Drivers and Barriers of Green Commercial Buildings in Australia

Buildings consume some 30% of the world’s resources, 10% of water and around 40% of the world’s energy (OECD 2003). In Australia, around 10% of greenhouse emissions are attributed to commercial buildings, of which office buildings and hospitals contribute around 40%.

The Green Building Council of Australia (GBCA) has developed a ‘Green Star Rating Tool’ to evaluate the environmental performance of Australian commercial buildings.

Drivers for ‘green’ buildings are all based on tenant demand and include:

  • Businesses wanting to reinforce the ‘green’ brand of an organisation
  • Satisfying Government ESD (ecological sustainable design) standards for the buildings leased and occupied by Government
  • Be leading-edge green building with national and international recognition: The desire to be a lighthouse project which would demonstrate the achievements of a ‘green’ building integrated with the urban environment and the community

The staff related drivers were:

  • To meet statutory regulations, specifically occupational health and safety and disabled access
  • To promote effectiveness and productivity levels
  • Improving staff health, well being and satisfaction levels through superior indoor environment quality

The financial drivers were:

  • A low risk, and high return investment over a 50 year life
  • Meet higher return on bond rate requirement for investment funds
  • To future-proof the accommodation (avoiding obsolescence)

Barriers for adopting principles of sustainability in building design and reluctance to invest in ‘green’ buildings include:

  • Perception of increased financial risk: 1-25% higher initial capital costs, financial modelling biased towards short term paybacks rather than life cycle costing, perceived lack of tenant demand. Split incentives amongst the developers, owners and tenants with the developers reluctant to increase capital costs for a building that currently generates similar rental returns for the owners as a conventional office building whilst the long term operational savings are passed directly to the tenants. Validity of traditional accounting practices and contractual arrangements for commercial building developments are in question as the value attributed from the cost of building sustainability are not fully captured (i.e. Non-financial benefits such as improvements to indoor air quality with associated health and productivity benefits to staff from green buildings can not be accounted as payroll costs and are also no simple to measure)
  • Perception of increased construction risk: changing from traditional processes of design and construction including: different contract forms of project delivery, longer design time using integrated design teams, introduction of greener and recycled materials (life-cycle analysis of materials assessed when selecting), changed site practices (Australian construction industry is driven by financial performance with success measured by cost, time and quality; environmental performance are still a peripheral issue) and behaviours (waste recycling and residual material management in construction phase must change)
  • Regulatory and market environment: planning process can be protracted, approval process for new technologies and recycled materials can be lengthy. Two distinctly different approaches can be adopted to embody ESD principles in the design of commercial buildings: European approach is to regulate to minimum standards of Environmental performance, whilst in the USA the free market economy is used to stimulate demand for green building practices. Australia is tending towards the free market approach, although Federal and State building regulatory authorities are have introduced minimum standards of environmental performance. The pay back period for operational savings resulting from the introduction of ESD principles in Australia is currently longer than in Europe and the USA, partially due to the substantially lower costs associated with the supply of energy and water. Until prices reflect the true cost of resources, there’s no economic incentive for people to incorporate energy and water conservation measures into their projects.

Overall, here is strong interest in the development of green commercial buildings in Australia, reflecting the
growing trend in Europe and the USA.

Generally, the companies have borne higher initial costs, although the adoption of life cycle costing can demonstrate some financial advantage. The key potential driver for the ‘fast followers’ is tenant demand for green buildings. Companies will demand green buildings if it can be demonstrated that the superior indoor environment quality results in improvements to staff health, staff satisfaction and staff productivity. Evidence and quantification of such gains will result in tenants and corporations demanding ‘green’ buildings and result in a paradigm shift in the way offices are designed and constructed in Australia. The Government has provided leadership by developing and demanding ‘green leases’ for all of its tenancies to stimulate initial tenant demand for green commercial buildings.

Mandatory disclosure of building performance in terms of the green star criteria and post occupancy studies would also be powerful means of alerting consumers to the ESD benefits and would further stimulate tenant demand.

This are the experiences and lessons learned from the construction of a number of contemporary green commercial buildings in Melbourne including: 60 Leicester Street (60L), Council House 2 (CH2), National @ Docklands, Queen Victoria Village (QV) and the Southern Cross development [Tagaza & Wilson 2004].

Council House 2, Melbourne Australia

Council House 2, Melbourne Australia

Council House 2, Melbourne Australia Design

Council House 2, Melbourne Australia Design


Source: Tagaza, E. and Wilson, J. L.,Swinburne University of Technology, Business Outlook and Evaluation, Australian Journal of Structural Engineering, Vol 7 No 1, Institution of Engineers, Australia 2006

One thought on “Drivers and Barriers of Green Commercial Buildings in Australia

  1. Pingback: Environmentally Sustainable Design Economics | Energy Systems & Sustainable Living

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