Government Leadership Helps to Drive Sustainability in Canada’s Real Estate

High-Performance, High-Profile Institutional Projects Raise Real Estate Expectations

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This past fall, the federal government released details on the second phase of infrastructure funding. Since the middle of the summer, hundreds of infrastructure projects across the country have received phase one funding from the federal government, which is aimed at boosting the economy, replacing aging infrastructure and investing in the innovation, research and technology sector.

Higher education investments alone account for more than 300 of the federally funded projects, with aims of stimulating innovation and research within the education realm. These projects will raise the bar for all green buildings in the country and have already changed the conversation on sustainability for many organizations.

These projects will raise the bar for all green buildings in the country…

A unique aspect of this round of infrastructure investment is that it also looked to address climate change and spark the conversation about moving to a low-carbon economy. The funding structure required applicants to detail how each project would address climate change, greenhouse gas emissions and other environmental issues. Some observers have voiced concern that the government did not set requirements high enough, and that merely asking for a list of strategies will not guarantee environmental performance. However, from the perspective of an advisor to a number of institutions submitting applications for funding, their approach to sustainability strategies is evolving to a new level.

Under the program, infrastructure funds were to be allocated based on how proposed projects met their stated sustainability objectives. As a result, higher education institutions became increasingly competitive to put forward the best expressions of their dedication to a sustainable future.  Organizations were having sustainability conversations of a whole different calibre.

Some observers have voiced concern that the government did not set requirements high enough…

LEED is a great system to ensure the development of a well-rounded, sustainable project, and should be recognized for its unique value in the marketplace. However, in this context, proposing LEED certifications of any level was no longer enough to distinguish a project from the pack and secure the needed funding.

Because federal funding only provided for half the cost of projects, institutions also needed to seek provincial and private funding to make up the remaining half. The effect of appealing to at least two different funding bodies led projects to pursue higher sustainability goals and targets than most would have considered in the past. Targeting energy performance under 100 kilowatt-hours per square metre, integrating large renewable energy components and even proposing to be Net Zero Energy were all a part of this new infrastructure investment discussion.

Momentum for Greater Achievement

Why does this matter to the real estate industry? And why should the private sector and public intuitions take note of this shift in the conversation around sustainability?

At the macro level, this means that more than 300 projects will be built in the next 18 months (funding requirements stipulated projects must reach substantial completion by spring of 2018) and add significant square footage to Canada’s real estate stock. It also means that 300 project teams are pursuing sustainability targets that were thought somewhat out of reach before. These developments are going to be from coast to coast, and will dominate real estate and sustainability news for the coming years. With the political nature of the funding tending to drive news coverage, there will be 300 ribbon cuttings with 300 accompanying photo opportunities. Developers, owners and investors with projects to be announced or completed in this time frame should take note of what the competition is doing if they are trying to showcase their organization’s commitment to sustainability.

The sustainability make-up of the Canadian building stock can be described as a bell curve with a small handful of leaders at the front, the bulk of projects making up the average, and the tail end being pushed by regulations. In essence, this round of sustainability-focused infrastructure funding is a force to shift the entire curve forward. Leaders in the real estate industry will push further and pursue grander environmental milestones to maintain their leadership status. This will propel the larger pack, as organizations do not want to be perceived as falling behind in the industry.

The sustainability make-up of the Canadian building stock can be described as a small handful of leaders at the front, the bulk of projects making up the average, and the tail end being pushed by regulations.

This has already been demonstrated in the first wave of 21st century office towers in downtown Toronto. These high-rises were not the first LEED projects in the city and perhaps not even the most sustainable. They did, however, raise the bar for commercial office developments – ensuring any credible office building proposal in the city would have to target LEED certification. The subsequent wave of office towers added to the Toronto skyline has shown exactly this, with some projects even pursuing LEED Platinum certifications.

Carbon-Savvy Professionals

Though it can be argued that private commercial office towers are targeting a different market than higher education institutions of the public sector, it would be unwise to overlook the parallels. Major tenants and organizations establish their sustainability programs based on the norm of their geographical locales. For example, the European division of a company usually answers to higher sustainability requirements than its North American counterpart.

Ontario’s Climate Change Strategy, should further push integration of sustainability and climate change action into higher education curricula, producing carbon-savvy professionals.

With the addition of these higher education projects across the country, the sustainability norm will undoubtedly be raised in Canada. A-class tenant organizations are investing significant resources to attract the best and brightest talent from Canada’s higher education institutions, and the next wave of new graduates and young professionals will be acclimatized to learning and working in high-performance spaces. They will demand the same of their workplaces.

Various provincial initiatives, such as Ontario’s Climate Change Strategy, should further push integration of sustainability and climate change action into higher education curricula, producing carbon-savvy professionals. This injection of funding in green public infrastructure adds momentum to the sustainability conversation in other sectors. Real estate organizations looking to maintain their standing should take note of this rising sustainability norm.

This article was originally published in Canadian Property Management‘s November 2016 issue and was republished with the authors permission
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Jon W. Douglas
, M.B.A, LEED AP is the Director of Sustainability for Menkes Property Management. He has been recognized as one of the Top 30 Young Sustainability Leaders in Canada. You can follow Jon on twitter @JonWDouglas.