Cochem, Germany

Going into 2018, sustainability has remained a trend in European real estate. Already, building sustainable real estate is widespread. In just the United Kingdom, older buildings account for 18 percent of carbon emissions. Like many other European cities, there isn't a lot of space for new buildings – at least not in the large cities – unless older buildings are torn down. By 2050, about six of 10 commercial buildings will be over 40 years old. As those buildings go up for sale, investors may buy them and revamp them into sustainable real estate, whether office space or apartments.

Sustainable Real Estate

In a nutshell, sustainable real estate is “green” real estate. Whether a developer builds a brand new building or renovates a building, he or she should be considering carbon-friendly building practices, including fire-treated wood, adding solar and other green practices. While building or renovating to the standards of the Global Real Estate Sustainability Benchmark is pricier than building without these standards, this type of building is what is on the rise. In fact, most tenants are willing to pay a little more for a sustainable building since they will save on utility bill.

If a building is properly planned and the developer utilizes several green features, it saves the developers and the future tenant’s money. For example, adding triple pane windows could add thousands to the cost of constructing the building. But, with those, you won't have to have a heat register under every window. The cost of that ductwork may cancel out the cost of the triple pane windows. Additionally, the heater does not have to be as large and won't work as hard, thus saving more money, not only for the developer but for the tenant.

Additionally, sustainable real estate gives the developer or investor a cultural, marketing and staffing advantage. Banks and investors are also more willing to invest in sustainable real estate, even though the initial costs to build are higher. Sustainable real estate has "green" features built in. In some cases, a building could be 100 percent sustainable by using solar power and then selling any extra power back to the electric company. The more energy-saving the home or retail/office establishment is, the more sustainable it is.

LEED Certification

LEED is a system that rates buildings on their sustainability – that is, how green they are. The certification is for homes, commercial buildings and community buildings. The agency provides a framework so that builders are able to create more efficient sustainable homes or retail/commercial buildings based on certain criteria, including whether a building uses fire-treated wood, is run completely on solar or contains alternative methods for heating.

According to the U.S. Green Building Council (USGBC), over 150 countries and territories over every continent, with the exception of Antarctica, uses the LEED system for sustainable real estate.

Wood is In

Part of having sustainable real estate is making sure the buildings last longer and cost less to maintain. While it costs the developer more to build a sustainable office building, the developer realizes an increase in its bottom line with lower energy bills and with having to perform less maintenance on a sustainable building. Wood that has been treated with fire is resistant to bugs and fire, and it lasts much longer than wood that hasn't been treated by fire. This saves the developer – if it doesn't sell the project – who might be developing a building for itself a large saving in utility bills and maintenance. While it is not common for developers to keep their projects, it is not unheard of.

Profitability

While retrofitting current buildings to be sustainable and building new sustainable real estate developments does cost more, the developer ends creating more profit in the long run. If utilities are included with the rent in office buildings, the developer will see a higher profit because of the reduced energy and water consumption in a sustainable building. Tesla Powerwalls, which is a newer technology, stores electricity. The stored electricity may be so that it may be used as backup power, for solar self-consumption or off-the-grid.

Leading Cities for Sustainable Real Estate in Europe

According to Emerging Trends Europe, Germany has four of the top six most sustainable cities or development in Europe. Berlin is at the top of the list. Frankfurt and Copenhagen, Denmark are tied in second place for sustainable developments. The United Kingdom and France are up and coming contenders. However, if a city is already crowded with buildings, developers are looking at older buildings that might be refurbished to become more sustainable.

Sustainable developments are more durable, which means they last longer than non-sustainable buildings. Because of the durability, the buildings also need less maintenance, which is another way that developers save money over time. One example of this is fire-treated wood used by Powerhouse Kjorbo in Oslo, Norway. The wood is insect- and fire-resistant and is very durable because of its low reactivity. The wood is expected to last for 80 years, thus saving developers maintenance and replacement costs that they would have to do for regular wood.

Sustainability Legislation

European countries are enacting real estate and construction sustainability laws. New developments must meet the sustainability requirements. Sustainable developments are more expensive to build, but developers and investors who build sustainable developments will find that they are less expensive to run and maintain.

The legislation, which is part of Europe's way to combat global warming, wants to increase the production and the use of renewable energy by 2020. Starting in 2023, Dutch office buildings must have a C-rating. If a building has a D-rating or below, the building will not be able to be used as an office building. Because so many buildings in Europe are older, the area is a great place for investors and developers who want to purchase and retrofit developments, office buildings and other real estate.

According to the European Commission, several rules and regulations have been or are being implemented. These rules and regulations include using resources more efficiently, enabling sustainable growth, how to use raw materials so that we don't deplete them from the earth, promoting more sustainable products and helping consumers make “greener” choices.

Related Articles:

Sustainable Real Estate Trends in the Middle East Region
Sustainable Real Estate Trends in United States

Join Realopedia Today