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Choosing and Managing
an Energy Efficient Space:
A Best Practice Guide for SME
Commercial Office Tenants
41
2
3
5
6
As an overview, here are the top ten
quick wins:
Download the RICS ‘Leasa’ App
from www.rics.org/Leasa
You can use the Royal Institution of
Chartered Surveyors (RICS) Leasa
App to identify and compare the
energy efficiency of buildings and
individual tenancy spaces you might
wish to lease. (See Chapter 2.)
Act in good time
This is typically a tenant’s biggest
mistake. Depending on the size of
your tenancy, it can take eight months
to two years to review your current
and future space requirements.
Careful planning and the right advice
are essential. Your tenant advisor will
be able to suggest the optimum time
frame. (See Chapter 2.)
Use a RICS-qualified tenant adviser
The leasing process is complex,
costly and needs expert market and
transaction knowledge. Premises
are often the second or third highest
business cost. RICS chartered
property professionals are trained
to meet demanding global property
standards and to abide by rules of
professionalism and conduct. For
details of a RICS-qualified tenant
adviser contact info@rics.org.au. This
should be done at the outset of the
process to achieve the best result.
This guide is for small to medium-sized enterprise
(SME) commercial office tenants. It offers advice
on choosing office space for lease and shows how
you can benefit by choosing a space that is energy
efficient. The guide also explains how you can manage
your tenancy in an energy efficient way.
Ten Quick Wins
Undertake due diligence
You’ll need to undertake a detailed
investigation of the premises you
have shortlisted – how they are
designed and managed and meet
your specific needs. (See Chapter 2.)
Choose a tenancy in a building that
is energy efficient
You should aim to be in a building
with a National Australian Built
Environment Rating System
(NABERS) Energy for Offices base
building rating of 4.5 or above. The
RICS Leasa App will show you the
ratings for buildings that have been
assessed as part of the Building
Energy Efficiency Certificate (BEEC)
process. For broader standards,
see the Property Council of
Australia (PCA) publication A Guide
to Office Building Quality which
sets benchmarks for the quality of
buildings. (See Chapter 3.)
Choose a tenancy which has
energy efficient lighting
You should aim for a tenancy which
has lighting with a Nominal Lighting
Power Density (NLPD) below 7 W/m2
.
The RICS Leasa App will show you
the lighting ratings for tenancies that
have been assessed as part of the
BEEC process. (See Chapter 5.)
TEN QUICK WINS2
9
10
8
7
Set sustainable standards for your
tenancy fit-out and tread lightly
Use the Green Building Council
of Australia (GBCA) Green Star –
Interiors rating tool and consider
achieving a rating for your tenancy.
(See Chapter 3.)
Consider the advantages of a
‘green lease’
Green leases provide obligations on
both the owner and tenant in relation
to environmental and energy efficient
building performance and improve
the environmental performance and
energy efficiency of the tenancy.
(See Chapter 5.)
Record and monitor your energy
consumption
You can’t manage if you don’t
measure! Use the RICS Leasa App to
analyse your energy consumption and
put in place an energy plan and audit
to improve your energy efficiency.
(See Chapter 4.)
Manage the energy consumption in
your tenancy
Buy the right equipment. Turn
equipment off and manage the
standby time of appliances. Set up
any supplementary air conditioning
properly. Promote, report on and
encourage energy efficiency. Use the
RICS Leasa App to record the energy
consumption of equipment in your
office. (See Chapter 5.)
Acknowledgement
This activity received funding from the
Australian Government Department of
Resources, Energy and Tourism as part of the
Energy Efficiency Information Grants Program.
Disclaimers
The views expressed herein are not
necessarily the views of the Commonwealth
of Australia, and the Commonwealth does
not accept responsibility for any information
or advice contained herein.
This document is a guide only. It is not
intended to be an instruction manual, nor a
detailed step by step process which must be
followed, but rather a guide to the principles
of choosing and managing space for lease.
This guide does not provide legal advice and
is general in nature. You are advised to take
property and legal advice from a properly
qualified advisor.
Copyright
Published by RICS Oceania (First
Edition 2013) RICS Oceania, level 16, 1
Castlereagh Street, Sydney, NSW, 2000.
No responsibility for loss occasioned to
any person acting or refraining from action
as a result of the material included in this
publication can be accepted by the author
or publisher.
© Copyright RICS June 2013. Copyright
in all or part of this publication rests with
RICS, and save by prior consent of RICS,
no part or parts shall be reproduced
by any means electronic, mechanical,
photocopying, recording or otherwise, now
known or to be devised.
RICS gratefully acknowledge the work of
the RICS Oceania working party in the
drafting of this Guide
John Goddard FRICS. J Goddard & Co
Jenny Goddard, J Goddard & Co
Steve Hennessy FCIBSE, WT Sustainability
Nick Hudson, RICS Oceania
and the following RICS Chartered property
professionals for their peer review;
Mike Franklin MRICS,
Franklin Property Consulting
James Shanks MRICS, Chapman Shanks
Giles Knapman MRICS,
Jones Lang Lasalle
Mark Daniel MRICS, Property Beyond
Paul Murgatroyd MRICS, CBRE Global
Corporate Services
Sara Wilkinson FRICS, University of
Technology Sydney
Bruce Thomas - Carbon Training
International
This Guide has been printed on
re-cycled paper
3TEN QUICK WINS
Ten Quick Wins	 02
Abbreviations Used in this Guide	 05
About this Guide	 06
Professional Advice	 07
Free Mobile Apps and Web Tools	 07
Part 1 – Choosing an Energy Efficient Tenancy	 08
Chapter 1: Why Energy Efficiency is important for SMEs	09
Five Reasons to Act Now	 09
Why does Energy Efficiency Matter? The Big Picture	 11
Chapter 2: Reviewing your leasing options	 14
Seek professional advice	 14
Allow plenty of time	 14
Do you stay or do you go?	 15
Moving to New Premises	 16
Steps Involved in Choosing New Premises	 16
Preparing your tenancy brief	 16
Inspecting premises – what to look for	 16
Tenant Due Diligence	 18
Evaluating and Comparing the Various Premises	 18
Chapter 3: Comparing Spaces to Lease –
Criteria to Consider	 20
Total Occupancy Costs	 20
Location	23
How Much Space do You Need?	 23
Energy Efficiency	 23
Commercial Building Disclosure	 25
Hidden Costs of Poor Performance	 26
Grade (quality) of the Building	 27
End-of-trip Facilities	 28
Tenancy Ratings	 28
Contents
4
Abbreviations Used in this Guide
BEEC	 Building Energy Efficiency Certificate
EUA	 Environmental Upgrade Agreement
CBD	 Commercial Building Disclosure
GBCA	 Green Building Council of Australia
IEQ	 Indoor Environment Quality
NABERS	 National Australian Built Environment Rating System
NLA	 Net Lettable Area
NLPD	 Nominal Lighting Power Density
PCA	 Property Council of Australia
RICS	 Royal Institution of Chartered Surveyors
SME	 Small to Medium-Sized Enterprise
Part 2 – Understanding and Managing
your Tenancy Energy	 29
Chapter 4: Understanding your Tenancy Energy Use	 30
Buying Power and Saving Money	 30
GreenPower	30
Cogeneration and Trigeneration	 30
Negotiating with energy retailers	 31
Using the RICS Leasa App to Compare Energy Efficiency	 31
How to Read Your Energy Bill	 32
Using the RICS Leasa App to Track and Review your Energy Use	 34
Chapter 5: Managing your Tenancy Energy Use	 35
Control versus influence	 35
Typical Tenancy Energy Breakdown	 36
Energy Audits	 37
Energy Savings Action Plans	 37
Benchmarking Energy Efficiency using NABERS	 38
Choosing Energy Efficient Equipment	 38
Lighting	40
Supplementary Air Conditioning	 42
Green Leases	 44
Case Study – Optimising Office Energy Consumption	 46
More information	 48
Chapter 6: Looking at the Bigger Picture –
Managing your Tenancy Carbon Emissions	49
A Brief Introduction to Carbon Emissions	 50
Further Information	 57
Appendices - Checklists	 57
Appendix A - What to look for in a tenancy	 58
Appendix B - Inspecting the premises 	 60
Appendix C - Possible deal breakers 	 63
5
For most SMEs the process of
finding suitable space to lease, or
deciding whether to stay in an existing
premises, can seem extremely
complex. There are many costs,
benefits, obligations, processes and
choices to consider.
A key aim of this guide is to show
how you can address energy
efficiency as part of the tenancy
leasing process. This can be
achieved through selecting the right
building and the right space for lease,
managing the fit-out appropriately
and operating the leased premises
efficiently.
The guide is presented in two parts:
•	 Part 1 – Choosing an Energy
Efficient Tenancy
•	 Part 2 – Understanding and
Managing your Tenancy Energy.
This guide is for commercial office tenants who
are considering moving to new premises, and for
tenants who wish to find out how to better manage
their energy use. The guide focuses on small and
medium-sized enterprises (SMEs) leasing less than
2,000 m2
or with less than 100 staff, though the
principles can equally be applied to larger tenancies.
About this Guide
This guide provides best practice
advice on:
•	 understanding the leasing process
and where to find the best
independent advice
•	 deciding whether to stay in an
existing tenancy or move
•	 prioritising the key features of
different tenancies
•	 what to look for when inspecting
tenancies
•	 what to include in negotiations with
your existing or new building owner
•	 making informed decisions about
different tenancies
•	 understanding total occupancy
costs
•	 why energy efficiency is important
for tenants
•	 how to choose an energy efficient
tenancy
•	 how to manage and improve
energy efficiency in a tenancy
•	 the measurement, management
and reduction of tenancy carbon
emissions.
ABOUT THIS GUIDE6
Thinking about moving
offices?
Factors you should consider
carefully include:
•	 the amount of space required
•	 the total occupancy costs of
the tenancy (rent, outgoings,
incentives, ongoing tenancy
energy costs, fit out costs, make
good costs etc.)
•	 the costs to exit your current
premises – make good and
write offs
•	 the time a relocation project
takes from planning to physical
relocation
•	 business and financial priorities
and objectives
•	 whether you have the internal
resources to project manage
a move
•	 key features of the tenancy
(location, views, standard of
building, ceiling height, lighting,
indoor environment quality etc.)
•	 the lighting efficiency of
the tenancy
•	 the environmental performance
of the base building and the
benefits that it can bring to its
tenants.
Professional Advice
This guide will not take you through
every detail of leasing a commercial
office tenancy but aims to help you
better understand the leasing process,
so you can ask pertinent questions
and get the information and help you
will need at the right times.
The process of evaluating your
requirements, choosing a tenancy and
negotiating optimal lease terms with
your building owner can be critical to
the success of your business. While
this guide is a good starting point, we
strongly recommend that you obtain
professional advice from a tenant
adviser.
RICS-qualified commercial property
tenant advisers have met RICS
standards of education, training and
professional development and are
regulated by RICS to a global standard.
For advice from a RICS-qualified
tenancy adviser contact RICS at info@
rics.org.au or call +61 (0) 2 9216 2333.
FREE RICS LEASA MOBILE
APP AND WEB TOOLS
In tandem with this guide, RICS
has produced a series of mobile
applications (apps) and web tools to
help you make well-informed decisions
about the tenancy you lease and
tenancies you are considering leasing.
These tools can help you to:
•	 compare and rank different
tenancies available for lease
•	 calculate and compare their total
occupancy costs, tenancy energy
costs and tenancy lighting costs
•	 track tenancy energy bills
•	 understand how choosing a
different space or changing other
tenancy variables (e.g. the amount
of space) will affect the energy
efficiency and cost of that space.
The apps are available for Apple
iPhone, iPad and Android mobile
devices and the web tools are
available for desktop web browsers.
To download the free apps and
tools visit the RICS website at
www.rics.org/Leasa
7ABOUT THIS GUIDE
Part 1:
Choosing an Energy
Efficient Tenancy
Part 1 of this guide examines the
leasing process and suggests key
criteria you should consider when
you are reviewing your lease or
considering moving to new premises.
It shows why energy efficiency is
important for SME tenants, and why
and how you should consider the
energy efficiency of the both the
tenancy space and the base building.
8 PART 1 | CHAPTER 1 | Why Energy Efficiency is important for SMEs
Chapter1
P1
Why Energy
Efficiency is
important for SMEs
5 REASONS TO ACT NOW:
1. Energy prices for businesses are
predicted to rise steeply between
now and 2020
Rising fossil fuel prices, ageing
electricity infrastructure, and the
investment needed to address
this, all mean that energy costs
will increase over time for most
businesses. The sooner you act, the
less it will cost. Significant savings
can be made from the start if you
position your business in an energy
efficient building and tenancy.
2. Sizeable cost savings can be
achieved
Tenants can achieve sizeable cost
savings if the tenancy they choose is
energy efficient. Choosing a tenancy
with energy efficient lighting could
save between $30,000 (for a 500 m2
space) and $140,000 (for a 2000 m2
space) over the term of a five-year
lease. For further details see Chapter
4: Understanding your Tenancy
Energy Use, and the RICS Leasa App
Tenancy Lighting Cost Calculator.
Tenancy size (NLA) m2
Cost savings from an NLPD of 7 instead of 24*
500 m2
$36,000
1,000 m2
$72,000
2,000 m2
$144,000
3. Increasing your competitive edge
Increasingly, major corporations track
and manage their carbon footprints
– reporting to their investors and the
market. In many instances they also
require their suppliers to demonstrate
high standards of environmental
performance. For SMEs, being
a ‘good environmental citizen’
can give you an edge over your
competitors and help with business
opportunities where high levels of
environmental performance are
required. A company’s performance
in its own office can be used as
proof of environmental commitment.
The leverage afforded by good
energy efficiency and environmental
performance can be substantial.
Energy efficiency not only makes good financial sense
in a market of rising energy prices, it is also part of a
much bigger picture. Energy efficiency is Australia’s
untapped energy resource. Australian buildings are
responsible for over 20% of our total energy use, and
the need for energy efficiency is here to stay as we
move towards a low-carbon economy. Energy-aware
companies can run their businesses energy efficiently
by taking simple steps during their tenancy set-up and
operation. It is not just big companies that will benefit
from being energy efficient – the value of energy
savings is often proportionally greater for SMEs.
Source: RICS Leasa App Tenancy Lighting Calculator
*Assumes office lighting use of 60 hours per week; energy price of $0.26 per kWh; over the
term of a five year lease.
9PART 1 | CHAPTER 1 | Why Energy Efficiency is important for SMEs
4. Partnering with your
building owner
Building owners are increasingly
willing to work with tenants to jointly
improve the energy efficiency of
their building and the spaces
tenants occupy.
By positioning your business in an
energy efficient building (or with a
building owner who is committed
to energy efficiency), you can
continue to make improvements
to your bottom line by working
together. A good example is tenancy
lighting where the building owner
would normally pay for any lighting
upgrades. This can ultimately benefit
both the tenant (through lower bills)
and the building owner (through
better building ratings). Environmental
Upgrade Agreements (EUAs) are one
way in which tenants can be asked
to contribute to the cost of building
improvements where there is a clear
financial benefit in doing so.
5. Indoor environment quality and
productivity
Choosing a building which is energy
efficient and which operates using
sustainable practices means you
stand a good chance of benefitting
from better indoor environment quality
(IEQ). With an increasing focus on
overall environmental performance,
there is greater awareness of the
importance of indoor environment
quality. We know that good levels
of daylight, better artificial lighting,
outlook and views will enhance a
person’s enjoyment of their workplace
and can lead to better job satisfaction
and productivity. IEQ is also linked to
employee health and wellbeing, staff
retention and recruitment. With staff
being the highest cost element of
most businesses, companies should
look after their human resources
by providing the best working
environment they can. A small
increase in productivity or reduction
in staff turnover can far outweigh the
rental cost difference of choosing a
better performing building. It can also
give one company the edge over the
opposition when recruiting from a
discerning and increasingly mobile
workforce.
For more information refer to
the section on ‘Managing indoor
environment quality’ in the
Sustainable Property Guide: www.
environment.nsw.gov.au/sustainbus/
SustainPropertyGuide.htm.
Building CHOICE is more important now
Building choice is more important today in attracting and retaining staff. In 2010 47% surveyed felt this was important
but in 2012 this figure had increased to 61%.
Source: Colliers International Office Tenant Survey 2012
10 PART 1 | CHAPTER 1 | Why Energy Efficiency is important for SMEs
WHY DOES ENERGY
EFFICIENCY MATTER?
THE BIG PICTURE
Energy inefficiency has a major
impact on carbon pollution and
thus accelerated climate change.
Climate change is having a significant
impact on our economy and the
environment. The effects of climate
change are real and so it is sound risk
mitigation to adopt energy efficient
practices. The following overview will
help SMEs, who are thinking about
adopting energy efficient practices,
to consider why their actions are
important and how they connect to
the bigger picture.
Climate Change and Global
Warming
To understand why energy efficiency
is important we need to look briefly
at the bigger picture. Climate change
is not new but the world is warming
at an unprecedented rate linked
to human population growth and
industrialisation.
Climate is the average of prevailing
weather conditions. However, it is
the rapid change to natural systems,
including weather patterns, that
is causing concern. 2010 global
temperatures were the warmest
on record and concentrations of
greenhouse gases in the atmosphere
reached a new high in 2011. The
start of 2013 saw record breaking
temperatures in Australia and the
first quarter, January - April, was the
second hottest on record. The warming
picture is not just about new records.
It is the lack of temperature range
between day and night, and new highs
being recorded outside El Nino and
drought years, that builds this picture
of longer-term warming.
The greatest environmental, social
and economic impacts are from the
frequency of extreme weather events
including heat waves and floods.
For more information see the Australian
Bureau of Meteorology’s National
Climate Centre: http://www.bom.gov.
au/climate/change/aus_cvac.shtml
5 REASONS TO ACT NOW
1.	 Energy Price Rises have been and will continue to be significant
2.	 Sizeable cost savings can be achieved, for example with efficient lighting
3.	 Being seen as energy efficient and sustainable will increase your competitive edge
4.	 Partnering with your building owner can help you both achieve financial rewards
5.	 Choosing a building which is energy efficient and which operates to sustainable practices means you will likely
benefit from better IEQ and productivity
Australian Bureau of Meteorology
11PART 1 | CHAPTER 1 | Why Energy Efficiency is important for SMEs
The Australian population is set
to grow from around 23 million to
somewhere between 30.9 and 42.5
million by 2050. Worldwide, the
population is set to reach around 8.4
billion by 2050. There is an urgent
need to consider how we build, how
we occupy and how we manage
our built environment. Businesses
and the property they occupy will be
subject to more fire, storm damage or
flooding, especially along the coast
and estuaries. These events will
have implications for all businesses,
for example in property values and
insurance costs.
The need for action: government
policies
The Australian Government is
responding to the challenges to – and
from – the built environment and is
developing ways to address this by:
•	 reducing emissions, including
support for energy efficiency
•	 adapting to unavoidable climate
change
•	 helping to shape a global solution.
Carbon pollution is the main cause
of the rapid climate change we need
to address and manage. Australia
generates more carbon pollution per
person than any other developed
country and this is continuing to grow
at a rapid rate.
Reducing our carbon pollution means
we have to produce and use energy
in a cleaner, smarter way. Securing a
Clean Energy Future is the Australian
Government’s report outlining energy
saving initiatives as part of a clean
energy future. The report provides
background information that can help
you put energy efficiency into context.
The Bigger Sustainability Picture and Risk Mitigation
There are many definitions of sustainability. Essentially it encompasses integrating environmental, economic and social
best practice to ensure responsible management of resources. It is about a shared mission between those who live,
work, trade, or manufacture. As such, sustainability is about risk mitigation, about ‘leaving enough for later’ so society
and the environment in which it operates can continue to thrive. Climate change is a risk to sustainability because it
presents a limitation. Factoring it in to your business plan makes social, environmental and economic sense.
“The costs to Australia of not acting on climate change would be greater than the costs of responsible mitigation.
The costs of inaction would increase over time, becoming more pronounced in the second half of the 21st century.”
Garnaut Climate Change Review 2011
12 PART 1 | CHAPTER 1 | Why Energy Efficiency is important for SMEs
“The central propositions of the mainstream science on climate
change are accepted by most Australians. This provides a basis
for effective policy action.”
