Private Equity Real Estate Expert Opinion: Avoiding obsolescence comes from planning
In the latest edition of Private Equity Real Estate (PERE), Maslow’s Director of Portfolio Management & ESG Ben Colling explains why real estate developers need to think ahead to ensure assets do not become obsolete and how the industry needs to aim for the highest possible energy efficiency standards to meet future building standards.
A short summary of Ben’s full opinion piece is located below:
- Developers must adopt a holistic mindset and embed systemic changes at the inception of a development to avoid “stranded” assets in the future.
- Stakeholders within the built environment need a radical mindset change to think about the efficiency and whole-life carbon trajectory of materials.
- This change is already taking hold in the refinance, operational, and build-to-rent markets where construction inadequacies have not met investor expectations.
- Identifying performance gaps during construction and operation is essential to the industry’s survival.
- Engaging with the design team early on is crucial to establishing a framework for whole-lifecycle carbon assessment and reporting.
- Digitalization should be embraced to utilize technologies like energy management systems and digital twins.
- The industry should aim for the highest possible energy efficiency standards to avoid deep retrofit requirements.
- A growing divide between green premiums and brown discounts is forming.
- Contractors and developers can manage this risk by adopting whole-lifecycle analysis/circularity principles and understanding the relationship between operational and embodied carbon.
- Attaining environmental product disclosure for low-carbon products at early design stage can inform decision-making on materials and quantities.