Land and buildings
Design Planning Contracting Construction Refurb End of life
The nature of land and buildings as investments, commodities and, ultimately, places of work and places in the community, requires that decision-making for their development includes assessment of a variety of factors including the following.
- Risk (e.g. up-front costs, such as environmental surveys)
- Growth (e.g. capital value appreciation over time)
- Contextual barriers (e.g. local planning constraints)
- Opportunities (e.g. existing tenant demand; providing for mixed use communities)
What may be most important at this stage is to consider factors further down-stream in the construction value chain. Early stage consultation across the construction sector network can bring to light sustainability related benefits of development options that may not be valued in traditional land and building analyses. For example, identifying opportunities to provide sustainable communities - mixed use developments that could provide residential, commercial, industrial and retail buildings on a site. Incorporation of considerations at the land and buildings stage that traditionally are raised further downstream in the construction process, such as design and operation, can provide opportunities to benefit from sustainability. Such benefits can include, for example, balancing technologies in terms of electricity, cooling and heating and providing energy efficiencies.
The Gazeley case study, ‘Eco-template and lifecycle analysis’ illustrates how understanding environmental impact of logistics warehouses can lead to improve the efficiency of the buildings by reducing carbon dioxide emissions and providing operational cost savings throughout the lifetime of the building, and in turn this could be reflected in a tenant being willing to pay a higher rent to an Investor.
Key considerations
- How can sustainability be taken into account at this stage?
- What variables should I consider to maximise sustainable construction benefits?
1. How can sustainability be taken into account at this stage?
Traditionally, key considerations for land and building issues can include market supply and demand variables. However, incorporating sustainability into site selection criteria provides a more robust analysis of site and scheme options, which can return greater benefits.
Adopting a strategic approach to sustainability at the land and building stage can support the business case by making it easier to choose sustainable options and demonstrate cost effectiveness throughout the lifecycle of the project. For example sustainability at this stage can enable the following.
- Steer the design towards sustainable specifications, for example, building siting.
- Lessen the risk of not securing planning permission if more extensive site and building planning consultation is completed before application submission.
- Save on material procurement costs by scoping opportunities to reuse site wastes.
- Save on energy by harnessing the technologies of electricity, cooling and heating of buildings on mixed use sites.
- Ensure buildings are future-proofed through providing flexible environments, thereby helping to attract longer-term tenants or prospective owners who will be able to re-use buildings as opposed to renewing them.
- Land and building future-proofing also includes climate change adaptation relevant to locations, for example, the provision of drains and other infrastructure needed to protect against future rain fall increases and flooding, or avoiding building on flood plains/removing vegetation that act as natural barriers against flooding. This may also help attract longer-term tenants, thereby securing rents, and will reduce climate change risks to the building and may support lower insurance costs.
The British Land case study, ‘Systems and Processes to Embed Sustainability’ and PricewaterhouseCoopers case study, ‘Embedding Sustainability in Development and Design Decision-making’ illustrate the advantages of these opportunities.
Investigation of these issues should be undertaken up-front, for example, with traditional site-investigation methods, desktop research, and checklists. A good example of a site selection checklist is provided on the Conway website, a private company which provides links across Corporate Facility Planners, Area Developers and Service Providers.
A list of example sustainability FAQs specific to the Land and building stage may help you identify what you should be considering at this stage.
2. What variables should I consider to maximise sustainable construction benefits?
Traditional variables that affect decision making around land and building selection, which can incorporate sustainability considerations (e.g. through including these considerations in whole life costing) include the follwoing.
- Land availability – abundance of land supply can depreciate a development’s market value; this is generally controlled through the planning system through land allocations.
- Site accessibility – transport links connecting people/and transport modes with the site; the more expensive it is for people to access a site the less likely they are to do so and this will drive down demand for that location.
- Rents – demand for buildings affect rental value; however, these are also impacted by other property costs, for example, if a building is expensive to maintain there may be less money available to pay higher rents.
- Yields – refers to demand for buildings – higher demand results in higher income derived from capital value.
- Capital values – value of a physical asset created through the rent and the yield.
- Construction estimates – costs of materials and services to build the scheme. This is an area where whole life costing should be considered. That is, it may cost more to construct a maintenance free building but when considering a cheaper building (capital) cost and adding to it the likely maintenance costs over, for example, a 25 year life cycle, which option would have the preferable NPV?
- Programmes – schedule of resources, for example, amount of time and resource it takes to deliver each stage of construction; time can also be calculated on a life cycle basis.
- Planning approval – planning authorities can restrict the amount of land or type of construction permitted to be developed, thereby controlling market demand and supply.
- Whole life value – managing capital and revenue spend together to better enable upfront spend on more sustainable options.
- Whole life costing - the total resources required for putting together, equipping, maintaining and operating a building, which include the following.
- Costs to develop
- Acquire
- Own
- Operate
- Re-let
- Refurbish
- Dispose of the property when it is no longer functional.
- Direct running costs (e.g. energy and water over the building’s lifecycle)
- Indirect costs (e.g. wasted energy from energy inefficient equipment or design)
- Administration costs (e.g. use of a more expensive product which is less harmful to the environment and people's health may reduce the time spent by staff in complying with the Control of Substances Hazardous to Health (COSHH) Regulations)
- 'Spend to save' costs (e.g. specifying higher levels of insulation where the extra expenditure can be recouped from lower energy costs/reduced indirect costs)
- Recyclability (e.g. purchasers can create markets for their own waste such as paper)
- Costs of disposal (e.g. premiums paid to dispose of hazardous waste; landfill taxes)
Developing sustainability objectives.
Positive attitudes towards sustainable buildings are changing and many owners, investors and occupiers increasingly demand sustainable buildings, and further to that, sustainable communities. To meet sustainability criteria, Government policies and regulations require a minimum environmental treatment, such as requirements for Environmental Impact Assessments (EIA) and Building Regulations (e.g. Part L), and increasingly organisations are setting their own sustainability objectives that strive to achieve above these established baselines.
In addition, sustainable construction as a process will require collaboration through value chain consultation and will require principles of sustainability, such as those identified throughout this website, to be embedded in organisations in the public and private sectors.
The following are a set of questions you should be asking yourself at this stage of the construction process.
- Which is the optimum site to use in sustainability terms?
Is a new site need at all or can an existing building be reused?
Which site minimises transport for employees, customers, suppliers or partners?
Is the land brownfield?
Which site will cause minimum impact to biodiversity?
Will certain sites have more community benefit than others?
Do certain sites have better renewable resources or grid connectivity?
Will certain sites be more vulnerable to future climate change impacts e.g. flooding? - How can waste be managed effectively in site clearance?
What opportunities are there to reuse any of the waste as part of the development or be put to any other local uses?
Can any of the waste from site clearance be recycled? - How should land valuers integrate sustainability into valuations?
- How might sustainability affect the value of the community and the risks to portfolios now and in the future?
How will 'future proofing' through sustainability affect the rates of obsolescence and depreciation?
Will the buildings’ sustainability characteristics impact on rental growth?
Will buyers/tenants have a preference for a more sustainable building, now and in the future e.g. increasing rental incomes or decreasing void periods?
What are the financial, economic and social returns of sustainable buildings?
How will sustainable construction be financed?