Garnaut Climate Change Review 2011
13PART 1 | CHAPTER 1 | Why Energy Efficiency is important for SMEs
Chapter2
P1
Reviewing your
leasing options
Seek professional
advice
We recommend that you engage
a professionally qualified tenancy
adviser to assist you. The tenancy
leasing process is complex and you
will obtain a better result by drawing
upon expert market and transaction
knowledge from someone who does
this work regularly.
RICS is the world’s largest and
most prestigious professional
body for property and construction
professionals. RICS chartered
members qualify through gaining
an accredited degree or equivalent
qualification and a minimum two
years of structured, planned and
assessed experience. Once qualified,
RICS members have to abide by
and are regulated by rules, codes of
professional ethics and professional
and technical standards which
govern the way they work.
For details of a RICS-qualified
tenancy adviser contact RICS
Oceania at info@rics.org.au.
Allow plenty of time
Firstly make sure that you have
enough time before the end of your
current lease. You will need to review
your current space and potential new
space against predicted operational
requirements. If you do decide to
move you will need to:
•	 find and compare potential new
spaces
•	 decide on the new premises, agree
terms and sign a lease
•	 finance and plan your move
•	 allow sufficient time to comply
with any exit obligations you may
have under your current lease
•	 and, if appropriate, complete a
fit-out so you can move in before
your current lease ends.
This process can take from eight
months to two years, depending
on the size of your tenancy. Careful
planning and expert advice are key
to minimising time delays, costs
and risks.
If your lease is coming to an end you will need to
choose between staying in your current premises and
possibly upgrading them, or finding and moving into
new premises. If your company is heading out on a
new venture you will need to make decisions about the
premises you are going to occupy. These will be critical
to the operation and effectiveness of your business.
14 PART 1 | CHAPTER 2 | Reviewing your leasing options
If you do not have sufficient time
before your current lease ends,
you will either have to negotiate an
extension to your current lease or
forego the move and stay in your
current premises. A lack of time is
likely to significantly reduce your
ability to negotiate optimum terms
with your building owner.
However, given sufficient time,
negotiations to renew an existing lease,
or to lease new premises, provide a
wonderful opportunity for discussions
with the building owner that could
result in a significantly better outcome
and lower ongoing costs.
For example, lease negotiations
provide the opportunity to reduce
your energy costs – both for your
tenancy and for your proportion of
the base building outgoings. Previous
experience is invaluable in these
situations; with expert help you are
more likely to achieve a ‘good deal’.
These may include incentives from
the building owner – a building owner
incurs significant expense in seeking
a replacement tenant and this can
be used to an existing tenants’
advantage in leveraging more
favourable terms.
Do you stay or do
you go?
Relocation is costly and disruptive.
The minor upgrading, refreshing or
refurbishment of an existing tenancy
can have significant cost and time
advantages, and can reduce risk.
Clearly you cannot change the base
building features and amenity, but by
careful design you can optimise your
use of those premises and avoid the
costs and disruption of moving.
There are often many reasons to stay
put; these might include:
•	 The space works for us, we like it.
•	 We can continue as we are.
•	 We do not have sufficient time to
plan and move.
•	 We do not want to spend money
on fit-out and relocation costs or
the costs of moving a business
(e.g. stationery, mail re-direction).
•	 We can negotiate a good rental/
lease deal.
•	 We can leverage our position to
improve general lease obligations
and reduce future costs.
•	 We have a large ‘make good’
liability.
… plus many reasons particular to
your company.
Reviewing the option to stay
Firstly assess and list what is wrong
with your existing premises and
what needs to be changed. Think
about what does not work; you can
use the checklist on inspecting the
premises in Appendix B to assist in
this process. Score your premises
to see how it rates and look at the
things that can be changed, and
those that cannot. In addition, look
at the non-tangible items such as
cultural fit, down time costs and
general management time required
to manage a relocation.
The lease expiration date also needs
to be taken into account. If your
options involve significant costs you
need to make sure you have a long
enough lease term over which to
amortse them. You need to talk to
the building owner about extending
your lease. These discussions may
also give you the opportunity to
discuss upgrades of the building
owner’s equipment and possibly an
incentive from the building owner
to enter into a new lease or an
extension of your existing lease. We
recommend you talk with a RICS
tenancy adviser to review and plan
your strategy as part of an overall
occupancy plan. Make sure that you
start discussions in good time.
Establish the time or date by which
refurbishment works need to be
complete. This might be the date of
the end of your lease. Remember
that your review process needs to be
complete with enough time to find
new premises if your conclusion is
that you are better off moving.
15PART 1 | CHAPTER 2 | Reviewing your leasing options
Refurbishment can be done in
stages if this will make it easier to
keep your business operating. There
will be a balance between doing as
much work, and disruption, as can
be borne, and the time taken. There
are benefits in doing as much work
as possible and then having a grand
re-opening so as to reignite staff
enthusiasm. Refurbishment over long
periods never appears to end. Bigger
refurbishment may need staging or
‘churn’ areas that can be used for
temporary locations.
If you do choose to stay and
refurbish your premises you can
find more information on planning a
refurbishment in the NABERS Energy
Management Guide for Tenants (2012).
Moving to New Premises
If staying is not an option, or if moving
to a new location is preferable, you
will need to review your company’s
requirements carefully. No two
buildings are alike and no two tenants
requirements are alike. Ensuing that
your new premises will meet all your
requirements is critical.
A commercial office tenancy can
influence many aspects of running a
business. Your new premises will:
•	 promote your company image to
your clients and to potential staff
•	 define your culture and values to
your employees, and can make
staff proud to be associated with
your company
•	 set the basis for your occupation
costs
•	 set the basis for a large proportion
of your company’s carbon
footprint
•	 have an impact on how your
company is structured, how it
operates and how flexible its
working arrangements are
•	 create a catalyst for change
•	 influence your company’s
efficiency
•	 influence the enjoyment,
productivity and wellbeing of
your staff during the time they are
at work.
Steps Involved in
Choosing New Premises
Your tenancy adviser will help you
through the following steps:
1
Prepare a Tenancy Brief: a detailed list of your company’s
requirements
2
Prepare the Request for Proposals (RFP) and issue it to the
market – to building owners and their agents.
3
Decide on your shortlist: assess the proposals you receive and
prepare a short list of suitable opportunities.
4 Refine the offers
5 Inspect the premises on the short list with the tenant advisor
6
Conduct ‘due diligence’ - detailed investigations on the
quality of the building/tenancy and its services
7 Prepare comparative financial reviews of the options
8
Test your fit: Undertake preliminary layout planning to make
sure the available space will be adequate for your company’s
needs
9 Compare, evaluate and refine your choice of tenancies
10 Negotiate terms with the shortlisted building owners
11 Make your final selection
12 Complete your lease negotiations and sign your lease
Some of these steps are discussed
in more detail below.
Preparing your
Tenancy Brief
Your tenancy adviser will work with
you to develop a comprehensive list
of your company’s requirements. The
adviser will need to understand your
business and its future direction,
the space you believe you might
need now and in the future, any
‘deal breakers’ and the full list of
criteria that are important to you. It’s
essential that you or your adviser
consult with staff from all areas
and aspects of your business to
understand their requirements.
You can start working on your
tenancy brief by writing down the
issues and criteria you feel are key
to your business and the space you
wish to lease. (Criteria you need to
consider when comparing premises
are discussed in detail in Chapter 3.)
Inspecting Premises –
What to Look For
When you inspect the premises arm
yourself with the information already
provided by the agent or building
owner. Look at the following:
16 PART 1 | CHAPTER 2 | Reviewing your leasing options
General attributes
•	 Lobby and entry presence
•	 Lift quality
•	 Standards of maintenance
and cleaning
•	 Security arrangements
Tenancy attributes
Finishes
•	 Ceiling quality
•	 Toilets – finishes and fittings
•	 Accessibility and provisions for
universal access
•	 Quality of finishes – carpet, walls
and lift lobby
Daylight and views
•	 Good levels of natural light that can
be enjoyed by the majority of staff
•	 Good views with the ability to see
activities and movement, rather
than the back sides of adjoining
buildings
•	 Check for dark areas and depth
from the windows to the central
‘core’ area
•	 Beware of west-facing windows;
they can be hot in the afternoons
•	 Are blinds fitted to control solar
gain and glare?
Energy efficient tenancy lighting
and controls
•	 The ability to sub-meter power
and lighting
Deal breakers –
your key criteria
You may identify some key criteria
for new premises that are not
negotiable. For example, your ‘deal
breakers’ might include:
•	 a specific financial outcome
(P&L, cashflow,
capital Expenditure)
•	 minimum 4.5 star NABERS
Energy for Offices base building
rating
•	 energy efficient lighting (NLPD of
7 W/m2
)
•	 views, accessible from two-
thirds of the floor area, that show
open space
•	 minimum ‘Grade B’ for the
building (Property Council of
Australia grading system)
•	 end of trip facilities including
bike and jogging facilities to
Green Star standards, i.e.
5% of the building population
accommodated by showers,
lockers and secure bike storage
•	 good quality toilets
•	 a location 10 minutes from a
train station or 2 minutes from a
bus stop.
•	 Lighting quality and energy
consumption
•	 Look for a NLPD of less than
7 W/m2
•	 Can lighting be switched in
smaller zones?
Electrical services
•	 Are tenancy light and power
metered separately?
Mechanical services
If you are going to require
supplementary air conditioning:
•	 What provisions are provided
by the base building (e.g. tenant
condenser water) and is the
capacity adequate for your
needs?
•	 Will it be charged to the tenant’s
or base building’s account? Is
it available through the base
building’s air conditioning
system or will you need to install
supplementary ‘package units’?
What other environmental
efficiencies are provided?
Base building attributes
•	 Is the base building lighting
upgraded to best available
technology throughout the
building, fire stairs, car parks,
etc.? (The building owner will
gain energy savings, as well as
air conditioning savings, where
more efficient lights are installed
in air conditioned areas.)
17PART 1 | CHAPTER 2 | Reviewing your leasing options
•	 Is there adequate after-hours air
conditioning control and zoning?
•	 Is there separate monitoring and
cost apportioning of after-hours
air conditioning (for buildings with
multiple tenancies)?
What performance reporting is
performed by the building manager?
Tenant Due Diligence
Once you have reduced your options
to three potential tenancies, it is time
to start your detailed investigation
into the way the premises have been
designed and set up, how they are
managed, how they will perform
through the term of your lease and
how much they will cost to occupy.
What information should be
provided by the building owner?
In most major commercial buildings,
as a minimum you should be
provided with:
•	 the floor plan
•	 net lettable area
•	 rent, incentive and outgoings
-- Determine whether quoted rent
is net rent plus outgoings or
gross rent including outgoings.
Check whether the incentive is
paid on the starting gross rent
or starting net rent.
•	 Property Council of Australia (PCA)
grading of the building
•	 building mechanical and electrical
specifications
•	 details of any planned future
upgrade works
•	 where available or required –
a Building Energy Efficiency
Certificate (BEEC) containing:
-- a NABERS for Offices energy
rating for the base building or
whole building. If this rating
is greater than 3 it is above
average. However, many
buildings now target a minimum
rating of 4 or 4.5 stars.
-- Nominal Lighting Power
Density (NLPD) for the tenancy
area lighting. Below 7 W/m2
is good. This will affect the
cost you pay for energy for the
tenancy lighting.
•	 information about whether after-
hours air conditioning may also
contribute to your energy and
financial costs. Some buildings
need to run their whole systems
when one tenant calls for after-
hours cooling; the costs per hour
can be very high.
Environmental performance
To help understand how you are
likely to be treated through the lease
term, you might also like to establish:
•	 Is the building management
environmentally conscious and
focused?
•	 Is the building being managed
and maintained to optimise energy
efficiency?
•	 What reporting through the
Building Management Systems
(BMS) is available to the tenant?
•	 Is there a building management
committee that actively
collaborates with tenants and
the building manager to plan and
optimise the energy performance?
Are there green leases in place or
leases available that have some
energy efficiency related aspect?
Planned upgrades
Find out whether major and
potentially disruptive upgrade works
are proposed to be carried out during
the term of your lease. Typically
disruptive upgrades may include:
•	 lift upgrades
•	 lobby upgrades
•	 services upgrades, particularly
when they are planned out of
season (i.e. to minimise disruption
to air conditioning performance, air
conditioning works are generally
planned to be carried out during
the cooler months; boilers are
generally planned to be worked on
in summer.)
As a useful tool, this tenant due
diligence information is included as a
checklist in Appendix B at the back
of this guide.
Evaluating and
Comparing the Various
Premises
The tenancy brief should identify the
key requirements (‘deal breakers’)
for your office premises and also
other selection criteria that should
be weighted in terms of importance.
Discount options that don’t meet
your ‘deal breakers’ and then
score each tenancy option against
your weighted selection criteria to
help decide on your short list or
final preferred location. (For more
information about criteria to consider
see Chapter 3.)
Using the RICS Leasa App to
compare spaces for lease
The RICS Leasa App includes a simple
‘Tenancies’ tool to help you compare
and rank tenancies you are considering.
18 PART 1 | CHAPTER 2 | Reviewing your leasing options
You can find tenancies drawn from the
BEEC database or enter details directly.
Once a tenancy has been chosen
you can enter and rate various
features of the tenancy including
occupancy costs, energy costs,
lease type and quality of the
building/space. Tenancies from
the BEEC database automatically
include energy efficiency ratings for
the building and tenancy lighting.
Once you have several tenancies stored
in the App tool you can filter what is
displayed, to either change the order
of preference of tenancies, or show
or hide individual tenancies. You can
change the ranking of your potential
tenancies and move them into the
‘short listed’, ‘not rated’ or ‘rejected’
categories by simply dragging the right
icon bars up or down.
You can switch to a comparison
screen which compares the features
of your shortlisted tenancies. (On
iPhone and iPad devices switch to
the comparison mode by turning the
device on its side.)
The RICS Leasa App enables you to compare the features of different tenancies.
19PART 1 | CHAPTER 2 | Reviewing your leasing options
Chapter3
P1
Comparing Spaces
to Lease – Criteria
to Consider
Total Occupancy Costs
One of the most significant criteria
when choosing the right space is the
total occupancy cost of the space
– this is the total cost of leasing
a space over the term of a lease.
Total occupancy cost includes the
following:
Rent
The money tenants pay to occupy a
premises is normally expressed as
a dollar rate per square metre, per
annum. A tenant will pay rent on the
basis of a gross rent (where quoted
rent includes outgoings) or net rent
(where outgoings are charged in
addition to quoted rent). The total
occupancy cost should include both
rent and outgoings and any rent
increases that are applied to the rent
during each year of the tenancy.
A number of recent surveys have shed light on what
commercial office tenants are currently looking for
when leasing space in Australia. These surveys are a
useful insight into what other businesses are looking
for. However, as prospective tenants you should
consider the full range of criteria presented in this
chapter and assess what is important to you.
In 2012 Colliers International carried out surveys of Australian
commercial office tenants in space over 500 m2
to assess what was
important to them when leasing space. Some key results were:
•	 95% of tenants want to occupy a green building.
•	 61% thought building choice was important in attracting and
retaining staff.
•	 30% considered cost saving a primary focus.
•	 Specific building attributes that would help attract and retain staff
included green space and bike racks.
20 PART 1 | CHAPTER 3 | Comparing Spaces to Lease – Criteria to Consider
Outgoings
Outgoings are the base building
operating and maintenance costs
typically shared between all the
tenants in the building on a pro-rata
basis. These typically include: base
building energy, rates and taxes,
security, insurance, management,
cleaning, recycling and waste
removal, repairs and maintenance.
Cleaning and other charges
Identify all other charges that may
be payable to the landlord though
excluded from outgoings such as
tenancy cleaning, security, out of
hours air conditioning etc.
Incentives
The building owner, through its
agents, may offer incentives such
as reduced rent or rent free periods,
assistance with fit-out costs or
other incentives to attract tenants
to their building. Whilst the incentive
may be paid at the start of the lease it
will be amortised over the lease term
within the P&L.
Fit-out
The fit-out of a tenancy refers to
the design and construction of the
internal space for lease so that it
meets the needs of the tenant in
operating their business. This would
include the office design and layout,
meeting rooms, board rooms, IT
rooms, partitions, temporary internal
walls, furniture, carpet, storage and
alteration to base building services
(e.g. supplementary air conditioning).
There are costs associated with
the design, planning, project
management, authority approvals
and construction of an office fit-out.
Capital expenditure for the fit-out is
usually carried out prior to occupation
however the cost is amortised over
the lease term within the P&L.
Relocation costs
These are costs associated with
physically moving furniture, filing
and storage, office equipment and
IT items.
Tenancy energy costs
Historically many tenants have not
considered the consumption of
energy as a critical issue. However,
this has changed due to rising energy
costs and increasing awareness of
the impact excessive energy use has
on an organisation’s carbon footprint.
Tenants typically pay for the energy
consumed in their leased premises
directly to an energy provider or
through the building owner. Tenants
also pay their proportion of the energy
consumed by the base building in
their outgoings.
‘Make good’ at lease end
‘Make good’, or ‘dilapidations’ as it
is also known, refers to the process
at the end of a commercial property
lease where the tenant is required
to hand back the premises they are
vacating in a particular condition that is
established by the terms of their lease.
‘Make good’ can be incredibly
wasteful of materials and money.
It is also an uncertain process for
both the building owner and tenant
and can be a massive distraction to
the tenant who is leaving and re-
establishing their business in new
premises. Simplification and reduction
of environmental waste should be an
aim here.
Depending on the intensity of the
fit-out and the extent to which the
fit-out works changed the base
building, the costs can range from
about $120/m2
to about $350/m2
.
However, particular circumstances
and leases differ and this affects the
‘make good’ costs. Whilst the make
good costs are incurred at the end of
a lease, accounting standards require
a provision to be created generating a
P&L cost during the lease term.
21PART 1 | CHAPTER 3 | Comparing Spaces to Lease – Criteria to Consider
Exit obligations from current sites
As with the premises you are
relocating to there will be exit
costs, primarily in terms of make
good, which need to be assessed
and allowed for. In addition leases
assume this work will be done prior
to the lease expiry which may lead
to a requirement to pay double rent
(existing and new premises) for a
period of several weeks whilst make
good works are completed. As this is
a high cost area it is advisable to seek
professional advice from a properly
qualified RICS advisor who may be
able to help mitigate some or all of
these costs.
Professional fees
A RICS or other tenant adviser
will charge a professional fee for
providing technical and strategic
advice, finding appropriate space and
negotiating the lease. Professional
advice may also be required for make
good and project managing a fit out.
Professional fees will also be incurred
for any legal advice.
Car parking
You may require parking for a certain
number of staff. Car spaces are
typically an additional cost to be
factored in and often do not include
hidden costs such as council parking
levies or Fringe Benefit Tax implications.
They are generally documented on a
licence separate from the lease. CBD
car parking is expensive and individual
car use is carbon intensive. You may
wish to consider alternative means
of transport.
Using the RICS Leasa App to help
you compare total occupancy costs
The RICS Leasa App has a tool
designed to record and compare
the total occupancy costs for each
potential tenancy you are reviewing.
Costs associated with tenancy
lighting are automatically entered
where the tenancy is covered by a
BEEC. (For more information about
BEECs see ‘Commercial Building
Disclosure’ below.) The energy costs
for equipment in a tenancy can also
be recorded and included in the
tenancy comparisons.
22 PART 1 | CHAPTER 3 | Comparing Spaces to Lease – Criteria to Consider
Minimising ‘make good’
You can significantly minimise the impact of your fit-out on the base building and thereby reduce your ‘make good’ costs:
•	 Tread lightly when you fit-out. Try to avoid removing or replacing base building owner’s equipment and fixtures such
as floor finishes, ceilings and claddings. Brief your interior designers accordingly.
•	 Use systems that are free standing where possible so that their fixings do not damage the base building.
•	 Use wireless data systems; they dramatically reduce the cabling waste and you can take them with you.
•	 Use existing partitions in the premises where possible; this might reduce your ‘make good’ costs.
There are many ways that the costs and stresses from ‘make good’ can be reduced. For example, you can agree on
the tenant’s liability at the lease commencement or use a ‘make good’ deed. If you don’t have an up-front agreement
you should discuss the ‘make good’ with your building owner well before the end of the lease so that agreement can be
reached in good time.
