Shanghai Office Buildings Set Energy Performance Standards
China's extraordinary economic growth has led to real estate development on an unprecedented scale. The way in which this development proceeds will have huge implications for China's environment, the health of the country's population, and the feasibility of sustained growth in the future. Designing and constructing more efficient green buildings and lowering resources consumption has huge implications for sustainable economic growth. As China's largest city, and its international and financial center, Shanghai will play a crucial role in the country's pursuit of improved and sustainable building practices.
The green office market in Shanghai today has received much publicity. A number of high-profile buildings have begun to advertise their sustainable designs and certifications. In order to examine the progression of this new market, and to understand how today's offices are being designed and operated, Jones Lang LaSalle assembled information on the design characteristics and resources consumption levels of 19 Grade A office buildings in downtown Shanghai which were willing to share detailed data with our Research team. These 19 buildings represent about one-third of the city's total Grade A office stock in the CBD, with a total of 1.25 million square meters of space. They include not only the most recognizable and technologically advanced, but also some of the most energy intensive and expensive-to-operate buildings in the city.
In order to quantify the performance of office buildings, we collected electricity consumption data for each building over a one-year period, which was then normalized based on gross floor area (GFA), the building's occupancy level and hours of operation per week. This allowed us to compare building performance based on like-for-like comparisons. Our normalization and data analysis was made possible using Jones Lang LaSalle's Energy and Sustainability Platform (ESP). The buildings in our analysis spent on average, approximately RMB 250 (US$40) per sq m per year on electricity bills. This means that for a typical 60,000 sq m office building, a 10-15% reduction in energy consumption needs would translate into savings of RMB 1.5-2.3 million (US$240,000-270,000) per year.
Our survey of 19 Grade A office buildings showed that those offices with strong sustainable management practices - including regular energy monitoring, environmental assessments, achieving a Green Building certification and setting targets for energy use - were able to significantly reduce overall energy consumption. Each building in our survey was assigned a sustainable management score based on their adoption of the aforementioned management practices. Buildings received a score of between 0 and 11. Buildings that scored between 7 and 11 in this survey used an average of 32% less electricity than those which scored between 0-6.
Chart 1: Average annual energy consumption of Grade A offices, Shanghai 2009/2010 – by sustainable management score
Energy Consumption* by Sustainable Management Score
*Note: Annual energy consumption of base building in kWh/sq m, normalised by operating hours and occupancy rate
In light of this data, the management practices of an office building translate directly into lower energy consumption over a building's lifetime. Since studies have shown that between 80-85% of a building's environmental impact occurs during the lifetime of the building, rather than during the construction or demolition phases, improving day-to-day operations is the most effective method for reducing a building's impact on the environment. To this end, we believe that operational certifications, such as LEED for Existing Buildings: Operations & Maintenance (EBOM), are the best method for ensuring that a building both performs as its design intends and can communicate this improved level of performance to potential tenants in the market. Operational performance has been incorporated in China's Three Star Green Building rating system and is a new factor in the LEED 2012 certification scheme, meaning that these organizations are beginning to realize the crucial importance of on-going management and monitoring for building performance.
Based on our preliminary analysis of the current marketplace and our knowledge of future office developments, we believe that Shanghai will transform dramatically over the next few years and a rental performance gap between green and non-green buildings will widen quickly. As this new market evolves, existing office buildings will need to improve their performance if they want to remain competitive with the new standards set by higher-performing green building projects. We believe that one of the most important ways for them to achieve this will be to enhance their management practices so as to affect lower energy use and optimize day-to-day building performance.
Chart 2: % Share of LEED Office completions vs non-LEED completions, 2012-2016 estimates, Shanghai CBD
*Note: LEED certified, pre-certified or registered projects.
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Head of Energy & Sustainability Services, Greater China