Green retrofits - a consideration for today's industrial tenant?

The answer, according to Stefano Contardo, development executive of industrial property specialist Improvon, is "yes", but only if there is complete buy-in to the green agenda from management and staff given the investment in time and money involved.

"The decision to retrofit a building with green technologies has to be taken in the context of current market conditions as well as in light of the tenant's overall green philosophy," he explained.

"The current market can be described as a tenant's market, due to there being many vacant developments. Owners need to manage their pricing carefully to ensure potential tenants - and tenants whose leases expire - don't look elsewhere. Thus, implementing sustainable technologies is generally done in conjunction with existing tenants or once a lease has been concluded.

"Price sensitivity is understandably discouraging retrofits, because of the costs involved and the fact that recouping those costs translates into higher rental prices.

"However, if you retrofits your facility, the occupant would do well to remember that the savings on operational costs achieved via the improvement very often exceed the increase in rental.

No negative impact on cash flow or bottom line

"This means that, by opting into a proposed retrofit programme, tenants could "go green" and reduce their carbon footprints without negatively impacting on their cash flows or bottom lines.

"And, if these tenants also adopt an organisation-wide sustainability programme that seeks to change human behaviour with respect to energy consumption and water usage, for example, which we suggest that they do, the realised benefits to the environment will be even greater," Contardo explained.

"Sustainability. Renewables. Green technologies. These are not words or practices that will go away; instead interest in them will grow and, when that demand grows, then we'll jump at the opportunity to assist tenants retrofit the buildings they occupy," he said.

He added that Improvon, while acknowledging current market forces and accepting that it is important to get a good yield now, takes a long-term view. For the company, this means a greener product when it comes to its new developments, because a green product is the product of the future.

"Improvon is one of the green building champions of the industry with the majority of its newer developments utilising green technologies to a greater or lesser degree," he said.

"With little tenant demand, we have not retrofitted any developments in our existing portfolio with greener technologies, but - because of our own belief in the future of green - we have deployed these to reduce the carbon footprint at our head office in Longmeadow Business Estate.

Practical changes

"We've started with the most practical changes that can be made to an existing building to make it greener. The first step included monitoring our water and power usage. The second step was then to identify easy fixes, such as fitting motion sensors to lighting in infrequently trafficked areas, followed by installing energy-efficient lighting and photovoltaic panels.

"Furthermore, given water's increasing scarcity as a resource, moisture sensors as opposed to rain gauges are used to limit unnecessary irrigation.

"Companies can save up to 30% on their lighting bills by simply changing to energy-efficient lights and claiming the respective rebates from Eskom.

"While photovoltaic systems save you money almost immediately as they reduce your energy consumption from the grid, it can take up to three-and-a-half years to recoup the capital outlay. Due to the relatively low cost of potable water, retrofitting greener water technologies can take as long as six to eight years, but if the cost of water increase as expected, this could come down significantly.

"And added to the actual cost of purchasing and installing the green technology are the abortive costs, those incurred because you'll be removing a perfectly functional piece of equipment that you've paid for and replacing it with another piece of similar, but greener, equipment. That's why, until asked, Improvon would rather invest in greening new developments."

The final point made by Contardo with respect to extremely price-sensitive tenants who are nevertheless considering going green is another important one.

"Irrespective of the facility's green status, management and staff can reduce their carbon footprints by adopting green behaviours.

"These behaviours include practices we've adopted at our head office, like powering down computers instead of leaving them on standby, requesting people report dripping taps, switching off the lights when the boardroom is not in use, and so on.

"These measures will assist in mitigating their environmental impact while taking their very real concerns about cost factors into account, and give them the confidence going forward to explore physical changes to the building," he said.