For more information or advice talk to an experienced RICS Chartered Building Surveyor and see the RICS guides Make
Good Best Practice (Australia) (2004) and Greening Make Good Australia (2009).
Location
When looking at a geographic area,
consider issues such as:
•	 rents in different areas
•	 ease of transport for your staff,
including proximity to modes of
public transport that suit them
•	 proximity for clients and
customers
•	 proximity of amenities such as
restaurants, banks, food courts
or retail
•	 your preferred area
•	 safety of access and egress from
the premises.
How Much Space do
You Need?
Base your floor area requirements on
the number of people who will use
the space, the facilities you would
expect to install (e.g. meeting rooms,
computer rooms, etc.) and the way
you would use the space, such as
workstation style and sizes, meeting
rooms and reception. More firms are
considering activity-based working
where desks are allocated only to the
staff in the office each day, resulting
in fewer desk spaces being required.
Most building services are designed
to allow a density of 10m2
per person
however if you are using a typical
open plan layout with a few enclosed
offices and meeting rooms then most
companies occupy at a density of
12 m2
to 17 m2
. Further advice can
be provided by your RICS tenancy
adviser.
Energy Efficiency
Energy efficiency of the building
Buildings with combined space
for lease over 2000 m2
must have
an energy efficiency rating which
includes a NABERS Energy for Offices
base building rating. A building with a
lower energy efficiency rating could
cost you more in outgoings.
Like many tenants, you may have
a policy to occupy energy efficient
buildings. If this is the case you could
choose not to occupy any building
with a NABERS Energy for Offices
base building rating of less than
4.5 stars. (See further information
below on the Commercial Building
Disclosure scheme and BEECs.)
Energy efficiency of tenancy
lighting
Buildings with combined space for
lease over 2000 m2
must also have an
energy efficiency rating for the lighting
in each tenancy for lease. Space
for lease where lighting is inefficient
will result in higher electricity bills.
This rating measures the NLPD – the
amount of power used by the lighting
in the tenancy that is provided by the
base building. This is measured in
The RICS Leasa App enables you to enter and compare the occupancy costs of existing
and potential tenancies.
23PART 1 | CHAPTER 3 | Comparing Spaces to Lease – Criteria to Consider
24 PART 1 | CHAPTER 3 | Comparing Spaces to Lease – Criteria to Consider
watts per square metre (W/m2
). The
lower the NLPD the better the space
from a power consumption point of
view (but take care that a low NLPD is
not at the expense of general lighting
levels). Modern lighting systems
can achieve NLPDs of 7.0 W/m2
with no loss of amenity. (See further
information below on the Commercial
Building Disclosure scheme and
BEECs.)
Commercial Building
Disclosure
Commercial Building Disclosure
(CBD) is a national program designed
to improve the energy efficiency of
Australia’s office buildings. Under the
Building Energy Efficiency Disclosure
Act 2010, there are mandatory
obligations applicable to many
commercial buildings. Most sellers
or lessors of office space of 2000 m2
or more are required to obtain and
disclose a current Building Energy
Efficiency Certificate (BEEC). The
BEEC for a particular building may
cover an area greater than you intend
to lease as it covers all currently
lettable space in that building.
A BEEC is comprised of:
•	 a NABERS Energy rating for the
building (excluding GreenPower)
•	 an assessment of tenancy lighting
in the area of the building that is
being sold or leased, and
•	 general energy efficiency
guidance.
BEECs are valid for 12 months and
must be publicly accessible on the
online Building Energy Efficiency
Register (see http://cbd.gov.au/
registers/beec-index). Certain
exceptions and exemptions apply.
BEEC Data will also be accessible
through the RICS Leasa App.
The aim of the BEEC is to provide
the commercial office market with
credible information about the relative
energy efficiency of offices that are
for sale, lease and sublease. This will
help businesses to consider energy
efficiency as part of their decision-
making process when choosing a
space to lease.
Example first page of a BEEC
25PART 1 | CHAPTER 3 | Comparing Spaces to Lease – Criteria to Consider
What if a tenancy or building is not
covered by a BEEC?
If the building has no BEEC it does
not necessarily mean the building
or the tenancy has poor energy
efficiency. It might mean that the
building has less than 2000 m2
to
lease and the owner is not required by
law to provide one.
In this situation you can still ask for
a BEEC to be prepared. The building
owner will need to provide:
•	 the NABERS Energy for Offices
base building rating, and
•	 the NLPD for the tenancy lighting
system.
Both of these ratings are relatively
easy for the owner to obtain. If the
building is well managed this will not
be considered an unusual request
from a prospective tenant.
Approximating the NLPD
If the Landlord is unwilling or unable
to provide a BEEC you can work out
an approximation of the NLPD in the
following way:
•	 Count the number of light fittings
in the tenancy, and the number of
tubes/globes in each fitting
•	 Work out the total lighting wattage
for each type of lamp:
-- If the light tubes are 25mm
(eight eighths of an inch)
in diameter (older style T8
fluorescent tubes), multiply
the number of tubes by 44 (1
tube equates to 44W of power
consumption)
-- If the light tubes are about
15mm (five eighths of an inch)
in diameter (slimline style T5
fluorescent tubes), multiply
the number of tubes by 33 (1
tube equates to 33W of power
consumption)
-- Where other types of lights
are present you should ask
the landlords representative to
advise the rating of the globes
and add 7W – then multiply this
by the number of globes eg a
50W low voltage downlight is
rated at 57W power consumption
•	 Add the lighting wattages together
to get a space total, and then
divide by the area of the tenancy
For example:
•	 150 T8 tubes in a 500m2
office
= 150 x 44 =6600W Divided by
500m2
= 13.2 W/m2
NLPD.
To get a more accurate assessment
that is in line with the methodology
used in determining a BEEC, you
could engage a BEEC Assessor to
undertake the assessment on your
behalf (the CBD.gov.au website has
contact details for assessors).
Another factor that will affect the
lighting energy use is the way they are
controlled. Basic control is via simple
wall switches (this tends to be the
least efficient method as it is easy for
someone vacating a space to forget
to turn off the lights). Some lighting
systems employ time controls such
that the lights automatically switch off
at a predetermined time.
More sophisticated systems employ
occupancy sensing such that lights are
only on if a sensor detects the space
is occupied. The smaller the switching
zone, the better the system can match
lighting to actual need eg a switching
zone of 260m2
would mean all lights
in that area would be on even though
there might be a single occupant.
However if the switching zone was
then reduced to 65m2
only a quarter
of the lights need turn on. Always ask
about what lighting controls exist.
Hidden Costs of Poor
Performance
The poorer the energy efficiency
of a base building, the higher the
proportion of the tenant’s occupancy
costs go towards base building
energy costs, and the bigger the
building’s and the tenants’ carbon
footprint.
The following graph shows indicative
percentage energy savings between
the NABERS Energy for Offices rating
stars, and therefore the potential
energy savings achieved by improving
from star to star, or the opportunities
missed out by not improving.
26 PART 1 | CHAPTER 3 | Comparing Spaces to Lease – Criteria to Consider
To add further perspective to the
difference between the star ratings,
the difference between a 2.5 and
4.5 star building is that the carbon
intensity of the 4.5 star building is
43% less than a 2.5 star building. In
other words, it could use up to 43%
less energy per square metre.
Businesses should look for buildings
with a good NABERS energy rating
(4.5 or above) and good tenancy
lighting efficiency (7 W/m2
or below).
Low energy ratings generally
indicate that the building owner
and the management team may not
be concerned with the building’s
environmental performance. They
may also indicate that the base
building systems are old and in need
of significant upgrading.
Low energy ratings certainly indicate
that a prospective tenant should
investigate the building thoroughly to
avoid leasing a poorly performing and
potentially unhealthy tenancy. You
should ask about potential upgrades
that could impact your occupation
and enjoyment of the building at some
time during the term of your lease.
Grade (quality) of
the Building
The Property Council of Australia’s A
Guide to Office Building Quality (2012)
is the industry standard for building
grading and it can help you determine
the standard of building your business
should occupy.
The PCA guide sets out the attributes
and standards required by buildings
to achieve certain grades. The grades
for new buildings are Premium, Grade
A and Grade B. For existing buildings
they are Premium and Grades A to D.
Choosing a PCA grade that will
provide you with the appropriate level
of performance can help you to avoid
paying for performance and facilities
that you don’t require, and avoid
buildings that might fail to meet your
requirements.
The guide uses parameters that
typically influence building quality.
These are based on extensive
consultation and international
research to identify the elements of
building quality from an occupant
or investor perspective. The guide
includes metrics for the assessment
of performance in the following areas:
•	 Environmental
•	 Configuration
•	 Mechanical
•	 Tenant services
•	 Electrical
•	 Standby Power
•	 Building Management
•	 Communications
•	 Hydraulics
•	 Security
•	 Amenities
•	 Parking
The PCA guide is voluntary; it is not a
rating tool and it is not necessary for
a building to achieve every parameter
nominated in the guide. However,
to qualify for a particular quality
grade, it is anticipated a building will
overwhelmingly meet the stated criteria.
Relative carbon emissions intensity of NABERS Office Star Ratings
Source: WT Sustainability (2013)
1.5 Stars
0%
10%
20%
30%
40%
50%
60%
2 Stars 3 Stars 4 Stars2.5 Stars 3.5 Stars 4.5 Stars 5 Stars
27PART 1 | CHAPTER 3 | Comparing Spaces to Lease – Criteria to Consider
A Guide to Office Building Quality
may be purchased through the
Property Council of Australia:
Property Council of Australia House
Level 1, 11 Barrack St Sydney
NSW 2000
Telephone: 02 9033 1900
Facsimile: 02 9033 1978
Email: research@propertyoz.com.au
Website: www.propertyoz.com.au
End-of-trip Facilities
Increasingly tenants are requiring
facilities for staff who run or cycle
to work, or during the day. Modern
standards for end-of-trip facilities will
generally include:
•	 secure bike storage, with security
cameras
•	 bike maintenance area including:
-- bench
-- compressed air
•	 lockers
•	 showers
•	 toilets
•	 additional facilities including:
-- iron and ironing board
-- hair dryers
-- laundry services
Tenancy Rating -
Green Star Interiors
The Green Building Council of
Australia’s Green Star – Interiors
rating system is an environmental
rating tool designed to rate interior
fit-outs. The tool rewards the
environmental performance of the fit-
out as well as the way the fit-out can
be made to operate within the base
building.
The tool can be used to differentiate
between the environmental
performance of buildings you are
reviewing. It can also help you
achieve a significant flying start
towards your own Green Star
– Interiors rating based on the
environmental performance of the
base building.
If you want to achieve a Green Star –
Interiors rating for your tenancy, you
could choose a tenancy in a building
that has been set up so that you will
achieve credit points towards your
Green Star – Interiors rating, simply
by choosing that building. These are
typically called Green Star – Interiors:
Flying Start points. This is a great
way of identifying which buildings
have been set up and are being run to
good environmental standards.
A well-prepared building management
should be able to provide an
incoming tenant with a package
of base building information that
can form part of the tenant’s Green
Star – Interiors environmental rating
application. The base building should
be able to provide about 50% or
more of the points needed for a 4 star
rating, 40% of the points for a 5 star
rating and about 30% of the points
for a 6 star rating.
Tenants have to make their own
application to the GBCA for their
Green Star – Interiors rating. The
points achieved will depend on
meeting the strict requirements of the
Green Building Council of Australia.
Ask your tenancy adviser or the
building’s leasing agent to find out
how many Green Star – Interiors
points would be available towards the
tenant’s Green Star – Interiors rating
if you chose to take space in their
building.
For more information visit the Green
Building Council of Australia’s website
at www.gbca.org.au.
Better Building
Partnership
The Better Buildings Partnership
(BBP) has created a number of tools
(e.g.their Leasing Lifecycle Tool) to
inform and facilitate partnership
outcomes in commercial leasing.
There are many components that
make up building ratings and grades
and tenant advisers need guidance
on what your priorities are amongst
these.
The BBP has created tenant-focused
tools for specifying to tenant advisers
the expectations tenants have of a
rating or building grade.
For more information, visit the
Better Buildings Partnership’s
Leasing Lifecycle Tool at http://
sydneybetterbuildings.com.au/leasing
28 PART 1 | CHAPTER 3 | Comparing Spaces to Lease – Criteria to Consider
Part 2:
Understanding and
Managing your
Tenancy Energy
Part 1 of this guide explains why you
should consider the energy efficiency
both of the tenancy spaces you
are considering leasing and of the
buildings these tenancies sit in.
Part 2 of this guide aims to help you
better understand and manage energy
use in your tenancy and see the
advantages of doing so.
29PART 2 | CHAPTER 4 | Understanding your Tenancy Energy Use
Chapter4
P2
Understanding your
Tenancy Energy Use
Buying Power and
Saving Money
Negotiating your own contract with
an electricity retailer can help you to
reduce costs and may lead to other
energy management initiatives, such as
monitoring, which help identify areas or
periods of high energy demand.
Not all electricity is pushed through
utility companies; in some instances
building owners can on-sell electricity,
often at favorable rates.
Energy is generally made up of two
components which may or may not
be distinguishable on the bill. The first
component is sometimes referred to
as ‘non-contestable’ and is regulated
by government. This covers the
cost of maintaining the electricity
distribution infrastructure (poles,
wires etc.) The second component
‘contestable’ is generally negotiable
with energy retailers.
If you take the time to investigate
your options it can bring real savings.
This can be achieved through direct
negotiations with an energy provider
or you can engage an energy broker
to negotiate on your behalf. The
Australian energy regulator has a
website where you can compare
energy rates: www.aer.gov.au.
There are commercial switching
services which offer to find better
deals for your energy outgoings.
You will need to provide them with
information about your current energy
As a tenant, you pay for the energy consumed within
your own tenancy. Tenant energy consumption is
associated with your lighting, the equipment you use
(such as computers, photocopiers, fridges etc.) and
supplementary air conditioning (e.g. computer room
and meeting room air conditioners).
bills, patterns of use and projected
requirements.
The offer found on your behalf may be
very good but it still pays to do your
homework. You should be aware of
the terms and conditions associated
with moving to a new contract.
Quotes can be calculated in different
ways and entering information into
different websites can make it hard to
draw comparisons.
GreenPower
GreenPower is an Australian
Government accreditation program
for renewable energy which is
generated from sources including
wind turbines and solar, and which
produces no nett greenhouse gas
emissions, thereby reducing carbon
emissions. When you purchase
GreenPower accredited renewable
energy you are supporting the
production of electricity from
renewable sources over and above
mandatory government targets. 91%
of electricity used in Australia is
generated from the burning of fossil
fuels such as coal, and only 9% of
Australia’s electricity comes from
renewable energy sources. Buying
GreenPower is the easiest way that
you can reduce the environmental
impact of electricity generation.
Most Australian energy suppliers
provide an accredited GreenPower
product, varying in price according
to the mix of renewable energy
used. The Australian Government’s
GreenPower website contains a list of
accredited GreenPower suppliers:
•	 www.greenpower.gov.au
•	 www.livinggreener.gov.au/energy/
renewable-energy/switch-greener-
energy
GreenPower and NABERS
Using accredited GreenPower will
impact on a NABERS Energy rating.
NABERS Energy Ratings are
presented in two parts:
•	 the rating with GreenPower, and
•	 the rating without GreenPower.
However, the NABERS component
of a BEEC only makes reference to
electricity without GreenPower.
Cogeneration and
Trigeneration
Some buildings generate their own
electricity, most often by using natural
gas-powered engines that generate
power for base building and tenant
consumption. If this is available,
it may give you another option for
purchasing power. Cogeneration
is the simultaneous production of
electrical energy and thermal energy
for power and heating; trigeneration
produces energy for cooling as
well. For more information see
www.cleanenergycouncil.org.au/
technologies/cogeneration.html.
30 PART 2 | CHAPTER 4 | Understanding your Tenancy Energy Use
Negotiating with Energy Retailers
•	 Provide information to the utility company on contract options required and any relevant site details such as
operating hours and type of space.
•	 Compare cost and services offered by the various retailers to ensure there are no hidden extras, such as a costs
passed on for line losses. Up to 10% of electricity is lost from the grid and some retailers will pass this cost directly
on to the consumer.
•	 Can the retailer monitor and graph a profile of your electricity use?
•	 Do you need account management or energy management advice? For larger consumers on a demand tariff, it
would be wise to seek specialist advice.
•	 Decide on a contract period: a longer contract may lower the rate.
•	 Decide on whether you want to fix firm prices up front for the contract period to avoid any increases.
Using the RICS Leasa
App to Compare Energy
Efficiency
The RICS Leasa App can help you
identify and compare:
•	 the energy efficiency of buildings, and
•	 the energy efficiency and cost of
tenancy lighting.
Using the ‘Search BEEC’ tool in the
RICS Leasa App will search through
the BEECs database to find the
tenancy you are looking for. If the
building has a BEEC, the App will show
you the lighting efficiency rating for the
tenancy and the NABERS Energy for
Offices rating for the base building – so
you can easily see which buildings and
tenancies perform better. The BEEC
data is also automatically included
when comparing the features of
tenancies in the ‘Tenancies’ tool.
The RICS Leasa App enables you to search
for tenancies in the BEEC database or enter
tenancy details manually.
If the building does not have a BEEC
certificate you have the ability to
enter the Net Lettable Area (NLA)
and Nominal Lighting Power Density
(NLPD) manually.
For potential new tenancies the NLA
can be provided by the real estate
agent advertising that space for lease.
For your existing tenancy the NLA will
be in your lease.
For potential new tenancies the
leasing agent should also be able to
provide you with the NLPD for the
space in question. For your existing
tenancy you should speak with the
building manager.
Calculating the total energy cost
for a new tenancy is challenging
because usage of office equipment
varies. The RICS App can help you
calculate indicative costs by using
information from the BEEC and the
App equipment register.
31PART 2 | CHAPTER 4 | Understanding your Tenancy Energy Use
How to Read Your
Energy Bill
The amount of information on
electricity bills can vary significantly
and can be very complex. An
example of a typical bill is shown
and explained below. (This bill relates
to a 1000 m2
tenancy in NSW and
excludes GreenPower.) Not all bills
would be this complex and in some
instances, particularly where building
owners on-sell power to tenants, they
may comprise just a few lines.
A typical commercial facility’s electricity bill
1: Account details
This is a straightforward item,
describing the account number,
the name of the business and the
electricity supply address.
2: Supply period
This covers the period of supply, and
ranges approximately from 30 days to
90 days.
3: NMI
National Meter Identifier (NMI) is a
unique number that identifies your
electricity meter.
4: Losses
This item lists the electricity lost
during transmission and distribution.
These losses are equivalent to
approximately 10% of the total
electricity transported between power
stations and market customers.
The loss factors are calculated and
fixed annually and represented
mathematically.
5: Energy charges
This is the actual charge of electricity
billed per every kilowatt hour (kWh)
used. The charges are based on
the agreed contract rates and are
negotiable. Energy usage charges
can be billed either as a time-of-use
charges such as peak, shoulder and
32 PART 2 | CHAPTER 4 | Understanding your Tenancy Energy Use
8: Off-peak charges
Electricity used at all other times from
the abovementioned is charged at
off-peak rates. The rates are lower
because the overall demand is lower.
In an energy efficient commercial
office setting, there should be little
off-peak electricity usage as these
times generally fall outside of the
normal occupancy hours. Most off-
peak usage would be associated
with 24-hour IT and communications
equipment and the associated air
conditioning. If off-peak consumption
is high, this might suggest poor
energy efficiency (e.g. computers
and lights left on when the space is
unoccupied).
9: Total energy usage
Total energy usage is the sum of
peak, shoulder and off-peak charges.
This is expressed in kilowatt hours
(kWh). The total energy usage is one
of the important components of a
NABERS Energy for Offices rating
assessment.
10: Network charges
These comprise the fees the
electricity retailer pays to the
electricity network owner for using
their networks to supply electricity
to households and businesses. For
each type of ‘time-of-use’, there is a
corresponding network charge. They
are classed as non-contestable.
11: DUOS as per time-of-use
DUOS (Distribution Use of System)
charges are based on the usage
of the network system as per the
peak, shoulder and off-peak times
of the day. These charges are non-
negotiable as they are charged by
the network owners to the electricity
retailers.
