7 opportunities to reduce the carbon footprint of your real estate asset
“…the “developer” in the real estate process is really many different people playing many different roles in the process of creating value throughout the lifetime(s) of the property.” — Daniel B. Kohlhepp
Introduction
The sustainability of real estate assets depends on diverse factors. These can include a sound business model that addresses market demands. Also, how it’s assets contribute to the development of healthy, inclusive, and beloved communities. And, how the industry manages to respond to climate risks by minimizing its environmental impacts.
Among these factors, talking about carbon emissions is the easiest way to discuss our environmental sustainability. After all, the link between carbon emissions and climate change is well known. In addition, the fact that the built environment is responsible for close to 40% of the annual carbon emissions makes this an opportunity to act and deliver significant impact. To this end, I look for these opportunities in the 7 stages of the real estate development process.
Impacts across the real estate development stages
Seven opportunities to address your carbon footprint
The model of the real estate development process was first proposed by Graaskamp and expanded by Kohlhepp (2018). It shows a sequence of stages where the developer increases the value of the property by achieving certain tasks. During this process, there are several stakeholders that contribute with different perspectives and expertise (Table 1).
To look at the opportunities of reducing your project’s carbon emissions, let’s take a look at each stage as follows:
1. Land Banking
This is the process in which undeveloped land is acquired. These assets are considered “green fields”. They are passive investments. “Land bankers” usually await changes in market conditions to make profits in the sales of these assets.
Sometimes it is forgotten that land provides an environmental service. This can include the absorption of atmospheric carbon in its natural metabolic cycle. This carbon gets assimilated into vegetation growth and for that reason, forested areas can be consider carbon sinks. Nevertheless, there are other systems like wetlands that serve a similar purpose. As such, these environmental services can be considered benefits that are lost when land is transformed for other uses. This can lead to consider low impact development strategies to minimize the loss of these services.
2. Land Packaging
During this stage, the value of undeveloped land is increased through “conceptual land planning, zoning changes, financing schemes, or other “paper enhancements” like title insurance, accurate surveys, or environmental studies” (Kohlhepp 2018).
In addition, the planning process will determine the density of the urban development and its supporting infrastructure. Low density will include most likely include smaller units but require more horizontal infrastructure (e.g. streets and services) to connect with the rest of the city. This could be a good stage to start developing a conceptual carbon budget for the development based on estimated infrastructure needs and building units. Carbon emissions per unit area by archetypical building type can help guide this process. In addition, consider this development within the city or urban transport network. The availability of public transport can reduce the reliance on individual vehicles and their carbon footprint.
3. Land Development
At this stage, the land developer begins to intervene the land by building the horizontal infrastructure that will tie together the whole development. Land plots can be sold separately to building developers or be developed by the same land developer (who assumes that role too).
The construction process leads to material selection and its procurement processes. There is ample discussion on how life cycle assessment (LCA) as a methodology can help you at this stage to estimate the carbon footprint (and other impacts) of this development. Normally this refers to the embodied carbon of the material. It represents the accumulated emissions used to fabricate the material, install it and eventually disposed of it. LCA software and material databases are good sources to help you make these calculations and understand where you can make trade-offs based on performance and impact.
4. Building Development
Similarly to the previous stage, the developer focuses on building the property within the developed parcels. From a carbon emissions perspective, this focuses on construction methods and materials. Many decisions on the selection of these materials will have impacts on the life cycle of the building and its operations.
To illustrate this, Figure 2 helps us visualize a building made out of many layers based on their function and lifecycle. It’s site and structure are made of more resistant materials that will probably last well over 50 years. Other elements like it’s services (e.g. plumbing) will have a life span of 15–20 years. This means that when considering an asset, you need to look at the impact of renovation work both as an added cost (to restore or improve value) but also as additional carbon emissions. As you can see, this can have several implications on the ownership and return on investment of the asset. Of course, this is tied into the actual “building operations”. Yet, I bring this up here, as the way we build has implications further into the life of the asset.
5. Building Operation
At this stage, the “operator” leases up the property and manages its maintenance. During this time, renovations and retrofits can add embodied carbon to the building’s footprint. Yet, the largest source of carbon comes from the consumption of electricity or other fuels to satisfy building requirements (e.g. climatization, lightning, etc.). As a consequence, it is important to consider the energy source used to generate the electricity. This determines the emission factor per unit of energy (i.e. kg of CO2e per kWh).
The emission factor of an energy mix represents how much carbon emissions where released during the generation of electricity. This can determine how large is the impact of operational carbon in the lifecycle of the building. Table 2 shows when would the accumulated operational carbon equal the embodied carbon of the building in selected countries. Moreover, it hints at the importance of considering building performance when determining the embodied carbon footprint of the building envelope. For example, an insulated wall system could have a high embodied carbon but serve to reduce the operational energy demand of the building; this can lead to net reductions in the lifetime of the building.
6. Building Renovation
In time, a property depreciates due to its use, its wear and tear. It can also suffer from loss of value due to changes in market demands. This can lead to renovations to adapt to new uses or to upgrade its conditions. The re-developer acquires these properties looking at increasing its value through retrofitting. This will incur in an additional carbon footprint. But, it can also help improve performance and reduce operational costs and emissions.
7. Property Redevelopment
Finally, the real estate development process comes full circle. It reached the end of it’s useful life. It needs significant renovation or demolition. The asset becomes a “brown field” and it is usually part of an urban infill development. Depends on its previous use, serious environmental pollution could limit its redevelopment options without costly cleaning and amelioration (e.g. gas stations or some industrial facilities). From a carbon perspective, this can become a material mine to recycle and reuse. The carbon footprint of the reuse material might be much lower than if bought “new”. Recycling also keeps the materials inside the economy.
In conclusion
I focused on the role of carbon at each stage of the real estate development. It is evident how decisions in what stage will have an impact further down the life of the property. It is not surprising that along a real estate’s asset lifecycle, the two main stakeholders are the investors/owners and local government. Both deal with the economic success and failure of real estate assets. Both need to respond to the needs of customers and/or communities. And, while carbon emissions depend on the physical form and performance of the assets, the existence of said assets relies on understanding their users. These will demand changes in form and/or use of those assets. As a consequence, the best way to address the carbon footprint of the built environment lies in taking a life cycle perspective. In that way, impacts and trade-offs between options can best be evaluated based on the needs of all stakeholders involved.
References
AIB. 2020. 2019 European Residual Mix Factors. Accessed: 29 May 2020 https://www.aib-net.org/facts/european-residual-mix
Brand, Stewart. 1994. How Buildings Learn. Penguin.
European Commission. Energy use in buildings. Accessed: 28 Nov 2020 https://ec.europa.eu/energy/eu-buildings-factsheets-topics-tree/energy-use-buildings_en
Kohlhepp, Daniel. 2018. Real Estate Development Process.
This article was updated after initial publication in the website of CHAOS Architects. Accessed 14 Oct 2020: https://chaosarchitects.com/7-opportunities-to-reduce-the-carbon-footprint-of-your-real-estate-asset/
