Green offices: collaboration is the key

This was the general view of the panel of experts who recently gathered for a roundtable held by Property Week and JLL at The Ned in the City of London, for a discussion on the importance of collaboration in circular end-to-end fit-outs.

The urgency with which many companies are seeking to address environmental goals is driving new approaches to property from both sides, but there are many factors that are slowing progress. These include the highly fragmented manufacturing and supply chain for reuse of products from heating, ventilation and air-conditioning systems through to furniture, plus an entrenched mindset that new is best.

Despite this, accountancy giant Grant Thornton decided to prioritise ESG factors when moving to its new offices at 8 Finsbury Circus.

Richard Jamison, the firm’s director and head of procurement, property and facilities management, said it had a written target to achieve a reduction of 20% in baseline carbon emissions, but it also had an unwritten target of an 80% reduction that everyone involved in the project knew the company was actually looking to hit. It claims it has cut embodied carbon on the project by 79%.

“The point was that to get to 80% you can’t just tweak around the edges; you’ve got to fundamentally rethink what you’re doing,” Jamison said.

Measures included reusing glass for meeting rooms; reusing ducting and fan coil units; and moving existing elements around to fit the new layout. While architects struggled at times with this vision, there was not much pushback from the landlord.

Elsewhere, Jamison sometimes struggles to negotiate green leases for properties, even for what seem like straightforward elements such as the provision of renewable energy, he said.

The more that we try to establish these green leases, the more we can drive collaboration
Areti Makantasi, JLL

However, Areti Makantasi, JLL’s director, sustainable asset services, said that green leases can be extremely helpful in maximising sustainability. “Green leases can be a tool that can drive collaboration in a more standardised way,” she explained. “The more that we try to establish these green leases as an industry, the more we can drive collaboration.”

According to Andrew Mercer, office sector lead at Legal & General (L&G), the group has been pushing green leases for years in its role as landlord and has found large corporates are the most engaged, as their objectives align with L&G’s. “It gets more difficult as the organisation gets smaller and it tends to come down in the end to cost,” he said, pointing out what is a business reality for many.

He added that the company will take a view on the issue of responsibility for costs for various sustainable features, for example a new energy system, depending on the financial benefit to the occupier.

Frank Blande, sustainability lead at landlord Great Portland Estates, said it could be helpful to avoid involving legal professionals in green lease negotiations. “When it came down to the lease negotiations, we found that the best way of having those discussions was in a collaborative, informal manner rather than having the lawyers getting involved and losing the energy of collaboration,” he explained.

Open conversations

According to Accenture principal director and director of real estate Oliver Light, it is important for occupiers to have more conversations with landlords. He said Accenture worked with a large global banking client whose consultant added green lease clauses without their understanding or buy-in, and they received pushback from the landlord.

Senior personnel at landlords and occupiers should discuss these together, he said, adding: “If you can have that conversation before it gets to lawyers, then you get that impetus and support and you can kind of pick your battles on what you should go for.”

Grant Thornton’s client-side property manager Chris Boundy said the key to making green leases work is a good landlord-tenant relationship: “If you’ve got the right landlord and the right managing agent and they’re all together, they work well together and collaborate, it makes such a difference.”

Jonathan Hughes, head of estate strategy at Shawbrook, highlighted the importance of senior decision-makers in enabling sustainable options to be chosen, as the conversation moved on to wider green actions. “In all honesty, my sense is that unless there is a directive from above [that] specifically you need to meet this environmental target, it’s very much still cost driven,” he added.

Mercer made the point that tenant-side senior-level buy-in over the operational benefits of circular fit-outs may be harder to achieve, given that, in his experience, those who come to view space are now often from HR teams rather than finance departments.

There are other types of cost, according to Craig Lloyd, head of workplace and facilities services at accountancy firm BDO, who said the level of carbon emissions should be taken into consideration as a moral cost in decisions such as whether to replace old furniture.

“Having those conversations [is helpful], because it’s not necessarily one person’s decision; it’s a number of people and [you can] inform them,” he added. “It’s about that communication and education and [explaining] this is why we need to change our purchasing; we need to do more reuse.”

Although he agreed with the sentiment, Jon Rowling, senior specialist in building standards at RICS, warned that reusing materials could leave tenants open to costly dilapidations as landlords argue their premises have been left in a way that means they need a new fit-out.

It’s making sure landlords understand we all want good-quality fitted space
James Saunders, Arcadis

“There are nuances and you might be taking stuff you didn’t have a right to take, but the principle of reuse is absolutely right,” he said.

JLL’s director of cost management Simon Patterson said the advent of material passports would allow easier reuse by occupiers as they move from one property to another, enabling tracking of different elements.

He added that cable trays could be reused much more, even if they are slightly bent. “There’s miles of it and it’s passive,” Patterson said. “My view is anything that’s passive you should be able to reuse. If it’s active, it’s slightly more difficult. We should be able to save anything that’s passive [like] raised floors or glazed partitions.”

Lessons to be learned

Katy Withers, global real estate portfolio lead at semiconductor design company Arm, which has 50 properties in 18 countries, said the UK could learn lessons from other countries to maximise its growth potential in this area.

In many other territories, she said, rights are more evenly balanced between a landlord and a tenant, with more simplistic leases using consistent terms, leading to fewer disputes over dilapidations. Such positive relationships between tenants and landlords would help deliver sustainable fit-outs at a much quicker pace than often happens here, she added.

Withers noted that continued progress in this area would help ensure the UK remains an attractive and competitive location for businesses to operate.

So what is most needed to change the mindset towards circular fit-outs? Angeliki Krania, strategic sustainability lead at King’s Cross Group, suggested that a “library of solutions” be created to help those who want to do more but don’t know how to go about it.

The library could include suppliers, providers and successful case studies. “I think that would accelerate some of the journeys because you have some people who really want to do great work; they just don’t know where to look.”

For Arcadis global projects director James Saunders, the key to financial viability, hitting sustainability targets and speed to site is ensuring fitted-out space is of a high quality. “I question whether the licence to alter process in some fit-outs is being done correctly,” he said. “Is there a way to improve that process? Because we all want the same thing. For me, it’s making sure that landlords understand that we want that good-quality fitted space.”

His point reflected one of the overarching themes of the discussion: circular fit-outs do not mean lesser quality, but done properly and collaboratively they can produce more cost-effective and sustainable spaces benefiting landlords and occupiers alike.