12: DUOS for peak capacity
The peak capacity charge, levied by
the network owner, is determined
by the peak electricity demand at
the premises (usually recorded in a
half-hour period). It is determined
by the maximum demand generated
by the premises on the network.
Peak demand is measured in
kilovolt-ampere (kVA) and is reset
at each billing cycle. If you reduce
your peak level of consumption
(through energy efficiency and active
load management) this can have
a significant impact on your bill. It
should be noted that this charge is
not found on all bill types.
13: Network access charge
This regulated fee is charged by
network service providers, and relates
to the ongoing provision of poles and
wires to a customer’s premises. The
charge depends on the location and
the quantity of electricity transported
to each individual meter at the
premises and is non-contestable.
14: Market Charges
These regulated charges comprise
administrative charges and charges
relating to maintaining key technical
characteristics of the power system,
such as frequency and voltage. They
are non-contestable.
15: NEM charges
The National Electricity Market
(NEM) operates as a wholesale
market for the supply of electricity to
electricity retailers and end-users in
Queensland, New South Wales, the
Australian Capital Territory, Victoria,
South Australia and Tasmania.
The charges on the bill are comprised
of NEM administration charges and
NEM ancillary services charges.
The NEM administration charge is
fixed and the NEM ancillary services
charge varies from billing period
to billing period based on network
load characteristics. The variation
occurs because maintenance of the
key technical characteristics of the
power system, such as frequency and
voltage, is outsourced to the most
competitive bidder.
off peak, or usage blocks where higher
rates apply if the electricity usage
exceeds a certain kWh value. The
time-of-use charges are only possible if
the meters installed have the capability
to record this. These charges are
considered to be contestable.
6: Peak charges
Peak charges apply to electricity used
on weekdays between certain times
of the day. For this particular bill, they
apply from 2 pm to 8 pm. Some other
retailers nominate times such as 7 am
to 9 am and 5 pm to 8 pm. Generally,
the rates are higher for electricity
used during the peak period. This is
a reflection of higher demand during
those times of the day. Altering
the usage by avoiding any non-
essential electricity consumption can
reduce peak charges. The rates are
negotiable with the electricity retailer
at the time of contract.
7: Shoulder charges
Shoulder charges apply to electricity
used on weekdays or weekends
between certain times of the day. For
this particular bill, they apply from 7
am to 2 pm and 8 pm to 10 pm. Other
retailers may have different times for
shoulder rates, such as 9 am to 5 pm
and 8 pm to 10 pm. Some retailers
charge shoulder rates from 7 am to 10
pm on weekends and public holidays.
The shoulder rates for this particular
bill are similar to peak rates, and they
are negotiable with the electricity
retailer at the time of contract.
33PART 2 | CHAPTER 4 | Understanding your Tenancy Energy Use
16: Other charges
These are generally non-contestable
charges fixed by government.
17: Meter provision
This is a charge for the cost of
metering equipment installed at a
customer’s site, as well as the meter
reading and data management costs
of metering services.
18: LRET charges
Large-scale Renewable Energy
Target (LRET) charges represent the
cost that electricity retailers pass
on to customers to offset the cost
of complying with the obligations
under the Australian Government’s
Renewable Energy Target (RET).
These Australian Government
charges are levied to fund large-scale
renewable energy projects such
as concentrated solar power and
wind farms.
19: SRES charges
Small-scale Renewable Energy
Scheme (SRES) charges, along
with LRET charges, are part of the
Australian Government’s Renewable
Energy Target.
20: Carbon charge
This charge is a result of the Australian
Government’s carbon pricing scheme
that began on 1 July 2012.
21: NSW Energy Savings
Scheme charge
The NSW Government obligates
electricity retailers to buy Energy
Savings Certificates (ESC) in order
to meet legislated targets. The
charge for this is passed down to the
customers of the electricity retailers.
Using the RICS Leasa
App to Track and
Review your Energy Use
The ‘Energy Bills’ tool in the RICS
Leasa App provides you with a tool to
enter information found on your energy
bill so you can see changes in your
energy consumption and cost. Once
you start entering this information,
you will be better able to estimate a
breakdown of your energy costs for
lighting and equipment.
If you enter the date that the bill is
received and the billing cycle (e.g.
quarterly) the RICS Leasa App will
remind you to enter your billing
information. All you need to do is
enter the cost (including GST) and
either the total kilowatt hours shown
on the bill or the meter readings.
The RICS Leasa App enables you to track and review your overall tenancy energy use.
34 PART 2 | CHAPTER 4 | Understanding your Tenancy Energy Use
Chapter5
P2
Managing Your
Tenancy Energy Use
Control Versus
Influence
When considering energy efficiency,
it is important to note what you
can ‘control’ and what you can
‘influence’.
Most tenants will not be able
to control base building energy
consumption because the
responsibility for this lies with the
building owner. Base building power
is generally the power consumed
by building services such as air
conditioning, lifts, lobby lighting
etc. Tenants pay for this through
their rent and outgoings. You can
influence the building owner and
manager by asking them to operate
the building more efficiently, or use
a green lease to document specific
energy efficiency goals etc., but you
can rarely enact base building energy
efficiency initiatives yourself.
However, you do have control
over the energy consumed within
your own tenancy. Tenancy energy
consumption is associated with your
lighting, the equipment you use,
(such as computers, photocopiers,
fridges etc.) and supplementary air
conditioning (e.g. computer room and
meeting room air conditioners). You
can chose when and how to operate
such equipment. You can also factor
in energy efficiency when making
decisions on which equipment to
purchase.
That said, most tenants will inherit
the lighting installation when moving
into a new tenancy. The lighting is
generally owned by the building
owner, and if it is inefficient you will
pay more for power than you need
to. This is the key reason that BEECs
state the NLPD, so prospective
tenants can make an informed choice.
Excessive energy use is unnecessarily expensive, as
well as being polluting and wasteful of resources that
could be used more efficiently by future generations.
Achieving an energy efficient tenancy will incur little or
no additional cost to set up and will save future costs
and reduce your carbon footprint through the life of
your tenancy.
35PART 2 | CHAPTER 5 | Why Energy Efficiency is important for SMEs
Typical Tenancy Energy
Breakdown
The diagrams below show the typical
energy breakdown within tenancies,
with and without supplementary air
conditioning. Supplementary air
conditioning can be a significant user
of energy especially when it is not
used efficiently.
Tenancy energy breakdown without supplementary air conditioning
Tenancy energy breakdown with supplementary air conditioning
36 PART 2 | CHAPTER 5 | Why Energy Efficiency is important for SMEs
Energy Audits
Knowing where your energy is going
is very important, especially when
you are embarking upon an energy
savings journey. An energy audit can
be a useful exercise in this regard.
Energy auditing generally falls into
three categories.
•	 A Level 1 audit is relatively simple
and would involve a ‘walk through’
of your tenancy and a review of
past consumption. Accuracy is
not great, but for tenancies where
energy usage is consistent a
Level 1 audit can be highly cost
effective.
•	 A Level 2 audit involves a more
detailed assessment of energy
use, and the results should
provide greater certainty when
making energy saving investment
decisions. Level 2 audits are useful
when variable loads are present
and you are keen to get a better
sense of how these impact your
energy consumption.
•	 A Level 3 audit is the most
detailed. The results of a Level
3 audit provide significant
detail and consequently greater
certainty when making investment
decisions, but of course this
comes at a price.
In most tenancies energy use is
relatively clear – lights, small power
(computers, printers, peripherals etc.)
and possibly some supplementary
air conditioning. A good office
manager should be able to determine
savings potentials, with a fair degree
of accuracy, just through a Level 1
audit. Since a Level 1 audit is usually
significantly cheaper than Level 2 or 3
audits, this means there will be more
money to spend on initiatives that
actually save energy.
While audits are an important tool
for an office manager, they need to
form part of a strategy. In isolation an
audit may do a good job at identifying
opportunities but it won’t deliver
savings – and that’s where an energy
savings action plan comes in.
Energy Savings
Action Plans
Even the best energy savings
initiatives are often not implemented
because key decision makers don’t
make a decision. Whether due to time
constraints, perceived risks or even
poor management, there are shelves
full of energy audits gathering dust.
A good energy savings action plan
will help you identify the barriers
to implementing energy savings
initiatives, and come up with
resolutions even before auditing starts.
A good plan will include decisions
about financial hurdles. For example,
you may decide up-front that energy
saving opportunities that will cost less
than $1500 to implement, and have a
payback of less than four years, will
be implemented immediately without
requiring further approval.
A good plan will tease out the
management barriers to implementing
energy savings initiatives. This has
the potential to be a painful process,
especially if some senior managers
are found to be unwilling to embrace
energy efficiency, but it is better
to know the barriers up-front (and
then try to address them) rather
than find them later after expending
considerable time and effort.
With an energy savings action plan,
the energy audit then becomes the
technical component. It is obviously
important but it’s only part of the
equation. And, with the tough
decisions being made before the
audit is commenced, you have a
much greater chance of delivering
meaningful savings.
CitySwitch and Energy Saver support
tenants in creating energy savings
action plans. For more information go
to: http://cityswitch.net.au
37PART 2 | CHAPTER 5 | Why Energy Efficiency is important for SMEs
Benchmarking Energy
Efficiency using NABERS
NABERS has had a significant
impact on commercial office space
because it allows energy efficiency
to be benchmarked. NABERS is now
used by many building owners and
tenants to better manage their energy
efficiency initiatives.
NABERS is a national rating system
that measures the environmental
performance of Australian buildings,
tenancies and homes. It is
performance based and provides
a rating for a building that is based
on the environmental impacts from
its operation. NABERS ratings
provide simple indications of the
environmental impact of the buildings
when compared against the national
average.
NABERS has the following rating
systems for commercial property:
•	 NABERS Energy for Offices
-- base building – not including
tenancies and lettable areas
-- whole of building – includes
tenanted areas
-- tenancy – individual tenancies
•	 NABERS Water for Offices
-- whole building
•	 NABERS Waste
•	 NABERS Indoor Environment
Quality.
A NABERS Energy for Offices rating is
based on the amount of greenhouse
gas generated due to the energy
consumed. The rating includes the
consumption of all energy including
electricity, gas, diesel, etc.
NABERS ratings go from 0 (very
poor) to 6 (market leading). For more
information see www.nabers.gov.au.
GreenPower can be used to improve
a NABERS rating. However, it is
reported separately and is not
recognised under the National
Greenhouse and Energy Reporting
Scheme (NGERS). For more
information see www.climatechange.
gov.au/reporting.
Choosing Energy
Efficient Equipment
Energy consumption should always
be a consideration when choosing
office equipment; the right choice
can make a significant difference to
your energy use. Take for instance
multi-function printer/copier/scanners
where two models may have identical
print performances but one consumes
four times the power of another.
How do you know? A good place
to start looking is the equipment
manufacturers’ technical data sheets.
When reviewing power consumption
you need to look at both power in
use, and power in standby mode.
Don’t just look at a nameplate rating
(these can be misleading). When it
comes to computers, laptops are
generally more efficient than desktop
computers (primarily because they
need to run extended periods in
battery mode and therefore have to
use power wisely). That said, there are
a number of energy hungry laptops on
the market.
Marrying a laptop to a docking station
can deliver desktop-like integration
(i.e. a full-sized keyboard, mouse
and monitor without the desktop
energy consumption), yet it provides
the flexibility to ‘undock’ and work
remotely. Some organisations that
have made the move to laptops
have reported increased productivity
because staff often take work with
them when they leave the office.
Some equipment choices are made
easier through energy labeling. When
choosing a fridge or dishwasher for
instance, you can determine the
likely energy performance from the
mandatory energy rating displayed on
the appliance.
Of course, whatever equipment you
choose must be properly managed.
Putting equipment into sleep mode
quickly can help, and you should
ensure the automatic settings are as
short as can be tolerated.
You will never be more efficient
than by turning things off – so
make this simple for everyone by
automating the process (see the WT
Sustainability case study below) or by
making switches and power sockets
easily accessible.
By embedding energy efficiency
criteria into procurement decisions,
and adapting life cycle costing as
opposed to ‘first cost’ considerations,
it should be possible to achieve long-
term savings.
Understanding Energy Rating
Labels
Most electrical appliances sold in
Australia have an Energy Rating Label
to help you compare the electricity
consumption of different appliances.
The label also provides an incentive
for manufacturers to improve the
energy performance of their products.
A Gas Rating Label can be found on
gas space heaters, ducted heating
and gas water heaters.
Sometimes high star-rated models
can cost a little more to buy, but
choosing a cheaper product with
38 PART 2 | CHAPTER 5 | Why Energy Efficiency is important for SMEs
fewer stars could end up costing you
more throughout the product’s life.
The running costs over the product’s
lifetime can easily add up to more
than the original purchase price. If
you consider the running costs as
a ‘second price tag’ it could help
you decide which appliance is best to
buy. For more information see www.
livinggreener.gov.au/energy/energy-
rating-labels.
What is ‘standby’ power?
Standby power is a key source of
hidden energy costs and can amount
to 10% of your electricity bill. It forms
a major part of the base load of
your consumption, i.e. the constant
consumption load running 24 hours a
day, 365 days a year.
Many appliances and computers
have a standby mode so they can
turn on quickly. However, standby
mode can use a lot of energy even
when the appliance isn’t being used.
Sometimes it can be difficult to tell if
equipment is on or off. If you switch
appliances off at the wall when you
aren’t using them, it guarantees
that you will save energy. For more
information on standby power go to:
www.livinggreener.gov.au/energy/
energy-efficient-appliances.
Using the RICS Leasa App to
manage energy consumed by your
office equipment
The RICS Leasa App includes an
‘Equipment’ tool to help you manage
a list of the energy consuming
equipment in your office, including a
function to estimate how much power
your equipment consumes each year.
If the appliance has an energy star
rating label you can use the annual
consumption figure quoted or you
can estimate the power consumption
based on how long it is used and
whether it has a standby low
power mode.
The RICS Leasa App enables you to manage
a list of the energy consuming equipment in
your office and estimate how much power is
consumed each year.
39PART 2 | CHAPTER 5 | Why Energy Efficiency is important for SMEs
Lighting
Lighting consumes a significant
proportion of the energy associated
with a tenancy. For tenants without
supplementary air conditioning,
lighting can account for 50% or
more of all tenancy power used.
It plays an important role from an
indoor environment perspective, and
can have profound effects on the
occupants wellbeing and productivity.
Yet many tenants have little or no say
in the lighting design of their tenancy
(other than the relocation of fittings
to suit partition layouts), as the
lighting is generally the property of
the building owner.
In most commercial offices the
general lighting will make use of
fluorescent tubes recessed within
a false ceiling. Compact florescent
lights are also common (usually
in ‘downlight’ fittings), and accent
lighting often takes the form of low
voltage halogen fittings.
The efficiency of lighting systems can
differ significantly. A typical office
would have a lighting level target of
320 lux measured on the working
plane (usually a desk). Good lighting
systems can achieve this using 7W
or less of electricity per m2
. Poor
systems might use 14 W/m2
or more
(twice as much for the same result).
Luminaires
The type of light fitting (luminaire)
is critical. A cursory glance at the
ceiling of most offices might lead you
to think all luminaires are roughly the
same. However, appearances can be
deceptive. Critical differences may be
apparent only to a lighting specialist,
and of course the tenant when they
compare energy bills.
The luminaire determines how the light
from the lamp is distributed (through
reflection, focus and diffusion). Some
luminaires allow for wider spacing
when compared with others, which
in turn may mean fewer fittings to
achieve the desired illumination levels.
Some luminaires may be equipped
with sophisticated control gear that
allows the lamps to be dimmed or
more effectively switched on and off
(though be careful, as some control
gear consumes power while in
standby mode).
Lamps
The type of lamp is important.
Most fluorescent tubes fall into two
categories: T8 and T5.
•	 T8 tubes are often 1200 mm long,
rated at 36 W, and have traditionally
been associated with ‘ferric core’ or
magnetic control gear.
•	 T5 tubes are thinner in diameter
and often 1148 mm long. Most
are rated at 28 W and they
are associated with electronic
transformers.
T5 fittings are often, but not always,
a more efficient lighting solution, but
there are plenty of offices with T5
lighting systems that have a NLPD far
in excess of a desired 7 W/m2
or less
and many with modified T8 fittings
that have a NLPD below 7 W/m2
.
Not all lamps are the same. Lighting
designers use lamps with different
‘colour temperatures’ to create
different looks, something to be
mindful of when replacing tubes.
LED (light emitting diode) lamps are
becoming more prevalent, especially
as replacements for incandescent
lights (such as low voltage halogen).
The efficiency of LEDs is improving
but they are not a universal energy
efficiency panacea and the decision as
to when and where to use them needs
careful thought. Retrofitting existing
luminaires with a new type of lamp
doesn’t always deliver an ideal result.
Lighting controls
The way lighting is controlled is also
an important factor. Traditionally
office lighting has been turned on and
off from a central wall plate. When
there are many circuits it can be
difficult for an occupant to determine
which switch serves their area, so
all lights get turned on whether
needed or not. If someone forgets to
turn the lights off at the end of the
day, the lights will burn all night and
possibly all weekend. Timed reset
control (whereby lights are turned off
automatically at predetermined times
and must be restarted manually) will
help reduce the impact of people
forgetting to turn lights off, but this is
only one step. Occupancy sensing,
such that lights turn on only when
people are in a particular area,
can deliver much greater levels of
efficiency, provided that the areas
they serve are not too large, and the
times that they keep the lights on
once occupancy is no longer sensed,
is not too great.
40 PART 2 | CHAPTER 5 | Why Energy Efficiency is important for SMEs
Integrating occupancy control
of lighting can be made easier
if the lighting system has been
‘networked’. Such a system can
usually be configured through
computer programming as opposed
to ‘hardwiring’ which means changes
to the way lights are controlled can
be done quickly and efficiently. Use of
these systems is not yet common but
is on the increase.
The Commercial Building Disclosure
scheme recognises the important
role that lighting plays in determining
the energy efficiency of a tenancy.
(See Chapter 3 for more information
about the CBD scheme and NLPD.)
NLPD information can be very useful
when comparing tenancies for lease.
If a space that you are interested in
leasing has an NLPD of more than
7W/m2
, you could use this information
in your lease negotiations. The
building owner must approve any
changes to the lighting system; ask
them to provide a system that is more
energy efficient. Also ask for lighting
controls that will best work for you.
For more information about energy
efficient lighting see the Energy Saver
Energy Efficient Lighting Technology
Report, Office of Environment and
Heritage, 2012: www.environment.nsw.
gov.au/sustainbus/energyefflight.htm.
Using the RICS Leasa App to
understand potential lighting
cost savings
The RICS Leasa APP provides a
simple “Calculator’ tool to help you
understand how various factors affect
the cost of lighting in your tenancy
and other tenancies that you may
be considering. Lighting costs are
affected by how long the lights are
kept on, the floor area, the number
and type of lights installed (which is
represented by the NLPD) and the
cost of electricity. You can drag the
sliders to see how the cost changes.
Engaging with your building owner
to install energy efficient lighting can
significantly reduce your tenancy
energy bills.
The RICS Leasa App ‘Calculator’ tool
enables you to compare the lighting costs
(and savings) of different space for lease.
41PART 2 | CHAPTER 5 | Why Energy Efficiency is important for SMEs
Supplementary Air
Conditioning
Most commercial office space in
Australia is air conditioned, and the
air conditioning is usually deemed
to be a base building service
(provided by the building owner).
The air conditioning is normally
designed to deal with a typical
‘nominal’ heat level, and if a tenant
decides to exceed this loading they
would be expected to supplement
the air conditioning with additional
equipment. The most common
examples of where nominal loads get
exceeded include computer rooms
(high heat levels from IT equipment)
meeting rooms (high occupancy
density requires additional ventilation
and cooling), training rooms and
‘trading floors’.
Supplementary air conditioning
can take many forms, but generally
systems make use of ceiling or floor-
mounted water-cooled package units,
or ‘split’ type DX (direct expansion)
units. Water-cooled units would
be connected to the base building
‘tenant condenser water loop’
(common in A Grade and Premium
building types and often found in
larger B Grade buildings) which
is used to reject heat via a central
cooling tower.
