From April 2022, all new government-owned non-residential buildings with a capital value above $25 million will need a minimum 5 Green Star rating from the New Zealand Green Building Council (NZGBC). The value threshold will reduce to $9 million after April 2023.
In addition, government agencies will be required to have NABERSNZ ratings for existing buildings when entering a new lease or renewing an existing lease above a certain floor area threshold.
Auckland Council has also adopted a sustainable asset policy for community facilities to achieve carbon neutrality and minimum 5 Green Star rating for new assets costing more than $10 million. Auckland Council’s property development arm, Eke Panuku Development Auckland, will require 5 Green Star ratings for new commercial buildings of more than 1,000sqm developed on its sites in town centres.
Bayleys Realty Group’s head of insights and data Chris Farhi says the growing awareness around energy efficiency, and different businesses putting in mandates to reduce their carbon footprints, is part of the wider movement to sustainability.
“To remain competitive, landlords should start gaining sustainability ratings for their buildings. It will be critical in locations where government agencies are major occupiers, especially Wellington,” Farhi says.
Failure to obtain ratings may reduce long-term rental growth for properties due to tenants seeking green-rated buildings, create higher risk of vacancies, and ultimately translate to comparatively softer yields for non-rated buildings, he says.
A recent major transaction brokered by Bayleys involved the New Zealand Blood service leasing a new building from Goodman Property at its Highbrook Business Park near Auckland.
Farhi says he understands it is the first industrial property to come under the Government’s new sustainability mandate.
NZGBC chief executive Andrew Eagles says there was good momentum during 2021 with 58 offices benchmarked for energy use under NABERS NZ ratings and 21 buildings or developments certified under Green Star. They included a large variety of government-occupied buildings.
The NZGBC’s Green Star rating measures the sustainability of a building, project or fitout across nine categories including: energy, transport, water, materials, management, indoor environment quality, land use and ecology, innovation and emissions.
Eagles says the huge uptake of Green Star ratings was across all building types including industrial, education, hotels and hospitals as well as offices.
For example, research winery, the Bragato Research Institute Rangahau Karepe, Wāina O Aotearoa, a subsidiary of New Zealand Winegrowers Inc has a 5 Green Star rating.
Costs associated with achieving Green Star rating during construction are estimated at about 1.5 percent to two percent.
“But any additional costs are offset by the higher value over the lifetime of the building, and the lower operating costs give a real competitive advantage,” Eagles says.
“Countdown is also doing it in all its stores. Never before have we seen such a fundamental shift in our buildings,” Eagles says.
Further enhancements to the ratings system are under way and due to be announced in April 2022 and taking effect on ratings compliance from September 2022.
The NZGBC is upgrading the existing version of Green Star to focus more on “embodied carbon”, which is the carbon released into the environment when making and manufacturing building materials.
“We’re looking at the amount of carbon in concrete and steel and requiring a measure of total carbon emissions from those sources. That means more procurement of green concrete, which uses different binding materials, and potentially more timber use. In the case of metals, it means designers might select aluminium windows made in New Zealand rather than importing.”
Eagles and NZGBC staff have had meetings with manufacturers of timber, steel and concrete, as well as engineers and architectural firms to discuss the new measures which are similar to what will come into the Building Code in 2024.
About 20 percent of carbon emissions come from the built environment in New Zealand, half from operational running, and the balance from the materials in buildings, Eagles says.