Manolea.

Also, Romania has resumed its national program "Green House" starting this year. According to current data, over 15,000 requests for non-refundable funds have been registered so far within this program. The program started in 2008 but it has been suspended several times over the years. Resumed in 2015, it has a budget of over 100 million RON. The program, representing installation of heating systems with renewable resources targets individuals that apply for a grant up to 6,000 RON in order to install solar panels or up to 8,000 for those installing other kinds of heating installation with the condition to use green resources.

LIVING IN A GREEN BUILDING, MORE THAN A STATUS SYMBOL

More than status, working and living in a "green" building should be viewed as a long-term investment. One of the most obvious benefits for many companies in Green Buildings is to be able to say "We are in a Green Building" and "Our Corporate Values promote Sustainability and the global environment".

"All this is true, but most companies will not pay a premium on their rent just in order to say this. Major corporations know that Green Building are less costly to them, provide healthier work environments for their employees, reduce long-term maintenance and utility costs, reduce employee turnover and worker absenteeism, increase worker productivity, as well as benefiting the local and global environment," Randy Tharp states.

Epstein's team of architects and engineers is currently providing complete architecture and engineering design services for Yazaki's new automotive component production facility located in the economic free zone of Braila, and is being developed by WDP. The project's first phase is designed to accommodate 1,800 employees and has approximately 10,000 sqm of production area and 6,000 sqm of administrative and support offices, storage, lockers, as company data shows.

Also, Epstein runs several LEED certifications for developers such as Skanska, represented by their Green Court Bucharest Project - Building B (Phase II). "This 33,000 sqm Class A office building has a target of LEED-CS Gold Certification. Epstein also provided similar services to Skanska on their Green Court Building A project which is also being certified as LEED-CS Gold," Epstein's data shows. Their project pool also includes providing process analysis and master planning for the relocation of a 25,000 sqm production facility for Aversa Manufacturing. "This project will allow Aversa to grow and develop their business which has already saved over 200 manufacturing jobs and will create another hundred or more over the next several years," Epstein representatives say.

However, the market shows signs of maturity as, comparing with the previous years where the certification was more a formal procedure, now the sustainability certification is a tool in the iterative process of a project optimization. "I can say that we have a project where the client doesn't look for a formal certification, but only to optimize his project base on the BREEAM standard approach and the design optimization modelling. This is from my perspective a clear sign of a mature market," says Razvan Nica, manager of Build Green Romania.

Build Green Romania projects in 2015 started with the site works for Timpuri Noi and Oregon Park, both in February and both targeting the same BREEAM excellence level-an important signal in Bucharest office market. Timpuri Noi is an important project from the perspective of several years expectancy, as the first InterIKEA project in Romania, and as a next step in sustainability after the success of Floreasca Park. Another important event is the completion of Coresi Brasov, the first shopping centre certified in Romania on the BREEAM Very Good level. Also, another project is the continuous office development in Barbu Vacarescu-Pipera area, with a few but very important LEED certification projects like Bucharest One, Green Court, GlobalWorth, according to data provided by Build Green Romania.