DX units tend to be used when
condenser water loops are not
available, or in mission critical
applications where reliance on a third
party system may be considered
inappropriate. Since they rely on
running refrigerant pipes to an
outdoor heat rejection device, their
use tends to be limited to spaces
with easy access to a roof, balcony or
car park. (Running refrigerant pipes
through other tenancies or over a long
distance can be problematic.)
Supplementary air conditioning can
consume a significant amount of
power, especially if the equipment
has to run 24 hours a day (usually
the case in computer rooms). Even a
small supplementary air conditioner
could end up using more power than
the entire tenancy lighting system,
so it is very important that the use
of supplementary air conditioning is
reviewed from the outset.
The first question to ask is ‘Do I really
need it – can I design it out?’ For
example, for a meeting area, do you
really need a dedicated enclosed
space, or could you use space within
the open office area? The latter would
be served by the base building air
conditioning and this would eliminate
a dedicated unit, saving not only
energy but significant fit-out costs.
42 PART 2 | CHAPTER 5 | Why Energy Efficiency is important for SMEs
Computer rooms can also sometimes
be designed out. The move by
some companies to ‘off-site’ IT
equipment (such as using cloud-
based computing) reduces the need to
operate temperature-sensitive servers
and the like within a dedicated secure
space. High-speed communication
equipment can often operate at much
higher temperatures, and may not
require any form of additional cooling.
(See the WT Sustainability case study
on page 46.)
If a computer room is needed,
can the heat load be ‘contained’
and reduced? Could heat-tolerant
communications gear be separated
from temperature-sensitive
equipment, and its head load dealt
with differently, e.g. through the
normal base building air conditioning?
Can equipment be turned off out of
hours? Can the equipment be run
warmer? There is rarely justification
for computer room temperatures
to be less than 24 degrees, and in
many cases temperatures in excess
of 28 degrees will still comply with
equipment manufacturers guidelines.
When supplementary air conditioning
can’t be avoided, it is important that it
is carefully designed. Sizing is critical,
and oversizing should be avoided
where possible. Oversizing is an easy
mistake to make because often it is
difficult to determine ‘real’ heat loads
(particularly when dealing with IT
equipment). Time spent at the design
stage will pay big energy savings
dividends in the long term.
Proper control is also very important.
Ensuring equipment runs only
when it is needed is not always
straightforward, particularly for
equipment servicing meeting rooms.
Manual ‘on’ and automatic ‘off’
switching can assist, especially if
the ‘off’ component is determined
using an occupancy sensor. It is also
important to make sure that the ‘in
operation’ control parameters are
correct. Poorly located temperature
sensors can cause supplementary air
conditioning to compete with base
building air conditioning, resulting in
one fighting the other, and both then
running inefficiently as they try to
maintain impossible conditions.
Supplementary air conditioning
requires regular maintenance if it is
to run efficiently. Controls need to be
verified and calibrated on a regular
basis; filters and coils need to be kept
clean. A preventative maintenance
agreement with monthly service
intervals may suffice, but ensure
that the contactor understands that
energy efficiency is a key priority.
43PART 2 | CHAPTER 5 | Why Energy Efficiency is important for SMEs
Managing Energy Efficient Space
Managing Energy Efficient Space
Managing Energy Efficient Space
Managing Energy Efficient Space
Managing Energy Efficient Space
Managing Energy Efficient Space
Managing Energy Efficient Space
Managing Energy Efficient Space
Managing Energy Efficient Space
Managing Energy Efficient Space
Managing Energy Efficient Space
Managing Energy Efficient Space
Managing Energy Efficient Space
Managing Energy Efficient Space
Managing Energy Efficient Space
Managing Energy Efficient Space
Managing Energy Efficient Space
Managing Energy Efficient Space
Managing Energy Efficient Space
Managing Energy Efficient Space
Managing Energy Efficient Space

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Managing Energy Efficient Space

  • 1. Choosing and Managing an Energy Efficient Space: A Best Practice Guide for SME Commercial Office Tenants
  • 2. 41 2 3 5 6 As an overview, here are the top ten quick wins: Download the RICS ‘Leasa’ App from www.rics.org/Leasa You can use the Royal Institution of Chartered Surveyors (RICS) Leasa App to identify and compare the energy efficiency of buildings and individual tenancy spaces you might wish to lease. (See Chapter 2.) Act in good time This is typically a tenant’s biggest mistake. Depending on the size of your tenancy, it can take eight months to two years to review your current and future space requirements. Careful planning and the right advice are essential. Your tenant advisor will be able to suggest the optimum time frame. (See Chapter 2.) Use a RICS-qualified tenant adviser The leasing process is complex, costly and needs expert market and transaction knowledge. Premises are often the second or third highest business cost. RICS chartered property professionals are trained to meet demanding global property standards and to abide by rules of professionalism and conduct. For details of a RICS-qualified tenant adviser contact info@rics.org.au. This should be done at the outset of the process to achieve the best result. This guide is for small to medium-sized enterprise (SME) commercial office tenants. It offers advice on choosing office space for lease and shows how you can benefit by choosing a space that is energy efficient. The guide also explains how you can manage your tenancy in an energy efficient way. Ten Quick Wins Undertake due diligence You’ll need to undertake a detailed investigation of the premises you have shortlisted – how they are designed and managed and meet your specific needs. (See Chapter 2.) Choose a tenancy in a building that is energy efficient You should aim to be in a building with a National Australian Built Environment Rating System (NABERS) Energy for Offices base building rating of 4.5 or above. The RICS Leasa App will show you the ratings for buildings that have been assessed as part of the Building Energy Efficiency Certificate (BEEC) process. For broader standards, see the Property Council of Australia (PCA) publication A Guide to Office Building Quality which sets benchmarks for the quality of buildings. (See Chapter 3.) Choose a tenancy which has energy efficient lighting You should aim for a tenancy which has lighting with a Nominal Lighting Power Density (NLPD) below 7 W/m2 . The RICS Leasa App will show you the lighting ratings for tenancies that have been assessed as part of the BEEC process. (See Chapter 5.) TEN QUICK WINS2
  • 3. 9 10 8 7 Set sustainable standards for your tenancy fit-out and tread lightly Use the Green Building Council of Australia (GBCA) Green Star – Interiors rating tool and consider achieving a rating for your tenancy. (See Chapter 3.) Consider the advantages of a ‘green lease’ Green leases provide obligations on both the owner and tenant in relation to environmental and energy efficient building performance and improve the environmental performance and energy efficiency of the tenancy. (See Chapter 5.) Record and monitor your energy consumption You can’t manage if you don’t measure! Use the RICS Leasa App to analyse your energy consumption and put in place an energy plan and audit to improve your energy efficiency. (See Chapter 4.) Manage the energy consumption in your tenancy Buy the right equipment. Turn equipment off and manage the standby time of appliances. Set up any supplementary air conditioning properly. Promote, report on and encourage energy efficiency. Use the RICS Leasa App to record the energy consumption of equipment in your office. (See Chapter 5.) Acknowledgement This activity received funding from the Australian Government Department of Resources, Energy and Tourism as part of the Energy Efficiency Information Grants Program. Disclaimers The views expressed herein are not necessarily the views of the Commonwealth of Australia, and the Commonwealth does not accept responsibility for any information or advice contained herein. This document is a guide only. It is not intended to be an instruction manual, nor a detailed step by step process which must be followed, but rather a guide to the principles of choosing and managing space for lease. This guide does not provide legal advice and is general in nature. You are advised to take property and legal advice from a properly qualified advisor. Copyright Published by RICS Oceania (First Edition 2013) RICS Oceania, level 16, 1 Castlereagh Street, Sydney, NSW, 2000. No responsibility for loss occasioned to any person acting or refraining from action as a result of the material included in this publication can be accepted by the author or publisher. © Copyright RICS June 2013. Copyright in all or part of this publication rests with RICS, and save by prior consent of RICS, no part or parts shall be reproduced by any means electronic, mechanical, photocopying, recording or otherwise, now known or to be devised. RICS gratefully acknowledge the work of the RICS Oceania working party in the drafting of this Guide John Goddard FRICS. J Goddard & Co Jenny Goddard, J Goddard & Co Steve Hennessy FCIBSE, WT Sustainability Nick Hudson, RICS Oceania and the following RICS Chartered property professionals for their peer review; Mike Franklin MRICS, Franklin Property Consulting James Shanks MRICS, Chapman Shanks Giles Knapman MRICS, Jones Lang Lasalle Mark Daniel MRICS, Property Beyond Paul Murgatroyd MRICS, CBRE Global Corporate Services Sara Wilkinson FRICS, University of Technology Sydney Bruce Thomas - Carbon Training International This Guide has been printed on re-cycled paper 3TEN QUICK WINS
  • 4. Ten Quick Wins 02 Abbreviations Used in this Guide 05 About this Guide 06 Professional Advice 07 Free Mobile Apps and Web Tools 07 Part 1 – Choosing an Energy Efficient Tenancy 08 Chapter 1: Why Energy Efficiency is important for SMEs 09 Five Reasons to Act Now 09 Why does Energy Efficiency Matter? The Big Picture 11 Chapter 2: Reviewing your leasing options 14 Seek professional advice 14 Allow plenty of time 14 Do you stay or do you go? 15 Moving to New Premises 16 Steps Involved in Choosing New Premises 16 Preparing your tenancy brief 16 Inspecting premises – what to look for 16 Tenant Due Diligence 18 Evaluating and Comparing the Various Premises 18 Chapter 3: Comparing Spaces to Lease – Criteria to Consider 20 Total Occupancy Costs 20 Location 23 How Much Space do You Need? 23 Energy Efficiency 23 Commercial Building Disclosure 25 Hidden Costs of Poor Performance 26 Grade (quality) of the Building 27 End-of-trip Facilities 28 Tenancy Ratings 28 Contents 4
  • 5. Abbreviations Used in this Guide BEEC Building Energy Efficiency Certificate EUA Environmental Upgrade Agreement CBD Commercial Building Disclosure GBCA Green Building Council of Australia IEQ Indoor Environment Quality NABERS National Australian Built Environment Rating System NLA Net Lettable Area NLPD Nominal Lighting Power Density PCA Property Council of Australia RICS Royal Institution of Chartered Surveyors SME Small to Medium-Sized Enterprise Part 2 – Understanding and Managing your Tenancy Energy 29 Chapter 4: Understanding your Tenancy Energy Use 30 Buying Power and Saving Money 30 GreenPower 30 Cogeneration and Trigeneration 30 Negotiating with energy retailers 31 Using the RICS Leasa App to Compare Energy Efficiency 31 How to Read Your Energy Bill 32 Using the RICS Leasa App to Track and Review your Energy Use 34 Chapter 5: Managing your Tenancy Energy Use 35 Control versus influence 35 Typical Tenancy Energy Breakdown 36 Energy Audits 37 Energy Savings Action Plans 37 Benchmarking Energy Efficiency using NABERS 38 Choosing Energy Efficient Equipment 38 Lighting 40 Supplementary Air Conditioning 42 Green Leases 44 Case Study – Optimising Office Energy Consumption 46 More information 48 Chapter 6: Looking at the Bigger Picture – Managing your Tenancy Carbon Emissions 49 A Brief Introduction to Carbon Emissions 50 Further Information 57 Appendices - Checklists 57 Appendix A - What to look for in a tenancy 58 Appendix B - Inspecting the premises 60 Appendix C - Possible deal breakers 63 5
  • 6. For most SMEs the process of finding suitable space to lease, or deciding whether to stay in an existing premises, can seem extremely complex. There are many costs, benefits, obligations, processes and choices to consider. A key aim of this guide is to show how you can address energy efficiency as part of the tenancy leasing process. This can be achieved through selecting the right building and the right space for lease, managing the fit-out appropriately and operating the leased premises efficiently. The guide is presented in two parts: • Part 1 – Choosing an Energy Efficient Tenancy • Part 2 – Understanding and Managing your Tenancy Energy. This guide is for commercial office tenants who are considering moving to new premises, and for tenants who wish to find out how to better manage their energy use. The guide focuses on small and medium-sized enterprises (SMEs) leasing less than 2,000 m2 or with less than 100 staff, though the principles can equally be applied to larger tenancies. About this Guide This guide provides best practice advice on: • understanding the leasing process and where to find the best independent advice • deciding whether to stay in an existing tenancy or move • prioritising the key features of different tenancies • what to look for when inspecting tenancies • what to include in negotiations with your existing or new building owner • making informed decisions about different tenancies • understanding total occupancy costs • why energy efficiency is important for tenants • how to choose an energy efficient tenancy • how to manage and improve energy efficiency in a tenancy • the measurement, management and reduction of tenancy carbon emissions. ABOUT THIS GUIDE6
  • 7. Thinking about moving offices? Factors you should consider carefully include: • the amount of space required • the total occupancy costs of the tenancy (rent, outgoings, incentives, ongoing tenancy energy costs, fit out costs, make good costs etc.) • the costs to exit your current premises – make good and write offs • the time a relocation project takes from planning to physical relocation • business and financial priorities and objectives • whether you have the internal resources to project manage a move • key features of the tenancy (location, views, standard of building, ceiling height, lighting, indoor environment quality etc.) • the lighting efficiency of the tenancy • the environmental performance of the base building and the benefits that it can bring to its tenants. Professional Advice This guide will not take you through every detail of leasing a commercial office tenancy but aims to help you better understand the leasing process, so you can ask pertinent questions and get the information and help you will need at the right times. The process of evaluating your requirements, choosing a tenancy and negotiating optimal lease terms with your building owner can be critical to the success of your business. While this guide is a good starting point, we strongly recommend that you obtain professional advice from a tenant adviser. RICS-qualified commercial property tenant advisers have met RICS standards of education, training and professional development and are regulated by RICS to a global standard. For advice from a RICS-qualified tenancy adviser contact RICS at info@ rics.org.au or call +61 (0) 2 9216 2333. FREE RICS LEASA MOBILE APP AND WEB TOOLS In tandem with this guide, RICS has produced a series of mobile applications (apps) and web tools to help you make well-informed decisions about the tenancy you lease and tenancies you are considering leasing. These tools can help you to: • compare and rank different tenancies available for lease • calculate and compare their total occupancy costs, tenancy energy costs and tenancy lighting costs • track tenancy energy bills • understand how choosing a different space or changing other tenancy variables (e.g. the amount of space) will affect the energy efficiency and cost of that space. The apps are available for Apple iPhone, iPad and Android mobile devices and the web tools are available for desktop web browsers. To download the free apps and tools visit the RICS website at www.rics.org/Leasa 7ABOUT THIS GUIDE
  • 8. Part 1: Choosing an Energy Efficient Tenancy Part 1 of this guide examines the leasing process and suggests key criteria you should consider when you are reviewing your lease or considering moving to new premises. It shows why energy efficiency is important for SME tenants, and why and how you should consider the energy efficiency of the both the tenancy space and the base building. 8 PART 1 | CHAPTER 1 | Why Energy Efficiency is important for SMEs
  • 9. Chapter1 P1 Why Energy Efficiency is important for SMEs 5 REASONS TO ACT NOW: 1. Energy prices for businesses are predicted to rise steeply between now and 2020 Rising fossil fuel prices, ageing electricity infrastructure, and the investment needed to address this, all mean that energy costs will increase over time for most businesses. The sooner you act, the less it will cost. Significant savings can be made from the start if you position your business in an energy efficient building and tenancy. 2. Sizeable cost savings can be achieved Tenants can achieve sizeable cost savings if the tenancy they choose is energy efficient. Choosing a tenancy with energy efficient lighting could save between $30,000 (for a 500 m2 space) and $140,000 (for a 2000 m2 space) over the term of a five-year lease. For further details see Chapter 4: Understanding your Tenancy Energy Use, and the RICS Leasa App Tenancy Lighting Cost Calculator. Tenancy size (NLA) m2 Cost savings from an NLPD of 7 instead of 24* 500 m2 $36,000 1,000 m2 $72,000 2,000 m2 $144,000 3. Increasing your competitive edge Increasingly, major corporations track and manage their carbon footprints – reporting to their investors and the market. In many instances they also require their suppliers to demonstrate high standards of environmental performance. For SMEs, being a ‘good environmental citizen’ can give you an edge over your competitors and help with business opportunities where high levels of environmental performance are required. A company’s performance in its own office can be used as proof of environmental commitment. The leverage afforded by good energy efficiency and environmental performance can be substantial. Energy efficiency not only makes good financial sense in a market of rising energy prices, it is also part of a much bigger picture. Energy efficiency is Australia’s untapped energy resource. Australian buildings are responsible for over 20% of our total energy use, and the need for energy efficiency is here to stay as we move towards a low-carbon economy. Energy-aware companies can run their businesses energy efficiently by taking simple steps during their tenancy set-up and operation. It is not just big companies that will benefit from being energy efficient – the value of energy savings is often proportionally greater for SMEs. Source: RICS Leasa App Tenancy Lighting Calculator *Assumes office lighting use of 60 hours per week; energy price of $0.26 per kWh; over the term of a five year lease. 9PART 1 | CHAPTER 1 | Why Energy Efficiency is important for SMEs
  • 10. 4. Partnering with your building owner Building owners are increasingly willing to work with tenants to jointly improve the energy efficiency of their building and the spaces tenants occupy. By positioning your business in an energy efficient building (or with a building owner who is committed to energy efficiency), you can continue to make improvements to your bottom line by working together. A good example is tenancy lighting where the building owner would normally pay for any lighting upgrades. This can ultimately benefit both the tenant (through lower bills) and the building owner (through better building ratings). Environmental Upgrade Agreements (EUAs) are one way in which tenants can be asked to contribute to the cost of building improvements where there is a clear financial benefit in doing so. 5. Indoor environment quality and productivity Choosing a building which is energy efficient and which operates using sustainable practices means you stand a good chance of benefitting from better indoor environment quality (IEQ). With an increasing focus on overall environmental performance, there is greater awareness of the importance of indoor environment quality. We know that good levels of daylight, better artificial lighting, outlook and views will enhance a person’s enjoyment of their workplace and can lead to better job satisfaction and productivity. IEQ is also linked to employee health and wellbeing, staff retention and recruitment. With staff being the highest cost element of most businesses, companies should look after their human resources by providing the best working environment they can. A small increase in productivity or reduction in staff turnover can far outweigh the rental cost difference of choosing a better performing building. It can also give one company the edge over the opposition when recruiting from a discerning and increasingly mobile workforce. For more information refer to the section on ‘Managing indoor environment quality’ in the Sustainable Property Guide: www. environment.nsw.gov.au/sustainbus/ SustainPropertyGuide.htm. Building CHOICE is more important now Building choice is more important today in attracting and retaining staff. In 2010 47% surveyed felt this was important but in 2012 this figure had increased to 61%. Source: Colliers International Office Tenant Survey 2012 10 PART 1 | CHAPTER 1 | Why Energy Efficiency is important for SMEs
  • 11. WHY DOES ENERGY EFFICIENCY MATTER? THE BIG PICTURE Energy inefficiency has a major impact on carbon pollution and thus accelerated climate change. Climate change is having a significant impact on our economy and the environment. The effects of climate change are real and so it is sound risk mitigation to adopt energy efficient practices. The following overview will help SMEs, who are thinking about adopting energy efficient practices, to consider why their actions are important and how they connect to the bigger picture. Climate Change and Global Warming To understand why energy efficiency is important we need to look briefly at the bigger picture. Climate change is not new but the world is warming at an unprecedented rate linked to human population growth and industrialisation. Climate is the average of prevailing weather conditions. However, it is the rapid change to natural systems, including weather patterns, that is causing concern. 2010 global temperatures were the warmest on record and concentrations of greenhouse gases in the atmosphere reached a new high in 2011. The start of 2013 saw record breaking temperatures in Australia and the first quarter, January - April, was the second hottest on record. The warming picture is not just about new records. It is the lack of temperature range between day and night, and new highs being recorded outside El Nino and drought years, that builds this picture of longer-term warming. The greatest environmental, social and economic impacts are from the frequency of extreme weather events including heat waves and floods. For more information see the Australian Bureau of Meteorology’s National Climate Centre: http://www.bom.gov. au/climate/change/aus_cvac.shtml 5 REASONS TO ACT NOW 1. Energy Price Rises have been and will continue to be significant 2. Sizeable cost savings can be achieved, for example with efficient lighting 3. Being seen as energy efficient and sustainable will increase your competitive edge 4. Partnering with your building owner can help you both achieve financial rewards 5. Choosing a building which is energy efficient and which operates to sustainable practices means you will likely benefit from better IEQ and productivity Australian Bureau of Meteorology 11PART 1 | CHAPTER 1 | Why Energy Efficiency is important for SMEs
