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While sustainability is now a given in European real estate, one critical element is dividing the best buildings from the rest – and is seeing some developers and investors future-proof their assets, while others risk undermining much of the otherwise excellent work they do.
Sandra Fives is chief strategy officer at Catalyst
That element is a coherent data strategy, which can become the difference between an exemplary green building that commands a premium and one that can’t attract an institutional buyer.
This isn’t purely down to bureaucracy and a mindset of ‘if you can’t count it, it doesn’t count’, although that is a factor for fund managers who operate to strict reporting requirements and see a lack of data flow as (almost) as bad as not having energy performance measures at all.
More importantly, it is because a data-powered building is a greener asset in operation. It is more easily and efficiently managed, it can become even greener through the use and application of intelligence-generating insights and, of course, it is a much more liquid investment.
The good news is that if it is planned at the start of project, a data strategy can be seamlessly integrated into construction. However, a data strategy is often an afterthought, with metering and monitoring systems specified for basic controls rather than ESG objectives.
Building management systems (BMSs) are frequently value-engineered out of construction contracts. Retrofitting metering infrastructure later is not only up to six times more costly, but it is also disruptive. In one case we advised a client on, a delayed upgrade resulted in €100,000 (£87,000) of costs and operational shutdowns, versus just €15,000 (£13,000) if it had been implemented during construction.
For standing assets, the problem comes down to fragmented data flows. Another example we worked on was a mixed-use asset in London with dozens of utility supplies and hundreds of subdivided areas between different utilities. Despite a comprehensive energy management system, only a fraction of the available data was reported –just 35 points out of the around 160 needed to inform reports and decisions. This meant energy consumption couldn’t be accurately assigned to tenants or specific areas, resulting in misclassification of emissions and missed opportunities for benchmarking and targeted improvements.
Responsibility for data strategy spans the value chain, from forward-thinking developers looking to future-proof assets to asset and fund managers making their requirements clear and ensuring that the investment is there at the start. It can’t just be assumed that ‘someone else is sorting it’. BMS and energy management system vendors often focus on the hardware, with little focus on sustainability or the granularity required, particularly in the EU, for fund managers in reporting. Without clear specifications and integration, manual workflows proliferate, data is siloed and reporting becomes painful.
Building a robust data strategy starts with understanding the fund manager’s objectives. These might be a holding period, reporting requirements and the need for energy analysis or showing reductions, for example. This is easier if you develop or retrofit the asset on a forward-funding/purchase basis, but can still be done through knowledge of best practice and understanding your target buyer.
It’s never too late to retrofit a data strategy, but earlier is always better. The risk is that without integration and correct meter tagging, manual workflows and misidentified data points can expose funds to compliance, reputational and commercial risks – including greenwashing claims, regulatory misalignment and misallocated capital.
In a market where capital follows verifiable performance, the greenest building is only as strong as the data running through it. The winners will be those whose assets prove, not just claim, their sustainability credentials.
Sandra Fives is chief strategy officer at Catalyst