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EnergyAustralia’s biggest office landlords are switching off lights and installing more efficient air conditioners ahead of rules demanding reporting of energy use in the nation with the developed world’s second-highest greenhouse gas emissions per person.

The largest property managers are ahead of legislation which comes into effect Nov. 1 requiring owners to reveal office buildings’ energy efficiency to tenants and buyers, according to Simon Wild, Sydney-based principal at sustainable design consultants Cundall. Cundall worked with the U.K. Green Building Council on a study of the nation’s sustainability rating tool, the results of which were released in August.

“The industry, particularly the tier one landlords, have been disclosing for a long time,” Wild said. “Australian companies are very much market-driven about how they can attract the big players in town to reside within their buildings.”

GPT Group, Australia’s second-biggest diversified property trust by market value, cut its buildings’ greenhouse gas emissions by 28 percent between 2005 and 2009 by installing more efficient air conditioners and recycling more waste. Morgan Stanley-backed Investa Property Group’s 21-story Ark building in North Sydney can generate electricity, recycle rainwater and recharge electric cars.

Australia boasts some of the most environmentally friendly real-estate groups in the world, a survey of global companies by Netherlands-based Maastricht University found this year. Sydney- based GPT heads the Dow Jones Sustainability Index’s 21-company real-estate leader list, a third of whose members are Australian, more than any other country.

Energy Efficiency

Australia had the second-highest carbon dioxide emissions per capita among developed nations, according to 2008 figures from the International Energy Agency, the latest data available from the group. Only Luxembourg’s emissions were higher.

The legislation requires owners of office buildings leasing or selling more than 2,000 square meters (21,528 square feet) to reveal their day-to-day energy efficiency on the five-star National Australian Built Environment Rating System. Companies pay A$770 ($752) for a rating to New South Wales state’s Department of Environment, Climate Change and Water, which administers the program nationally, and about A$3,000 for an assessor to review documents including the previous year’s bills, said Yma ten Hoedt, the department’s principal program manager.

The rules will affect 10 percent of office buildings nationally every year, DECCW estimates. Companies must also disclose tenanted areas’ lighting systems’ performance and provide a statement on buildings’ efficiency from Nov. 1, 2011.

Smaller owners, who may not have ratings or necessary documents, will be most affected, said Rebecca Pearce, Sydney- based head of sustainability at CB Richard Ellis Group Inc., the world’s largest commercial property broker.

Tenants

Government agencies, which occupy about a third of offices nationally, will require buildings they lease or own to have a minimum 4.5 star energy rating by next year. The national average is 2.5 stars, with the biggest landlords targeting 4.5 over the next two to four years.

“To have a building vacant because it’s not efficient or rated so tenants don’t want to go into it, we don’t even want to go there,” said Rowan Griffin, head of sustainability at Colonial First State, the asset management arm of Commonwealth Bank of Australia. Colonial manages 34 office properties, valued at about A$4 billion.

Almost 300 tenants occupying about 1.5 million square meters, have committed to the CitySwitch Green Office program, including accounting firm PricewaterhouseCoopers LLP, property broker DTZ, and Commonwealth Bank of Australia, the country’s biggest bank, pledging to achieve at least a four-star tenancy rating.

Improving Performance

PricewaterhouseCoopers has spent A$800,000 replacing light switches in its Sydney office with sensors, according to the CitySwitch website. DTZ is saving A$3,500 a year on the energy bill at its Sydney headquarters by introducing steps such as installing shared printers and setting computing equipment to turn off automatically, the website said.

A one-star efficiency gain means A$2 to A$4 in annual savings per square meter, a Citi Investment Research study in January found. For a 10,000-square-meter office building, that equates to savings of as much as A$40,000 a year.

A University of California, Berkeley, study found buildings rated under a U.S. plan similar to the system used in the incoming Australian rules commanded rents of about 3.5 percent more than comparable properties, and sale prices rose as much as 16 percent. A similar Australian study is expected to be completed in the second quarter of 2011.

Building Management

Companies reach up to four stars by better timing lights and equipment use, installing more efficient systems during upgrades, and better training staff, said Craig Roussac, general manager for sustainability, safety and environment at Investa. The company improved one of its building’s performance by 1.5 stars more than expected by adjusting the way it was run by its manager, he said.

“You can have an efficient car, but you can be driving it with the handbrake on and completely stuff things up,” Roussac said. “Conversely, you can have someone who’s passionate and skilled, and see an increase in returns.”

To contact the reporter on this story: Nichola Saminather in Sydney at nsaminather1@bloomberg.net.

To contact the editor responsible for this story: Andreea Papuc at apapuc1@bloomberg.net.

Tags: energy, landlords, marketing, property, real estate, rentals

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