As businesses aim to achieve their carbon reduction targets, they must ensure their real estate portfolio–which in the Philippines may include buildings over 50 years of age–can achieve a certain level of sustainability
The demand for sustainability is quickly shaping up today’s-built environment.
JLL Philippines said simply focusing the carbon-reduction plan on new properties will be insufficient, as many corporate real estate portfolios include existing buildings, some built pre-2000s.
Hence, retrofitting existing properties will be crucial in meeting market demand for net-zero carbon spaces.
Retrofitting or rehabilitation is an approach to increase the life span of an existing structure rather than redeveloping it.
“There is a mismatch between what occupiers want and what existing buildings offer. Over 50 percent of buildings in major cities are over 20 years old and most have not been upgraded to meet post-COVID (new coronavirus disease 2019) requirements,” said Calum Swinnerton, JLL Philippines head of Project and Development Services.
In the Philippines, a sizeable percentage of the active property market constitutes the built environment.
“The older business districts such as CBD (central business district) Makati have a number of buildings between 40 to 50 years in age. These buildings tend to be between 6 and12 storeys in height, have underperforming elevators, poor natural light, inherent problems such as leaking decks and aged facades, and not fully compliant with latest National Building Codes,” Swinnerton said.
Swinnerton identified the key drivers for asset enhancement, which may serve as guidelines for clients who wish to improve the sustainability of their portfolio. These include green building and WELL certification, rental corrections, occupier demand for experience, aged assets and obsolescence, new supply and need to retain tenants, rebound of investment volumes, and a move up the risk curve.
“The option for building owners with aging assets is to demolish and redevelop, which could take an excess of five years and may not be the best move to achieve net-zero portfolio.
Alternatively, we advocate that they rehabilitate or enhance their assets and address speed to market and at a lower–up to 70 percent cheaper–capex cost,” Swinnerton added.
