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Green Recovery: How Real Estate Can Use The Pandemic To Turbocharge Sustainability

Two images of the Hong Kong skyline, one taken on a day of high air pollution, one on a day of low air pollution.

“It’s so critical that we don’t sleepwalk out of the current crisis into another potentially more deadly crisis.”

LaSalle Investment Management Head of European Sustainability Sophie Carruth neatly summed up the situation on a recent Bisnow webinar on the threat and the opportunity presented by the coronavirus pandemic on real estate and sustainability. 

The immediate crisis has the potential to redirect money and attention away from the long-term challenge of addressing the climate crisis. 

But it is an opportunity, in that it has given society a chance to hit the pause button, and examine the practices that had been causing environmental damage — and choose not to continue with them when the world returns to something approaching normality. With fewer planes in the air, cars on the road and offices running their air conditioning or heating units, the air we breathe is cleaner. And it doesn’t have to go back to the way it was. 

“I’m fascinated by the parallels between COVID-19 and the climate crisis: both are global crises that affect human health, in both cases we need to flatten the curve, and in both cases prevention is much cheaper than the cure,” Carruth told the audience of the Healthy Buildings Post Lockdown webinar, presented by Gardiner & Theobald. 

“People have struggled to get their head around climate change, getting your head around being net zero by 2050 seems so far away, but the speed of the COVID crisis means we have had to react. In that sense it has been actually quite a helpful practice run for people to be put through a crisis, and people realise they don’t want to be put through that again and that we need to act now.”

For real estate, that has implications both big and small. The current pause allows us to hit the reset button on big, long-term strategies and also on more immediate things like the way buildings are operated and managed. 

Carruth said LaSalle is running energy health checks at its buildings to make sure that when it does switch them back on, it is running them in the most cost-effective and energy-efficient way possible: For instance, can you turn the air conditioning or the heating down a notch? She acknowledged there is a tension between making sure there is the right amount of air circulation, for instance, but not having all of a building’s systems on 100% of the time.

Then there is the question of where a building’s energy supply comes from.

“Quite a few governments in Europe have given strong indications that they are going to encourage as green a recovery as possible, supporting a move away from fossil fuels to renewable energy, and that will be an exciting opportunity,” Carruth said. “We have been moving towards installation of renewable energy infrastructure in our portfolio, and that is a big opportunity for real estate, but if policy can support that then all the better.”

Clockwise from top left: Gardiner & Teobald's Richard Francis, LaSalle's Sophie Carruth, Bisnow's Mike Phillips, Lendlease's Paul King

At a wider level, cities are also taking immediate measures that will have a positive impact on sustainability and the real estate sector can play its part.  

“You are starting to see the prioritisation of walking and cycling routes, you can ask why it has taken a crisis for us to prioritise these things over the motor vehicle,” Lendlease Managing Director of Sustainability & Social Impact for Europe Paul King said. “We can change people’s way of experiencing the city, and improve air quality in the process.”

For real estate owners, now would be a good time to improve the facilities cyclists need, like bike storage and showers in offices, to help people to embrace this transition.  

Even before the crisis, there was an increasing synergy between the idea of a sustainable building and one that promotes the health and wellbeing of the user, the panelists agreed. That has been accelerated by the crisis, and the way buildings are built and managed will need to change accordingly. 

“The word we’re hearing more and more is natural,” Gardiner & Theobald Director of Environment & Sustainability Richard Francis said. “So how do you have natural ventilation, natural daylight, natural materials, which ticks the box for a sustainable and also for a healthy building? It is no surprise that air quality is a big concern, but we also know that things like natural daylight are very important, so what the pandemic is doing is pushing us in a direction we were already going, and creating the business case for these things that are fundamental.” 

Returning to the theme of the dangers of short-term thinking, Lendlease’s King pointed out that if developers in particular weren’t already thinking about the long-term when it came to sustainability, then they were at risk of creating buildings that would be obsolete before they even came out of the ground. 

“In some ways 2050 seems a long way off, but in some senses it is right now,” he said. “We are masterplanning schemes that will be completed in 20 or 30 years’ time, so if they are not being planned to be net carbon neutral right now, then they are already obsolete.” 

To overcome that cognitive bias toward being unable to comprehend long-term issues, Carruth advised taking goals like becoming net carbon zero by 2050 and breaking them down into small incremental chunks that seem more manageable than a large, distant target. Part of this could be seeing when an asset is scheduled to become vacant and factoring in a refurbishment at this point. But more generally, interim targets for decolonisation are crucial.  

For Francis, the coronavirus provides one big overall opportunity for real estate — the opportunity to reset its relationship with the public, a relationship that has the potential to turn sour if it doesn’t change, and quickly.

“The big thing we’re going to be building after the crisis is trust: People will need to trust and believe that going inside your building is safe,” he said. “Increasingly, sustainability and healthy buildings will be a way for companies to communicate their values to a customer that is increasingly more discerning. In other markets, green products are beating non-green products hands down, and that ethos will come to buildings as well.”