  • 12. The Australian population is set to grow from around 23 million to somewhere between 30.9 and 42.5 million by 2050. Worldwide, the population is set to reach around 8.4 billion by 2050. There is an urgent need to consider how we build, how we occupy and how we manage our built environment. Businesses and the property they occupy will be subject to more fire, storm damage or flooding, especially along the coast and estuaries. These events will have implications for all businesses, for example in property values and insurance costs. The need for action: government policies The Australian Government is responding to the challenges to – and from – the built environment and is developing ways to address this by: • reducing emissions, including support for energy efficiency • adapting to unavoidable climate change • helping to shape a global solution. Carbon pollution is the main cause of the rapid climate change we need to address and manage. Australia generates more carbon pollution per person than any other developed country and this is continuing to grow at a rapid rate. Reducing our carbon pollution means we have to produce and use energy in a cleaner, smarter way. Securing a Clean Energy Future is the Australian Government’s report outlining energy saving initiatives as part of a clean energy future. The report provides background information that can help you put energy efficiency into context. The Bigger Sustainability Picture and Risk Mitigation There are many definitions of sustainability. Essentially it encompasses integrating environmental, economic and social best practice to ensure responsible management of resources. It is about a shared mission between those who live, work, trade, or manufacture. As such, sustainability is about risk mitigation, about ‘leaving enough for later’ so society and the environment in which it operates can continue to thrive. Climate change is a risk to sustainability because it presents a limitation. Factoring it in to your business plan makes social, environmental and economic sense. “The costs to Australia of not acting on climate change would be greater than the costs of responsible mitigation. The costs of inaction would increase over time, becoming more pronounced in the second half of the 21st century.” Garnaut Climate Change Review 2011 12 PART 1 | CHAPTER 1 | Why Energy Efficiency is important for SMEs
  • 13. “The central propositions of the mainstream science on climate change are accepted by most Australians. This provides a basis for effective policy action.” Garnaut Climate Change Review 2011 13PART 1 | CHAPTER 1 | Why Energy Efficiency is important for SMEs
  • 14. Chapter2 P1 Reviewing your leasing options Seek professional advice We recommend that you engage a professionally qualified tenancy adviser to assist you. The tenancy leasing process is complex and you will obtain a better result by drawing upon expert market and transaction knowledge from someone who does this work regularly. RICS is the world’s largest and most prestigious professional body for property and construction professionals. RICS chartered members qualify through gaining an accredited degree or equivalent qualification and a minimum two years of structured, planned and assessed experience. Once qualified, RICS members have to abide by and are regulated by rules, codes of professional ethics and professional and technical standards which govern the way they work. For details of a RICS-qualified tenancy adviser contact RICS Oceania at info@rics.org.au. Allow plenty of time Firstly make sure that you have enough time before the end of your current lease. You will need to review your current space and potential new space against predicted operational requirements. If you do decide to move you will need to: • find and compare potential new spaces • decide on the new premises, agree terms and sign a lease • finance and plan your move • allow sufficient time to comply with any exit obligations you may have under your current lease • and, if appropriate, complete a fit-out so you can move in before your current lease ends. This process can take from eight months to two years, depending on the size of your tenancy. Careful planning and expert advice are key to minimising time delays, costs and risks. If your lease is coming to an end you will need to choose between staying in your current premises and possibly upgrading them, or finding and moving into new premises. If your company is heading out on a new venture you will need to make decisions about the premises you are going to occupy. These will be critical to the operation and effectiveness of your business. 14 PART 1 | CHAPTER 2 | Reviewing your leasing options
  • 15. If you do not have sufficient time before your current lease ends, you will either have to negotiate an extension to your current lease or forego the move and stay in your current premises. A lack of time is likely to significantly reduce your ability to negotiate optimum terms with your building owner. However, given sufficient time, negotiations to renew an existing lease, or to lease new premises, provide a wonderful opportunity for discussions with the building owner that could result in a significantly better outcome and lower ongoing costs. For example, lease negotiations provide the opportunity to reduce your energy costs – both for your tenancy and for your proportion of the base building outgoings. Previous experience is invaluable in these situations; with expert help you are more likely to achieve a ‘good deal’. These may include incentives from the building owner – a building owner incurs significant expense in seeking a replacement tenant and this can be used to an existing tenants’ advantage in leveraging more favourable terms. Do you stay or do you go? Relocation is costly and disruptive. The minor upgrading, refreshing or refurbishment of an existing tenancy can have significant cost and time advantages, and can reduce risk. Clearly you cannot change the base building features and amenity, but by careful design you can optimise your use of those premises and avoid the costs and disruption of moving. There are often many reasons to stay put; these might include: • The space works for us, we like it. • We can continue as we are. • We do not have sufficient time to plan and move. • We do not want to spend money on fit-out and relocation costs or the costs of moving a business (e.g. stationery, mail re-direction). • We can negotiate a good rental/ lease deal. • We can leverage our position to improve general lease obligations and reduce future costs. • We have a large ‘make good’ liability. … plus many reasons particular to your company. Reviewing the option to stay Firstly assess and list what is wrong with your existing premises and what needs to be changed. Think about what does not work; you can use the checklist on inspecting the premises in Appendix B to assist in this process. Score your premises to see how it rates and look at the things that can be changed, and those that cannot. In addition, look at the non-tangible items such as cultural fit, down time costs and general management time required to manage a relocation. The lease expiration date also needs to be taken into account. If your options involve significant costs you need to make sure you have a long enough lease term over which to amortse them. You need to talk to the building owner about extending your lease. These discussions may also give you the opportunity to discuss upgrades of the building owner’s equipment and possibly an incentive from the building owner to enter into a new lease or an extension of your existing lease. We recommend you talk with a RICS tenancy adviser to review and plan your strategy as part of an overall occupancy plan. Make sure that you start discussions in good time. Establish the time or date by which refurbishment works need to be complete. This might be the date of the end of your lease. Remember that your review process needs to be complete with enough time to find new premises if your conclusion is that you are better off moving. 15PART 1 | CHAPTER 2 | Reviewing your leasing options
  • 16. Refurbishment can be done in stages if this will make it easier to keep your business operating. There will be a balance between doing as much work, and disruption, as can be borne, and the time taken. There are benefits in doing as much work as possible and then having a grand re-opening so as to reignite staff enthusiasm. Refurbishment over long periods never appears to end. Bigger refurbishment may need staging or ‘churn’ areas that can be used for temporary locations. If you do choose to stay and refurbish your premises you can find more information on planning a refurbishment in the NABERS Energy Management Guide for Tenants (2012). Moving to New Premises If staying is not an option, or if moving to a new location is preferable, you will need to review your company’s requirements carefully. No two buildings are alike and no two tenants requirements are alike. Ensuing that your new premises will meet all your requirements is critical. A commercial office tenancy can influence many aspects of running a business. Your new premises will: • promote your company image to your clients and to potential staff • define your culture and values to your employees, and can make staff proud to be associated with your company • set the basis for your occupation costs • set the basis for a large proportion of your company’s carbon footprint • have an impact on how your company is structured, how it operates and how flexible its working arrangements are • create a catalyst for change • influence your company’s efficiency • influence the enjoyment, productivity and wellbeing of your staff during the time they are at work. Steps Involved in Choosing New Premises Your tenancy adviser will help you through the following steps: 1 Prepare a Tenancy Brief: a detailed list of your company’s requirements 2 Prepare the Request for Proposals (RFP) and issue it to the market – to building owners and their agents. 3 Decide on your shortlist: assess the proposals you receive and prepare a short list of suitable opportunities. 4 Refine the offers 5 Inspect the premises on the short list with the tenant advisor 6 Conduct ‘due diligence’ - detailed investigations on the quality of the building/tenancy and its services 7 Prepare comparative financial reviews of the options 8 Test your fit: Undertake preliminary layout planning to make sure the available space will be adequate for your company’s needs 9 Compare, evaluate and refine your choice of tenancies 10 Negotiate terms with the shortlisted building owners 11 Make your final selection 12 Complete your lease negotiations and sign your lease Some of these steps are discussed in more detail below. Preparing your Tenancy Brief Your tenancy adviser will work with you to develop a comprehensive list of your company’s requirements. The adviser will need to understand your business and its future direction, the space you believe you might need now and in the future, any ‘deal breakers’ and the full list of criteria that are important to you. It’s essential that you or your adviser consult with staff from all areas and aspects of your business to understand their requirements. You can start working on your tenancy brief by writing down the issues and criteria you feel are key to your business and the space you wish to lease. (Criteria you need to consider when comparing premises are discussed in detail in Chapter 3.) Inspecting Premises – What to Look For When you inspect the premises arm yourself with the information already provided by the agent or building owner. Look at the following: 16 PART 1 | CHAPTER 2 | Reviewing your leasing options
  • 17. General attributes • Lobby and entry presence • Lift quality • Standards of maintenance and cleaning • Security arrangements Tenancy attributes Finishes • Ceiling quality • Toilets – finishes and fittings • Accessibility and provisions for universal access • Quality of finishes – carpet, walls and lift lobby Daylight and views • Good levels of natural light that can be enjoyed by the majority of staff • Good views with the ability to see activities and movement, rather than the back sides of adjoining buildings • Check for dark areas and depth from the windows to the central ‘core’ area • Beware of west-facing windows; they can be hot in the afternoons • Are blinds fitted to control solar gain and glare? Energy efficient tenancy lighting and controls • The ability to sub-meter power and lighting Deal breakers – your key criteria You may identify some key criteria for new premises that are not negotiable. For example, your ‘deal breakers’ might include: • a specific financial outcome (P&L, cashflow, capital Expenditure) • minimum 4.5 star NABERS Energy for Offices base building rating • energy efficient lighting (NLPD of 7 W/m2 ) • views, accessible from two- thirds of the floor area, that show open space • minimum ‘Grade B’ for the building (Property Council of Australia grading system) • end of trip facilities including bike and jogging facilities to Green Star standards, i.e. 5% of the building population accommodated by showers, lockers and secure bike storage • good quality toilets • a location 10 minutes from a train station or 2 minutes from a bus stop. • Lighting quality and energy consumption • Look for a NLPD of less than 7 W/m2 • Can lighting be switched in smaller zones? Electrical services • Are tenancy light and power metered separately? Mechanical services If you are going to require supplementary air conditioning: • What provisions are provided by the base building (e.g. tenant condenser water) and is the capacity adequate for your needs? • Will it be charged to the tenant’s or base building’s account? Is it available through the base building’s air conditioning system or will you need to install supplementary ‘package units’? What other environmental efficiencies are provided? Base building attributes • Is the base building lighting upgraded to best available technology throughout the building, fire stairs, car parks, etc.? (The building owner will gain energy savings, as well as air conditioning savings, where more efficient lights are installed in air conditioned areas.) 17PART 1 | CHAPTER 2 | Reviewing your leasing options
  • 18. • Is there adequate after-hours air conditioning control and zoning? • Is there separate monitoring and cost apportioning of after-hours air conditioning (for buildings with multiple tenancies)? What performance reporting is performed by the building manager? Tenant Due Diligence Once you have reduced your options to three potential tenancies, it is time to start your detailed investigation into the way the premises have been designed and set up, how they are managed, how they will perform through the term of your lease and how much they will cost to occupy. What information should be provided by the building owner? In most major commercial buildings, as a minimum you should be provided with: • the floor plan • net lettable area • rent, incentive and outgoings -- Determine whether quoted rent is net rent plus outgoings or gross rent including outgoings. Check whether the incentive is paid on the starting gross rent or starting net rent. • Property Council of Australia (PCA) grading of the building • building mechanical and electrical specifications • details of any planned future upgrade works • where available or required – a Building Energy Efficiency Certificate (BEEC) containing: -- a NABERS for Offices energy rating for the base building or whole building. If this rating is greater than 3 it is above average. However, many buildings now target a minimum rating of 4 or 4.5 stars. -- Nominal Lighting Power Density (NLPD) for the tenancy area lighting. Below 7 W/m2 is good. This will affect the cost you pay for energy for the tenancy lighting. • information about whether after- hours air conditioning may also contribute to your energy and financial costs. Some buildings need to run their whole systems when one tenant calls for after- hours cooling; the costs per hour can be very high. Environmental performance To help understand how you are likely to be treated through the lease term, you might also like to establish: • Is the building management environmentally conscious and focused? • Is the building being managed and maintained to optimise energy efficiency? • What reporting through the Building Management Systems (BMS) is available to the tenant? • Is there a building management committee that actively collaborates with tenants and the building manager to plan and optimise the energy performance? Are there green leases in place or leases available that have some energy efficiency related aspect? Planned upgrades Find out whether major and potentially disruptive upgrade works are proposed to be carried out during the term of your lease. Typically disruptive upgrades may include: • lift upgrades • lobby upgrades • services upgrades, particularly when they are planned out of season (i.e. to minimise disruption to air conditioning performance, air conditioning works are generally planned to be carried out during the cooler months; boilers are generally planned to be worked on in summer.) As a useful tool, this tenant due diligence information is included as a checklist in Appendix B at the back of this guide. Evaluating and Comparing the Various Premises The tenancy brief should identify the key requirements (‘deal breakers’) for your office premises and also other selection criteria that should be weighted in terms of importance. Discount options that don’t meet your ‘deal breakers’ and then score each tenancy option against your weighted selection criteria to help decide on your short list or final preferred location. (For more information about criteria to consider see Chapter 3.) Using the RICS Leasa App to compare spaces for lease The RICS Leasa App includes a simple ‘Tenancies’ tool to help you compare and rank tenancies you are considering. 18 PART 1 | CHAPTER 2 | Reviewing your leasing options
  • 19. You can find tenancies drawn from the BEEC database or enter details directly. Once a tenancy has been chosen you can enter and rate various features of the tenancy including occupancy costs, energy costs, lease type and quality of the building/space. Tenancies from the BEEC database automatically include energy efficiency ratings for the building and tenancy lighting. Once you have several tenancies stored in the App tool you can filter what is displayed, to either change the order of preference of tenancies, or show or hide individual tenancies. You can change the ranking of your potential tenancies and move them into the ‘short listed’, ‘not rated’ or ‘rejected’ categories by simply dragging the right icon bars up or down. You can switch to a comparison screen which compares the features of your shortlisted tenancies. (On iPhone and iPad devices switch to the comparison mode by turning the device on its side.) The RICS Leasa App enables you to compare the features of different tenancies. 19PART 1 | CHAPTER 2 | Reviewing your leasing options
  • 20. Chapter3 P1 Comparing Spaces to Lease – Criteria to Consider Total Occupancy Costs One of the most significant criteria when choosing the right space is the total occupancy cost of the space – this is the total cost of leasing a space over the term of a lease. Total occupancy cost includes the following: Rent The money tenants pay to occupy a premises is normally expressed as a dollar rate per square metre, per annum. A tenant will pay rent on the basis of a gross rent (where quoted rent includes outgoings) or net rent (where outgoings are charged in addition to quoted rent). The total occupancy cost should include both rent and outgoings and any rent increases that are applied to the rent during each year of the tenancy. A number of recent surveys have shed light on what commercial office tenants are currently looking for when leasing space in Australia. These surveys are a useful insight into what other businesses are looking for. However, as prospective tenants you should consider the full range of criteria presented in this chapter and assess what is important to you. In 2012 Colliers International carried out surveys of Australian commercial office tenants in space over 500 m2 to assess what was important to them when leasing space. Some key results were: • 95% of tenants want to occupy a green building. • 61% thought building choice was important in attracting and retaining staff. • 30% considered cost saving a primary focus. • Specific building attributes that would help attract and retain staff included green space and bike racks. 20 PART 1 | CHAPTER 3 | Comparing Spaces to Lease – Criteria to Consider
  • 21. Outgoings Outgoings are the base building operating and maintenance costs typically shared between all the tenants in the building on a pro-rata basis. These typically include: base building energy, rates and taxes, security, insurance, management, cleaning, recycling and waste removal, repairs and maintenance. Cleaning and other charges Identify all other charges that may be payable to the landlord though excluded from outgoings such as tenancy cleaning, security, out of hours air conditioning etc. Incentives The building owner, through its agents, may offer incentives such as reduced rent or rent free periods, assistance with fit-out costs or other incentives to attract tenants to their building. Whilst the incentive may be paid at the start of the lease it will be amortised over the lease term within the P&L. Fit-out The fit-out of a tenancy refers to the design and construction of the internal space for lease so that it meets the needs of the tenant in operating their business. This would include the office design and layout, meeting rooms, board rooms, IT rooms, partitions, temporary internal walls, furniture, carpet, storage and alteration to base building services (e.g. supplementary air conditioning). There are costs associated with the design, planning, project management, authority approvals and construction of an office fit-out. Capital expenditure for the fit-out is usually carried out prior to occupation however the cost is amortised over the lease term within the P&L. Relocation costs These are costs associated with physically moving furniture, filing and storage, office equipment and IT items. Tenancy energy costs Historically many tenants have not considered the consumption of energy as a critical issue. However, this has changed due to rising energy costs and increasing awareness of the impact excessive energy use has on an organisation’s carbon footprint. Tenants typically pay for the energy consumed in their leased premises directly to an energy provider or through the building owner. Tenants also pay their proportion of the energy consumed by the base building in their outgoings. ‘Make good’ at lease end ‘Make good’, or ‘dilapidations’ as it is also known, refers to the process at the end of a commercial property lease where the tenant is required to hand back the premises they are vacating in a particular condition that is established by the terms of their lease. ‘Make good’ can be incredibly wasteful of materials and money. It is also an uncertain process for both the building owner and tenant and can be a massive distraction to the tenant who is leaving and re- establishing their business in new premises. Simplification and reduction of environmental waste should be an aim here. Depending on the intensity of the fit-out and the extent to which the fit-out works changed the base building, the costs can range from about $120/m2 to about $350/m2 . However, particular circumstances and leases differ and this affects the ‘make good’ costs. Whilst the make good costs are incurred at the end of a lease, accounting standards require a provision to be created generating a P&L cost during the lease term. 21PART 1 | CHAPTER 3 | Comparing Spaces to Lease – Criteria to Consider
  • 22. Exit obligations from current sites As with the premises you are relocating to there will be exit costs, primarily in terms of make good, which need to be assessed and allowed for. In addition leases assume this work will be done prior to the lease expiry which may lead to a requirement to pay double rent (existing and new premises) for a period of several weeks whilst make good works are completed. As this is a high cost area it is advisable to seek professional advice from a properly qualified RICS advisor who may be able to help mitigate some or all of these costs. Professional fees A RICS or other tenant adviser will charge a professional fee for providing technical and strategic advice, finding appropriate space and negotiating the lease. Professional advice may also be required for make good and project managing a fit out. Professional fees will also be incurred for any legal advice. Car parking You may require parking for a certain number of staff. Car spaces are typically an additional cost to be factored in and often do not include hidden costs such as council parking levies or Fringe Benefit Tax implications. They are generally documented on a licence separate from the lease. CBD car parking is expensive and individual car use is carbon intensive. You may wish to consider alternative means of transport. Using the RICS Leasa App to help you compare total occupancy costs The RICS Leasa App has a tool designed to record and compare the total occupancy costs for each potential tenancy you are reviewing. Costs associated with tenancy lighting are automatically entered where the tenancy is covered by a BEEC. (For more information about BEECs see ‘Commercial Building Disclosure’ below.) The energy costs for equipment in a tenancy can also be recorded and included in the tenancy comparisons. 22 PART 1 | CHAPTER 3 | Comparing Spaces to Lease – Criteria to Consider
