Sirius Sirius Real Estate

 

Welcome to Sirius Real Estate’s new blog series called ‘Impact’, every few weeks we’ll be sharing our views on sustainability in commercial real estate, and the ‘Unternehmensimmobilien’ sector: a distinct asset class of German multi-use and multi-let commercial properties, that is home to the heart of the German industrial economy. These assets are typically ‘business parks’ found in locations on the edge of towns and are characterised by their potential for reversibility of use and their multi-tenant structure. This means they’re flexible both in terms of usage but also in terms of tenants and tenant size.

We’ll provide updates on the progress we are making as a business as we continue to advance our ESG strategy and talk frankly about the challenges our sector faces in continuing to deliver high standards on ESG as we grapple with recovery from Covid 19. I’d love to hear any thoughts or questions you might have, just drop them in the comments below!

The Case for Reusing and ‘Recyling’ Buildings

It is no secret that reusing building materials could significantly reduce the construction’s industry’s CO2 footprint. At Sirius a core aspect of our business model is the acquisition of older industrial buildings and their recycling and reconfiguration. In doing so we extend the life of older buildings and reduce the need for carbon intensive rebuilding projects and further building on non-brownfield sites. These sites are often rich in biodiversity and integrated into the surrounding countryside meaning that we avoid further building on greenfield land or needing to engage in land clearances or deforestation. It is also worth noting that these sites have been built to extremely high standards - which is typical in Germany -  meaning they can be used for decades to come.

We all know fast and significant action is needed to reduce carbon. The 2019 Intergovernmental Panel on Climate Change (IPCC) report made clear that the world has little over a decade to radically reduce its carbon emissions in order to avoid catastrophe.[1] Yet construction remains focused on energy-intensive new builds. The Royal Institute of Chartered Surveyors (RICS) found that, by practical completion stage, 35 per cent of the whole-life carbon of a typical office development will already have been emitted, while the figure for residential is 51 per cent.[2] This makes the case for recycling buildings even more pertinent.

Keeping and using existing buildings avoids the release of massive quantities of greenhouse gases and emissions caused by needlessly demolishing and replacing existing buildings. Retrofitting existing buildings to meet high-performance standards is the most effective strategy for reducing near- and mid-term - carbon emissions, the most important step in limiting climate disruption. In Germany the Umweltbundesamt (which is Germany’s central environmental authority) issued a report in early March calling for “immediate measures [to be taken] to clean up the construction sector”[3] after it missed its carbon reduction targets in 2020, despite the Covid 19 pandemic.

Demolishing buildings or building on new land can also be undesirable on social and economic grounds, it can often be unpopular and stoke opposition from communities. The refurbishment and retrofit of existing buildings, on the other hand, is cost-effective and generally less controversial, because it conserves and enhances existing places and neighbourhoods. Coupled with this, retrofitting sites on brownfield land can clearly protect and preserve biodiversity. Many of our sites at Sirius are found on the edge of towns and cities and by conserving and enhancing these properties we reduce the need for further new building on greenfield sites which would contribute to urban sprawl and further biodiversity loss.  

We see the implementation of our environmental strategy as supporting and strengthening our core strategy: transforming business parks into higher-quality assets through investment and intensive asset management. However, we are also aware of the need to improve the efficiency of older buildings where possible whilst conserving scarce – and carbon intensive - building resources, which is why a number of years ago we committed to sourcing our electricity consumption of our portfolio from renewable sources. In January this year we achieved that goal and I am delighted to confirm that we now source 100% of our electricity from renewable sources.

We are also increasing our support to our tenants through the provision of improved energy efficiency services and we are rolling out EV charging infrastructure across half of Sirius’s portfolio during 2021. We have also started implementing smart metering at both a property and tenant level and are considering how we can further protect and support biodiversity across our assets.

We’re committed to doing our part to address climate change and we know we can play an important role by retrofitting and upgrading existing sites to reduce carbon emissions, without the need for carbon-intensive new construction. It’s also worth adding that at Sirius we know that we have much more to do and I’m looking forward to updating you on our progress on this blog over the next few months. Any questions please do comment below.

 

[1] https://www.ipcc.ch/site/assets/uploads/sites/2/2019/06/SR15_Full_Report_High_Res.pdf

[2] https://www.rics.org/globalassets/rics-website/media/news/whole-life-carbon-assessment-for-the--built-environment-november-2017.pdf

[3] https://www.reuters.com/article/uk-germany-emissions-uba-idUKKBN2B8141

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