Commercial office conundrum. To retrofit or not and can the Green Building Fund really assist?

Written on the 8 March 2010

Commercial office conundrum. To retrofit or not and can the Green Building Fund really assist?

Alastair Walker has joined the Gold Coast Business News team. The managing director of Napier & Blakeley property consultants will offer monthly commentary on the latest trends and issues facing the property industry.

For owners of commercial property around the country, the current market is a struggle with increasing vacancy rates, decreasing rental levels and tenants demands.

With incentives increasing and tenant opportunities decreasing, it’s clearly a difficult time for commercial property owners and the effects on the Gold Coast market are there for all to see in terms of vacancy.

Going forward, there are a number of issues for owners, including tenant retention, building obsolescence, effective rental levels and at the end of the day keeping up with the Joneses. From a tenant retention and incentive perspective, there are clearly many tenants with a desire to be accommodated in cleaner greener spaces at a realistic market price.

When the economy and the commercial office market recovers, the main question moving forward is will your asset be up to scratch to capture new tenant demand or be good enough to keep your existing tenants coming out of lease?

This year will also see the introduction of mandatory NABERS (National Australian Built Environment Rating System), where property owners will have to disclose the energy efficiency star rating of their asset if they lease space or intend to dispose of an asset.

The Federal Government, through AusIndustry established the Green Building Fund to assist commercial property owners green their assets by reducing their energy consumption by retrofitting assets. As far as we know, no Gold Cost commercial property owners have applied for retrofit funding from the fund.

The Gold Coast has around 327,369 sqm of B, C and D grade commercial office space and to date only three buildings have successfully received funding from the Green Building Fund.

Typical works the government will fund are items like lighting, HVAC systems, glazing and shading and building management and control systems.

Basically all the areas that energy consumption can be reduced or managed more effectively.

Clearly in the current climate there is a resistance and also a difficulty in raising capital to fund asset improvement. So can the Green Building Fund help?

The fund’s primary aim is to assist in reducing the impact of Australia’s built environment on green house gas emissions, by reducing the energy consumed in the operation of existing commercial office buildings.

The program provides grants through its Stream A section targeting owners of existing commercial office buildings. It supports retrofitting and retro-commissioning of commercial office space and grants can range from $50,000 to $500,000 for up to 50 per cent of a retrofit project cost.

Applications can be submitted for individual buildings or as part of a consortium bid of multiple buildings and owners, and some of the qualifying criteria around individual or consortium are as follows:

• 70 per cent commercial office space use for the last 12 months
• 70 per cent commercial office space use for the 12 months following completion of project
• A NABERS energy assessment for pre and estimated post energy use
• An A, B, C or D grade building under PCA Guidelines
• Have an energy reduction target of 25 per cent
• Ownership or management by an Australian incorporated company

Owners and applicants must:

• Be registered for GST
• Have a demonstrated capability to fund their part of the project.

The initial analysis required includes an evaluation of current energy efficiency and options going forward, followed by retrofit recommendations with cost estimates and a program of events for the retrofit works.

The Fund has already had five rounds pass and there is only more application period to go with the last one just closed on January 12 and the last opportunity to apply closes on April 27. Eligible projects that are successful in achieving funding must be completed by December 31, 2011.


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