  • 23. Minimising ‘make good’ You can significantly minimise the impact of your fit-out on the base building and thereby reduce your ‘make good’ costs: • Tread lightly when you fit-out. Try to avoid removing or replacing base building owner’s equipment and fixtures such as floor finishes, ceilings and claddings. Brief your interior designers accordingly. • Use systems that are free standing where possible so that their fixings do not damage the base building. • Use wireless data systems; they dramatically reduce the cabling waste and you can take them with you. • Use existing partitions in the premises where possible; this might reduce your ‘make good’ costs. There are many ways that the costs and stresses from ‘make good’ can be reduced. For example, you can agree on the tenant’s liability at the lease commencement or use a ‘make good’ deed. If you don’t have an up-front agreement you should discuss the ‘make good’ with your building owner well before the end of the lease so that agreement can be reached in good time. For more information or advice talk to an experienced RICS Chartered Building Surveyor and see the RICS guides Make Good Best Practice (Australia) (2004) and Greening Make Good Australia (2009). Location When looking at a geographic area, consider issues such as: • rents in different areas • ease of transport for your staff, including proximity to modes of public transport that suit them • proximity for clients and customers • proximity of amenities such as restaurants, banks, food courts or retail • your preferred area • safety of access and egress from the premises. How Much Space do You Need? Base your floor area requirements on the number of people who will use the space, the facilities you would expect to install (e.g. meeting rooms, computer rooms, etc.) and the way you would use the space, such as workstation style and sizes, meeting rooms and reception. More firms are considering activity-based working where desks are allocated only to the staff in the office each day, resulting in fewer desk spaces being required. Most building services are designed to allow a density of 10m2 per person however if you are using a typical open plan layout with a few enclosed offices and meeting rooms then most companies occupy at a density of 12 m2 to 17 m2 . Further advice can be provided by your RICS tenancy adviser. Energy Efficiency Energy efficiency of the building Buildings with combined space for lease over 2000 m2 must have an energy efficiency rating which includes a NABERS Energy for Offices base building rating. A building with a lower energy efficiency rating could cost you more in outgoings. Like many tenants, you may have a policy to occupy energy efficient buildings. If this is the case you could choose not to occupy any building with a NABERS Energy for Offices base building rating of less than 4.5 stars. (See further information below on the Commercial Building Disclosure scheme and BEECs.) Energy efficiency of tenancy lighting Buildings with combined space for lease over 2000 m2 must also have an energy efficiency rating for the lighting in each tenancy for lease. Space for lease where lighting is inefficient will result in higher electricity bills. This rating measures the NLPD – the amount of power used by the lighting in the tenancy that is provided by the base building. This is measured in The RICS Leasa App enables you to enter and compare the occupancy costs of existing and potential tenancies. 23PART 1 | CHAPTER 3 | Comparing Spaces to Lease – Criteria to Consider
  • 24. 24 PART 1 | CHAPTER 3 | Comparing Spaces to Lease – Criteria to Consider
  • 25. watts per square metre (W/m2 ). The lower the NLPD the better the space from a power consumption point of view (but take care that a low NLPD is not at the expense of general lighting levels). Modern lighting systems can achieve NLPDs of 7.0 W/m2 with no loss of amenity. (See further information below on the Commercial Building Disclosure scheme and BEECs.) Commercial Building Disclosure Commercial Building Disclosure (CBD) is a national program designed to improve the energy efficiency of Australia’s office buildings. Under the Building Energy Efficiency Disclosure Act 2010, there are mandatory obligations applicable to many commercial buildings. Most sellers or lessors of office space of 2000 m2 or more are required to obtain and disclose a current Building Energy Efficiency Certificate (BEEC). The BEEC for a particular building may cover an area greater than you intend to lease as it covers all currently lettable space in that building. A BEEC is comprised of: • a NABERS Energy rating for the building (excluding GreenPower) • an assessment of tenancy lighting in the area of the building that is being sold or leased, and • general energy efficiency guidance. BEECs are valid for 12 months and must be publicly accessible on the online Building Energy Efficiency Register (see http://cbd.gov.au/ registers/beec-index). Certain exceptions and exemptions apply. BEEC Data will also be accessible through the RICS Leasa App. The aim of the BEEC is to provide the commercial office market with credible information about the relative energy efficiency of offices that are for sale, lease and sublease. This will help businesses to consider energy efficiency as part of their decision- making process when choosing a space to lease. Example first page of a BEEC 25PART 1 | CHAPTER 3 | Comparing Spaces to Lease – Criteria to Consider
  • 26. What if a tenancy or building is not covered by a BEEC? If the building has no BEEC it does not necessarily mean the building or the tenancy has poor energy efficiency. It might mean that the building has less than 2000 m2 to lease and the owner is not required by law to provide one. In this situation you can still ask for a BEEC to be prepared. The building owner will need to provide: • the NABERS Energy for Offices base building rating, and • the NLPD for the tenancy lighting system. Both of these ratings are relatively easy for the owner to obtain. If the building is well managed this will not be considered an unusual request from a prospective tenant. Approximating the NLPD If the Landlord is unwilling or unable to provide a BEEC you can work out an approximation of the NLPD in the following way: • Count the number of light fittings in the tenancy, and the number of tubes/globes in each fitting • Work out the total lighting wattage for each type of lamp: -- If the light tubes are 25mm (eight eighths of an inch) in diameter (older style T8 fluorescent tubes), multiply the number of tubes by 44 (1 tube equates to 44W of power consumption) -- If the light tubes are about 15mm (five eighths of an inch) in diameter (slimline style T5 fluorescent tubes), multiply the number of tubes by 33 (1 tube equates to 33W of power consumption) -- Where other types of lights are present you should ask the landlords representative to advise the rating of the globes and add 7W – then multiply this by the number of globes eg a 50W low voltage downlight is rated at 57W power consumption • Add the lighting wattages together to get a space total, and then divide by the area of the tenancy For example: • 150 T8 tubes in a 500m2 office = 150 x 44 =6600W Divided by 500m2 = 13.2 W/m2 NLPD. To get a more accurate assessment that is in line with the methodology used in determining a BEEC, you could engage a BEEC Assessor to undertake the assessment on your behalf (the CBD.gov.au website has contact details for assessors). Another factor that will affect the lighting energy use is the way they are controlled. Basic control is via simple wall switches (this tends to be the least efficient method as it is easy for someone vacating a space to forget to turn off the lights). Some lighting systems employ time controls such that the lights automatically switch off at a predetermined time. More sophisticated systems employ occupancy sensing such that lights are only on if a sensor detects the space is occupied. The smaller the switching zone, the better the system can match lighting to actual need eg a switching zone of 260m2 would mean all lights in that area would be on even though there might be a single occupant. However if the switching zone was then reduced to 65m2 only a quarter of the lights need turn on. Always ask about what lighting controls exist. Hidden Costs of Poor Performance The poorer the energy efficiency of a base building, the higher the proportion of the tenant’s occupancy costs go towards base building energy costs, and the bigger the building’s and the tenants’ carbon footprint. The following graph shows indicative percentage energy savings between the NABERS Energy for Offices rating stars, and therefore the potential energy savings achieved by improving from star to star, or the opportunities missed out by not improving. 26 PART 1 | CHAPTER 3 | Comparing Spaces to Lease – Criteria to Consider
  • 27. To add further perspective to the difference between the star ratings, the difference between a 2.5 and 4.5 star building is that the carbon intensity of the 4.5 star building is 43% less than a 2.5 star building. In other words, it could use up to 43% less energy per square metre. Businesses should look for buildings with a good NABERS energy rating (4.5 or above) and good tenancy lighting efficiency (7 W/m2 or below). Low energy ratings generally indicate that the building owner and the management team may not be concerned with the building’s environmental performance. They may also indicate that the base building systems are old and in need of significant upgrading. Low energy ratings certainly indicate that a prospective tenant should investigate the building thoroughly to avoid leasing a poorly performing and potentially unhealthy tenancy. You should ask about potential upgrades that could impact your occupation and enjoyment of the building at some time during the term of your lease. Grade (quality) of the Building The Property Council of Australia’s A Guide to Office Building Quality (2012) is the industry standard for building grading and it can help you determine the standard of building your business should occupy. The PCA guide sets out the attributes and standards required by buildings to achieve certain grades. The grades for new buildings are Premium, Grade A and Grade B. For existing buildings they are Premium and Grades A to D. Choosing a PCA grade that will provide you with the appropriate level of performance can help you to avoid paying for performance and facilities that you don’t require, and avoid buildings that might fail to meet your requirements. The guide uses parameters that typically influence building quality. These are based on extensive consultation and international research to identify the elements of building quality from an occupant or investor perspective. The guide includes metrics for the assessment of performance in the following areas: • Environmental • Configuration • Mechanical • Tenant services • Electrical • Standby Power • Building Management • Communications • Hydraulics • Security • Amenities • Parking The PCA guide is voluntary; it is not a rating tool and it is not necessary for a building to achieve every parameter nominated in the guide. However, to qualify for a particular quality grade, it is anticipated a building will overwhelmingly meet the stated criteria. Relative carbon emissions intensity of NABERS Office Star Ratings Source: WT Sustainability (2013) 1.5 Stars 0% 10% 20% 30% 40% 50% 60% 2 Stars 3 Stars 4 Stars2.5 Stars 3.5 Stars 4.5 Stars 5 Stars 27PART 1 | CHAPTER 3 | Comparing Spaces to Lease – Criteria to Consider
  • 28. A Guide to Office Building Quality may be purchased through the Property Council of Australia: Property Council of Australia House Level 1, 11 Barrack St Sydney NSW 2000 Telephone: 02 9033 1900 Facsimile: 02 9033 1978 Email: research@propertyoz.com.au Website: www.propertyoz.com.au End-of-trip Facilities Increasingly tenants are requiring facilities for staff who run or cycle to work, or during the day. Modern standards for end-of-trip facilities will generally include: • secure bike storage, with security cameras • bike maintenance area including: -- bench -- compressed air • lockers • showers • toilets • additional facilities including: -- iron and ironing board -- hair dryers -- laundry services Tenancy Rating - Green Star Interiors The Green Building Council of Australia’s Green Star – Interiors rating system is an environmental rating tool designed to rate interior fit-outs. The tool rewards the environmental performance of the fit- out as well as the way the fit-out can be made to operate within the base building. The tool can be used to differentiate between the environmental performance of buildings you are reviewing. It can also help you achieve a significant flying start towards your own Green Star – Interiors rating based on the environmental performance of the base building. If you want to achieve a Green Star – Interiors rating for your tenancy, you could choose a tenancy in a building that has been set up so that you will achieve credit points towards your Green Star – Interiors rating, simply by choosing that building. These are typically called Green Star – Interiors: Flying Start points. This is a great way of identifying which buildings have been set up and are being run to good environmental standards. A well-prepared building management should be able to provide an incoming tenant with a package of base building information that can form part of the tenant’s Green Star – Interiors environmental rating application. The base building should be able to provide about 50% or more of the points needed for a 4 star rating, 40% of the points for a 5 star rating and about 30% of the points for a 6 star rating. Tenants have to make their own application to the GBCA for their Green Star – Interiors rating. The points achieved will depend on meeting the strict requirements of the Green Building Council of Australia. Ask your tenancy adviser or the building’s leasing agent to find out how many Green Star – Interiors points would be available towards the tenant’s Green Star – Interiors rating if you chose to take space in their building. For more information visit the Green Building Council of Australia’s website at www.gbca.org.au. Better Building Partnership The Better Buildings Partnership (BBP) has created a number of tools (e.g.their Leasing Lifecycle Tool) to inform and facilitate partnership outcomes in commercial leasing. There are many components that make up building ratings and grades and tenant advisers need guidance on what your priorities are amongst these. The BBP has created tenant-focused tools for specifying to tenant advisers the expectations tenants have of a rating or building grade. For more information, visit the Better Buildings Partnership’s Leasing Lifecycle Tool at http:// sydneybetterbuildings.com.au/leasing 28 PART 1 | CHAPTER 3 | Comparing Spaces to Lease – Criteria to Consider
  • 29. Part 2: Understanding and Managing your Tenancy Energy Part 1 of this guide explains why you should consider the energy efficiency both of the tenancy spaces you are considering leasing and of the buildings these tenancies sit in. Part 2 of this guide aims to help you better understand and manage energy use in your tenancy and see the advantages of doing so. 29PART 2 | CHAPTER 4 | Understanding your Tenancy Energy Use
  • 30. Chapter4 P2 Understanding your Tenancy Energy Use Buying Power and Saving Money Negotiating your own contract with an electricity retailer can help you to reduce costs and may lead to other energy management initiatives, such as monitoring, which help identify areas or periods of high energy demand. Not all electricity is pushed through utility companies; in some instances building owners can on-sell electricity, often at favorable rates. Energy is generally made up of two components which may or may not be distinguishable on the bill. The first component is sometimes referred to as ‘non-contestable’ and is regulated by government. This covers the cost of maintaining the electricity distribution infrastructure (poles, wires etc.) The second component ‘contestable’ is generally negotiable with energy retailers. If you take the time to investigate your options it can bring real savings. This can be achieved through direct negotiations with an energy provider or you can engage an energy broker to negotiate on your behalf. The Australian energy regulator has a website where you can compare energy rates: www.aer.gov.au. There are commercial switching services which offer to find better deals for your energy outgoings. You will need to provide them with information about your current energy As a tenant, you pay for the energy consumed within your own tenancy. Tenant energy consumption is associated with your lighting, the equipment you use (such as computers, photocopiers, fridges etc.) and supplementary air conditioning (e.g. computer room and meeting room air conditioners). bills, patterns of use and projected requirements. The offer found on your behalf may be very good but it still pays to do your homework. You should be aware of the terms and conditions associated with moving to a new contract. Quotes can be calculated in different ways and entering information into different websites can make it hard to draw comparisons. GreenPower GreenPower is an Australian Government accreditation program for renewable energy which is generated from sources including wind turbines and solar, and which produces no nett greenhouse gas emissions, thereby reducing carbon emissions. When you purchase GreenPower accredited renewable energy you are supporting the production of electricity from renewable sources over and above mandatory government targets. 91% of electricity used in Australia is generated from the burning of fossil fuels such as coal, and only 9% of Australia’s electricity comes from renewable energy sources. Buying GreenPower is the easiest way that you can reduce the environmental impact of electricity generation. Most Australian energy suppliers provide an accredited GreenPower product, varying in price according to the mix of renewable energy used. The Australian Government’s GreenPower website contains a list of accredited GreenPower suppliers: • www.greenpower.gov.au • www.livinggreener.gov.au/energy/ renewable-energy/switch-greener- energy GreenPower and NABERS Using accredited GreenPower will impact on a NABERS Energy rating. NABERS Energy Ratings are presented in two parts: • the rating with GreenPower, and • the rating without GreenPower. However, the NABERS component of a BEEC only makes reference to electricity without GreenPower. Cogeneration and Trigeneration Some buildings generate their own electricity, most often by using natural gas-powered engines that generate power for base building and tenant consumption. If this is available, it may give you another option for purchasing power. Cogeneration is the simultaneous production of electrical energy and thermal energy for power and heating; trigeneration produces energy for cooling as well. For more information see www.cleanenergycouncil.org.au/ technologies/cogeneration.html. 30 PART 2 | CHAPTER 4 | Understanding your Tenancy Energy Use
  • 31. Negotiating with Energy Retailers • Provide information to the utility company on contract options required and any relevant site details such as operating hours and type of space. • Compare cost and services offered by the various retailers to ensure there are no hidden extras, such as a costs passed on for line losses. Up to 10% of electricity is lost from the grid and some retailers will pass this cost directly on to the consumer. • Can the retailer monitor and graph a profile of your electricity use? • Do you need account management or energy management advice? For larger consumers on a demand tariff, it would be wise to seek specialist advice. • Decide on a contract period: a longer contract may lower the rate. • Decide on whether you want to fix firm prices up front for the contract period to avoid any increases. Using the RICS Leasa App to Compare Energy Efficiency The RICS Leasa App can help you identify and compare: • the energy efficiency of buildings, and • the energy efficiency and cost of tenancy lighting. Using the ‘Search BEEC’ tool in the RICS Leasa App will search through the BEECs database to find the tenancy you are looking for. If the building has a BEEC, the App will show you the lighting efficiency rating for the tenancy and the NABERS Energy for Offices rating for the base building – so you can easily see which buildings and tenancies perform better. The BEEC data is also automatically included when comparing the features of tenancies in the ‘Tenancies’ tool. The RICS Leasa App enables you to search for tenancies in the BEEC database or enter tenancy details manually. If the building does not have a BEEC certificate you have the ability to enter the Net Lettable Area (NLA) and Nominal Lighting Power Density (NLPD) manually. For potential new tenancies the NLA can be provided by the real estate agent advertising that space for lease. For your existing tenancy the NLA will be in your lease. For potential new tenancies the leasing agent should also be able to provide you with the NLPD for the space in question. For your existing tenancy you should speak with the building manager. Calculating the total energy cost for a new tenancy is challenging because usage of office equipment varies. The RICS App can help you calculate indicative costs by using information from the BEEC and the App equipment register. 31PART 2 | CHAPTER 4 | Understanding your Tenancy Energy Use
  • 32. How to Read Your Energy Bill The amount of information on electricity bills can vary significantly and can be very complex. An example of a typical bill is shown and explained below. (This bill relates to a 1000 m2 tenancy in NSW and excludes GreenPower.) Not all bills would be this complex and in some instances, particularly where building owners on-sell power to tenants, they may comprise just a few lines. A typical commercial facility’s electricity bill 1: Account details This is a straightforward item, describing the account number, the name of the business and the electricity supply address. 2: Supply period This covers the period of supply, and ranges approximately from 30 days to 90 days. 3: NMI National Meter Identifier (NMI) is a unique number that identifies your electricity meter. 4: Losses This item lists the electricity lost during transmission and distribution. These losses are equivalent to approximately 10% of the total electricity transported between power stations and market customers. The loss factors are calculated and fixed annually and represented mathematically. 5: Energy charges This is the actual charge of electricity billed per every kilowatt hour (kWh) used. The charges are based on the agreed contract rates and are negotiable. Energy usage charges can be billed either as a time-of-use charges such as peak, shoulder and 32 PART 2 | CHAPTER 4 | Understanding your Tenancy Energy Use
  • 33. 8: Off-peak charges Electricity used at all other times from the abovementioned is charged at off-peak rates. The rates are lower because the overall demand is lower. In an energy efficient commercial office setting, there should be little off-peak electricity usage as these times generally fall outside of the normal occupancy hours. Most off- peak usage would be associated with 24-hour IT and communications equipment and the associated air conditioning. If off-peak consumption is high, this might suggest poor energy efficiency (e.g. computers and lights left on when the space is unoccupied). 9: Total energy usage Total energy usage is the sum of peak, shoulder and off-peak charges. This is expressed in kilowatt hours (kWh). The total energy usage is one of the important components of a NABERS Energy for Offices rating assessment. 10: Network charges These comprise the fees the electricity retailer pays to the electricity network owner for using their networks to supply electricity to households and businesses. For each type of ‘time-of-use’, there is a corresponding network charge. They are classed as non-contestable. 11: DUOS as per time-of-use DUOS (Distribution Use of System) charges are based on the usage of the network system as per the peak, shoulder and off-peak times of the day. These charges are non- negotiable as they are charged by the network owners to the electricity retailers. 12: DUOS for peak capacity The peak capacity charge, levied by the network owner, is determined by the peak electricity demand at the premises (usually recorded in a half-hour period). It is determined by the maximum demand generated by the premises on the network. Peak demand is measured in kilovolt-ampere (kVA) and is reset at each billing cycle. If you reduce your peak level of consumption (through energy efficiency and active load management) this can have a significant impact on your bill. It should be noted that this charge is not found on all bill types. 13: Network access charge This regulated fee is charged by network service providers, and relates to the ongoing provision of poles and wires to a customer’s premises. The charge depends on the location and the quantity of electricity transported to each individual meter at the premises and is non-contestable. 14: Market Charges These regulated charges comprise administrative charges and charges relating to maintaining key technical characteristics of the power system, such as frequency and voltage. They are non-contestable. 15: NEM charges The National Electricity Market (NEM) operates as a wholesale market for the supply of electricity to electricity retailers and end-users in Queensland, New South Wales, the Australian Capital Territory, Victoria, South Australia and Tasmania. The charges on the bill are comprised of NEM administration charges and NEM ancillary services charges. The NEM administration charge is fixed and the NEM ancillary services charge varies from billing period to billing period based on network load characteristics. The variation occurs because maintenance of the key technical characteristics of the power system, such as frequency and voltage, is outsourced to the most competitive bidder. off peak, or usage blocks where higher rates apply if the electricity usage exceeds a certain kWh value. The time-of-use charges are only possible if the meters installed have the capability to record this. These charges are considered to be contestable. 6: Peak charges Peak charges apply to electricity used on weekdays between certain times of the day. For this particular bill, they apply from 2 pm to 8 pm. Some other retailers nominate times such as 7 am to 9 am and 5 pm to 8 pm. Generally, the rates are higher for electricity used during the peak period. This is a reflection of higher demand during those times of the day. Altering the usage by avoiding any non- essential electricity consumption can reduce peak charges. The rates are negotiable with the electricity retailer at the time of contract. 7: Shoulder charges Shoulder charges apply to electricity used on weekdays or weekends between certain times of the day. For this particular bill, they apply from 7 am to 2 pm and 8 pm to 10 pm. Other retailers may have different times for shoulder rates, such as 9 am to 5 pm and 8 pm to 10 pm. Some retailers charge shoulder rates from 7 am to 10 pm on weekends and public holidays. The shoulder rates for this particular bill are similar to peak rates, and they are negotiable with the electricity retailer at the time of contract. 33PART 2 | CHAPTER 4 | Understanding your Tenancy Energy Use
