4 minute read
Editor’s note
from CPM November 2022
by MediaEdge
VOL. 37 NO. 5 NOVEMBER/DECEMBER 2022
Editor-in-Chief Barbara Carss barbc@mediaedge.ca
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editor’snote
HIGH-PERFORMANCE BUILDINGS have become somewhat ho-hum in the 2020s. There continues to be advances in structural components, building systems and clean and smart technologies, but there is no great philosophical reset involved in adopting them. It’s just steady progress on a course of action that has already been widely accepted.
Today, the rethinking is occurring around valuation and lowercalibre assets as a spate of interrelated drivers prompts commercial real estate professionals to consider greenhouse gas (GHG) emissions and climate risk. Regulators, tenants, investors and insurers are all exerting varying degrees of pressure to bolster buildings’ resilience and shrink their carbon footprints. Then there is the certain knowledge that the carbon price will be $65 per tonne in about four months’ time and $80 per tonne 12 months after that.
The capital markets are tapped to play a leading role in the envisioned transition to a lowcarbon economy, and, in the commercial real estate sector, that’s beginning to take form in changing views on risk, value and financing. Key analysts are now grappling with the waning of some conventional perceptions and the rise of new attributes of value.
JLL Canada summarizes many of those challenges in a new discussion paper examining capital markets’ influence in the pursuit of net-zero targets. “The appraisal and financing processes can provide a strong behavioral lever if practitioners learn to integrate the real impact of the zero-carbon and ESG components, and investors are prepared to accept conclusions that may be ahead of market trends,” it observes. We include an excerpt in this issue.
On the management and operations front, a building-by-building assessment is deemed fundamental to pegging a portfolio’s baseline GHG emissions. From there, owners/ managers can identify where best to begin finding reductions and can measure progress against that starting point. Industry insiders emphasize that the hardest work will lie in the buildings that generally seldom receive fanfare.
“It is not sufficient simply to recognize and celebrate the best assets in a portfolio, however fun that might be,” Chris Pyke, Senior Vice President with the U.S. Green Building Council, cautioned, in conjunction with the recent online release of the 2022 GRESB results. “Start at creating transparency for every asset in the portfolio.”
This issue highlights some tools and approaches for the task ahead, including the Canada Green Building Council’s efforts to create a building performance database and artificial intelligence options to potentially simplify and speed up building-level assessments. We also look at the newly promised federal tax credits that could help cushion the cost of required investments.
“Every building has one, maybe two cost-effective opportunities to transition to a cleaner future state between now and 2050, and the best way to do it is to have a transition plan at each asset,” Philippe Bernier, Executive Vice President, Strategy & Growth, with JLL Canada, asserted during the GRESB results presentation. “Don’t miss your shot.”
Barbara Carss barbc@mediaedge.ca
contents
Focus: Green Buildings, Sustainable Management & Operations
6 Clean Technology Tax Credits: A range of energy and low-carbon heating equipment designated for refundable tax credits, beginning in 2023. 8 Disclosure Challenge: Prominent real estate companies join effort to make building data transparent and accessible. 14 2030 and 2050 Targets: Asset-level plans map the net-zero pathway. 16 Energized Career Path: More than half of global energy sector jobs align with emissions reduction.
20 Valuing Net-Zero Assets: Capital markets ponder clean building premiums. 25 Flood Protection: Insurers respond to climatedriven risks.
26 Heat as a Service: ESCOs tapped to shoulder capital costs of decarbonization. 30 Low-Carbon Infrastructure: Canada and the U.S. invest with aim of teasing out private capital. 34 ESG Software: Reporting functionality in demand.
Articles:
38 Property Tax Mitigation: Interventions have record of creating complications and exacerbating inequities. 42 Interest Rate Repercussions: Investors await real estate pricing adjustments. 44 Office-to-rental-housing: Floorplates factor in conversion feasibility.
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