  • 34. 16: Other charges These are generally non-contestable charges fixed by government. 17: Meter provision This is a charge for the cost of metering equipment installed at a customer’s site, as well as the meter reading and data management costs of metering services. 18: LRET charges Large-scale Renewable Energy Target (LRET) charges represent the cost that electricity retailers pass on to customers to offset the cost of complying with the obligations under the Australian Government’s Renewable Energy Target (RET). These Australian Government charges are levied to fund large-scale renewable energy projects such as concentrated solar power and wind farms. 19: SRES charges Small-scale Renewable Energy Scheme (SRES) charges, along with LRET charges, are part of the Australian Government’s Renewable Energy Target. 20: Carbon charge This charge is a result of the Australian Government’s carbon pricing scheme that began on 1 July 2012. 21: NSW Energy Savings Scheme charge The NSW Government obligates electricity retailers to buy Energy Savings Certificates (ESC) in order to meet legislated targets. The charge for this is passed down to the customers of the electricity retailers. Using the RICS Leasa App to Track and Review your Energy Use The ‘Energy Bills’ tool in the RICS Leasa App provides you with a tool to enter information found on your energy bill so you can see changes in your energy consumption and cost. Once you start entering this information, you will be better able to estimate a breakdown of your energy costs for lighting and equipment. If you enter the date that the bill is received and the billing cycle (e.g. quarterly) the RICS Leasa App will remind you to enter your billing information. All you need to do is enter the cost (including GST) and either the total kilowatt hours shown on the bill or the meter readings. The RICS Leasa App enables you to track and review your overall tenancy energy use. 34 PART 2 | CHAPTER 4 | Understanding your Tenancy Energy Use
  • 35. Chapter5 P2 Managing Your Tenancy Energy Use Control Versus Influence When considering energy efficiency, it is important to note what you can ‘control’ and what you can ‘influence’. Most tenants will not be able to control base building energy consumption because the responsibility for this lies with the building owner. Base building power is generally the power consumed by building services such as air conditioning, lifts, lobby lighting etc. Tenants pay for this through their rent and outgoings. You can influence the building owner and manager by asking them to operate the building more efficiently, or use a green lease to document specific energy efficiency goals etc., but you can rarely enact base building energy efficiency initiatives yourself. However, you do have control over the energy consumed within your own tenancy. Tenancy energy consumption is associated with your lighting, the equipment you use, (such as computers, photocopiers, fridges etc.) and supplementary air conditioning (e.g. computer room and meeting room air conditioners). You can chose when and how to operate such equipment. You can also factor in energy efficiency when making decisions on which equipment to purchase. That said, most tenants will inherit the lighting installation when moving into a new tenancy. The lighting is generally owned by the building owner, and if it is inefficient you will pay more for power than you need to. This is the key reason that BEECs state the NLPD, so prospective tenants can make an informed choice. Excessive energy use is unnecessarily expensive, as well as being polluting and wasteful of resources that could be used more efficiently by future generations. Achieving an energy efficient tenancy will incur little or no additional cost to set up and will save future costs and reduce your carbon footprint through the life of your tenancy. 35PART 2 | CHAPTER 5 | Why Energy Efficiency is important for SMEs
  • 36. Typical Tenancy Energy Breakdown The diagrams below show the typical energy breakdown within tenancies, with and without supplementary air conditioning. Supplementary air conditioning can be a significant user of energy especially when it is not used efficiently. Tenancy energy breakdown without supplementary air conditioning Tenancy energy breakdown with supplementary air conditioning 36 PART 2 | CHAPTER 5 | Why Energy Efficiency is important for SMEs
  • 37. Energy Audits Knowing where your energy is going is very important, especially when you are embarking upon an energy savings journey. An energy audit can be a useful exercise in this regard. Energy auditing generally falls into three categories. • A Level 1 audit is relatively simple and would involve a ‘walk through’ of your tenancy and a review of past consumption. Accuracy is not great, but for tenancies where energy usage is consistent a Level 1 audit can be highly cost effective. • A Level 2 audit involves a more detailed assessment of energy use, and the results should provide greater certainty when making energy saving investment decisions. Level 2 audits are useful when variable loads are present and you are keen to get a better sense of how these impact your energy consumption. • A Level 3 audit is the most detailed. The results of a Level 3 audit provide significant detail and consequently greater certainty when making investment decisions, but of course this comes at a price. In most tenancies energy use is relatively clear – lights, small power (computers, printers, peripherals etc.) and possibly some supplementary air conditioning. A good office manager should be able to determine savings potentials, with a fair degree of accuracy, just through a Level 1 audit. Since a Level 1 audit is usually significantly cheaper than Level 2 or 3 audits, this means there will be more money to spend on initiatives that actually save energy. While audits are an important tool for an office manager, they need to form part of a strategy. In isolation an audit may do a good job at identifying opportunities but it won’t deliver savings – and that’s where an energy savings action plan comes in. Energy Savings Action Plans Even the best energy savings initiatives are often not implemented because key decision makers don’t make a decision. Whether due to time constraints, perceived risks or even poor management, there are shelves full of energy audits gathering dust. A good energy savings action plan will help you identify the barriers to implementing energy savings initiatives, and come up with resolutions even before auditing starts. A good plan will include decisions about financial hurdles. For example, you may decide up-front that energy saving opportunities that will cost less than $1500 to implement, and have a payback of less than four years, will be implemented immediately without requiring further approval. A good plan will tease out the management barriers to implementing energy savings initiatives. This has the potential to be a painful process, especially if some senior managers are found to be unwilling to embrace energy efficiency, but it is better to know the barriers up-front (and then try to address them) rather than find them later after expending considerable time and effort. With an energy savings action plan, the energy audit then becomes the technical component. It is obviously important but it’s only part of the equation. And, with the tough decisions being made before the audit is commenced, you have a much greater chance of delivering meaningful savings. CitySwitch and Energy Saver support tenants in creating energy savings action plans. For more information go to: http://cityswitch.net.au 37PART 2 | CHAPTER 5 | Why Energy Efficiency is important for SMEs
  • 38. Benchmarking Energy Efficiency using NABERS NABERS has had a significant impact on commercial office space because it allows energy efficiency to be benchmarked. NABERS is now used by many building owners and tenants to better manage their energy efficiency initiatives. NABERS is a national rating system that measures the environmental performance of Australian buildings, tenancies and homes. It is performance based and provides a rating for a building that is based on the environmental impacts from its operation. NABERS ratings provide simple indications of the environmental impact of the buildings when compared against the national average. NABERS has the following rating systems for commercial property: • NABERS Energy for Offices -- base building – not including tenancies and lettable areas -- whole of building – includes tenanted areas -- tenancy – individual tenancies • NABERS Water for Offices -- whole building • NABERS Waste • NABERS Indoor Environment Quality. A NABERS Energy for Offices rating is based on the amount of greenhouse gas generated due to the energy consumed. The rating includes the consumption of all energy including electricity, gas, diesel, etc. NABERS ratings go from 0 (very poor) to 6 (market leading). For more information see www.nabers.gov.au. GreenPower can be used to improve a NABERS rating. However, it is reported separately and is not recognised under the National Greenhouse and Energy Reporting Scheme (NGERS). For more information see www.climatechange. gov.au/reporting. Choosing Energy Efficient Equipment Energy consumption should always be a consideration when choosing office equipment; the right choice can make a significant difference to your energy use. Take for instance multi-function printer/copier/scanners where two models may have identical print performances but one consumes four times the power of another. How do you know? A good place to start looking is the equipment manufacturers’ technical data sheets. When reviewing power consumption you need to look at both power in use, and power in standby mode. Don’t just look at a nameplate rating (these can be misleading). When it comes to computers, laptops are generally more efficient than desktop computers (primarily because they need to run extended periods in battery mode and therefore have to use power wisely). That said, there are a number of energy hungry laptops on the market. Marrying a laptop to a docking station can deliver desktop-like integration (i.e. a full-sized keyboard, mouse and monitor without the desktop energy consumption), yet it provides the flexibility to ‘undock’ and work remotely. Some organisations that have made the move to laptops have reported increased productivity because staff often take work with them when they leave the office. Some equipment choices are made easier through energy labeling. When choosing a fridge or dishwasher for instance, you can determine the likely energy performance from the mandatory energy rating displayed on the appliance. Of course, whatever equipment you choose must be properly managed. Putting equipment into sleep mode quickly can help, and you should ensure the automatic settings are as short as can be tolerated. You will never be more efficient than by turning things off – so make this simple for everyone by automating the process (see the WT Sustainability case study below) or by making switches and power sockets easily accessible. By embedding energy efficiency criteria into procurement decisions, and adapting life cycle costing as opposed to ‘first cost’ considerations, it should be possible to achieve long- term savings. Understanding Energy Rating Labels Most electrical appliances sold in Australia have an Energy Rating Label to help you compare the electricity consumption of different appliances. The label also provides an incentive for manufacturers to improve the energy performance of their products. A Gas Rating Label can be found on gas space heaters, ducted heating and gas water heaters. Sometimes high star-rated models can cost a little more to buy, but choosing a cheaper product with 38 PART 2 | CHAPTER 5 | Why Energy Efficiency is important for SMEs
  • 39. fewer stars could end up costing you more throughout the product’s life. The running costs over the product’s lifetime can easily add up to more than the original purchase price. If you consider the running costs as a ‘second price tag’ it could help you decide which appliance is best to buy. For more information see www. livinggreener.gov.au/energy/energy- rating-labels. What is ‘standby’ power? Standby power is a key source of hidden energy costs and can amount to 10% of your electricity bill. It forms a major part of the base load of your consumption, i.e. the constant consumption load running 24 hours a day, 365 days a year. Many appliances and computers have a standby mode so they can turn on quickly. However, standby mode can use a lot of energy even when the appliance isn’t being used. Sometimes it can be difficult to tell if equipment is on or off. If you switch appliances off at the wall when you aren’t using them, it guarantees that you will save energy. For more information on standby power go to: www.livinggreener.gov.au/energy/ energy-efficient-appliances. Using the RICS Leasa App to manage energy consumed by your office equipment The RICS Leasa App includes an ‘Equipment’ tool to help you manage a list of the energy consuming equipment in your office, including a function to estimate how much power your equipment consumes each year. If the appliance has an energy star rating label you can use the annual consumption figure quoted or you can estimate the power consumption based on how long it is used and whether it has a standby low power mode. The RICS Leasa App enables you to manage a list of the energy consuming equipment in your office and estimate how much power is consumed each year. 39PART 2 | CHAPTER 5 | Why Energy Efficiency is important for SMEs
  • 40. Lighting Lighting consumes a significant proportion of the energy associated with a tenancy. For tenants without supplementary air conditioning, lighting can account for 50% or more of all tenancy power used. It plays an important role from an indoor environment perspective, and can have profound effects on the occupants wellbeing and productivity. Yet many tenants have little or no say in the lighting design of their tenancy (other than the relocation of fittings to suit partition layouts), as the lighting is generally the property of the building owner. In most commercial offices the general lighting will make use of fluorescent tubes recessed within a false ceiling. Compact florescent lights are also common (usually in ‘downlight’ fittings), and accent lighting often takes the form of low voltage halogen fittings. The efficiency of lighting systems can differ significantly. A typical office would have a lighting level target of 320 lux measured on the working plane (usually a desk). Good lighting systems can achieve this using 7W or less of electricity per m2 . Poor systems might use 14 W/m2 or more (twice as much for the same result). Luminaires The type of light fitting (luminaire) is critical. A cursory glance at the ceiling of most offices might lead you to think all luminaires are roughly the same. However, appearances can be deceptive. Critical differences may be apparent only to a lighting specialist, and of course the tenant when they compare energy bills. The luminaire determines how the light from the lamp is distributed (through reflection, focus and diffusion). Some luminaires allow for wider spacing when compared with others, which in turn may mean fewer fittings to achieve the desired illumination levels. Some luminaires may be equipped with sophisticated control gear that allows the lamps to be dimmed or more effectively switched on and off (though be careful, as some control gear consumes power while in standby mode). Lamps The type of lamp is important. Most fluorescent tubes fall into two categories: T8 and T5. • T8 tubes are often 1200 mm long, rated at 36 W, and have traditionally been associated with ‘ferric core’ or magnetic control gear. • T5 tubes are thinner in diameter and often 1148 mm long. Most are rated at 28 W and they are associated with electronic transformers. T5 fittings are often, but not always, a more efficient lighting solution, but there are plenty of offices with T5 lighting systems that have a NLPD far in excess of a desired 7 W/m2 or less and many with modified T8 fittings that have a NLPD below 7 W/m2 . Not all lamps are the same. Lighting designers use lamps with different ‘colour temperatures’ to create different looks, something to be mindful of when replacing tubes. LED (light emitting diode) lamps are becoming more prevalent, especially as replacements for incandescent lights (such as low voltage halogen). The efficiency of LEDs is improving but they are not a universal energy efficiency panacea and the decision as to when and where to use them needs careful thought. Retrofitting existing luminaires with a new type of lamp doesn’t always deliver an ideal result. Lighting controls The way lighting is controlled is also an important factor. Traditionally office lighting has been turned on and off from a central wall plate. When there are many circuits it can be difficult for an occupant to determine which switch serves their area, so all lights get turned on whether needed or not. If someone forgets to turn the lights off at the end of the day, the lights will burn all night and possibly all weekend. Timed reset control (whereby lights are turned off automatically at predetermined times and must be restarted manually) will help reduce the impact of people forgetting to turn lights off, but this is only one step. Occupancy sensing, such that lights turn on only when people are in a particular area, can deliver much greater levels of efficiency, provided that the areas they serve are not too large, and the times that they keep the lights on once occupancy is no longer sensed, is not too great. 40 PART 2 | CHAPTER 5 | Why Energy Efficiency is important for SMEs
  • 41. Integrating occupancy control of lighting can be made easier if the lighting system has been ‘networked’. Such a system can usually be configured through computer programming as opposed to ‘hardwiring’ which means changes to the way lights are controlled can be done quickly and efficiently. Use of these systems is not yet common but is on the increase. The Commercial Building Disclosure scheme recognises the important role that lighting plays in determining the energy efficiency of a tenancy. (See Chapter 3 for more information about the CBD scheme and NLPD.) NLPD information can be very useful when comparing tenancies for lease. If a space that you are interested in leasing has an NLPD of more than 7W/m2 , you could use this information in your lease negotiations. The building owner must approve any changes to the lighting system; ask them to provide a system that is more energy efficient. Also ask for lighting controls that will best work for you. For more information about energy efficient lighting see the Energy Saver Energy Efficient Lighting Technology Report, Office of Environment and Heritage, 2012: www.environment.nsw. gov.au/sustainbus/energyefflight.htm. Using the RICS Leasa App to understand potential lighting cost savings The RICS Leasa APP provides a simple “Calculator’ tool to help you understand how various factors affect the cost of lighting in your tenancy and other tenancies that you may be considering. Lighting costs are affected by how long the lights are kept on, the floor area, the number and type of lights installed (which is represented by the NLPD) and the cost of electricity. You can drag the sliders to see how the cost changes. Engaging with your building owner to install energy efficient lighting can significantly reduce your tenancy energy bills. The RICS Leasa App ‘Calculator’ tool enables you to compare the lighting costs (and savings) of different space for lease. 41PART 2 | CHAPTER 5 | Why Energy Efficiency is important for SMEs
  • 42. Supplementary Air Conditioning Most commercial office space in Australia is air conditioned, and the air conditioning is usually deemed to be a base building service (provided by the building owner). The air conditioning is normally designed to deal with a typical ‘nominal’ heat level, and if a tenant decides to exceed this loading they would be expected to supplement the air conditioning with additional equipment. The most common examples of where nominal loads get exceeded include computer rooms (high heat levels from IT equipment) meeting rooms (high occupancy density requires additional ventilation and cooling), training rooms and ‘trading floors’. Supplementary air conditioning can take many forms, but generally systems make use of ceiling or floor- mounted water-cooled package units, or ‘split’ type DX (direct expansion) units. Water-cooled units would be connected to the base building ‘tenant condenser water loop’ (common in A Grade and Premium building types and often found in larger B Grade buildings) which is used to reject heat via a central cooling tower. DX units tend to be used when condenser water loops are not available, or in mission critical applications where reliance on a third party system may be considered inappropriate. Since they rely on running refrigerant pipes to an outdoor heat rejection device, their use tends to be limited to spaces with easy access to a roof, balcony or car park. (Running refrigerant pipes through other tenancies or over a long distance can be problematic.) Supplementary air conditioning can consume a significant amount of power, especially if the equipment has to run 24 hours a day (usually the case in computer rooms). Even a small supplementary air conditioner could end up using more power than the entire tenancy lighting system, so it is very important that the use of supplementary air conditioning is reviewed from the outset. The first question to ask is ‘Do I really need it – can I design it out?’ For example, for a meeting area, do you really need a dedicated enclosed space, or could you use space within the open office area? The latter would be served by the base building air conditioning and this would eliminate a dedicated unit, saving not only energy but significant fit-out costs. 42 PART 2 | CHAPTER 5 | Why Energy Efficiency is important for SMEs
  • 43. Computer rooms can also sometimes be designed out. The move by some companies to ‘off-site’ IT equipment (such as using cloud- based computing) reduces the need to operate temperature-sensitive servers and the like within a dedicated secure space. High-speed communication equipment can often operate at much higher temperatures, and may not require any form of additional cooling. (See the WT Sustainability case study on page 46.) If a computer room is needed, can the heat load be ‘contained’ and reduced? Could heat-tolerant communications gear be separated from temperature-sensitive equipment, and its head load dealt with differently, e.g. through the normal base building air conditioning? Can equipment be turned off out of hours? Can the equipment be run warmer? There is rarely justification for computer room temperatures to be less than 24 degrees, and in many cases temperatures in excess of 28 degrees will still comply with equipment manufacturers guidelines. When supplementary air conditioning can’t be avoided, it is important that it is carefully designed. Sizing is critical, and oversizing should be avoided where possible. Oversizing is an easy mistake to make because often it is difficult to determine ‘real’ heat loads (particularly when dealing with IT equipment). Time spent at the design stage will pay big energy savings dividends in the long term. Proper control is also very important. Ensuring equipment runs only when it is needed is not always straightforward, particularly for equipment servicing meeting rooms. Manual ‘on’ and automatic ‘off’ switching can assist, especially if the ‘off’ component is determined using an occupancy sensor. It is also important to make sure that the ‘in operation’ control parameters are correct. Poorly located temperature sensors can cause supplementary air conditioning to compete with base building air conditioning, resulting in one fighting the other, and both then running inefficiently as they try to maintain impossible conditions. Supplementary air conditioning requires regular maintenance if it is to run efficiently. Controls need to be verified and calibrated on a regular basis; filters and coils need to be kept clean. A preventative maintenance agreement with monthly service intervals may suffice, but ensure that the contactor understands that energy efficiency is a key priority. 43PART 2 | CHAPTER 5 | Why Energy Efficiency is important for SMEs