Article | Future Cities

The journey to net zero

How to retrofit city buildings and precincts to deliver on climate goals.

June 9, 2023

The image shows CBRE’s Pacific Head of ESG Su-Fern Tan at a CBRE-hosted event which discussed the potential that retrofitting presents as the City of Melbourne strives to achieve net zero emissions by 2040.

How do we retrofit city buildings and precincts on the journey to net zero? It’s a key focus area for government bodies and the property sector as building owners strive to achieve their climate goals.

One organisation leading the way is the City of Melbourne, which is developing a Zero Carbon Buildings plan and facilitating ongoing industry discussion through a new Thought Leadership series.

The latest, CBRE-hosted event, brought together Lord Mayor Sally Capp, CBRE’s Pacific Head of ESG Su-Fern Tan, ISPT’s Head of ESG Steven Peters, City of Melbourne Councillor Elizabeth Doidge, City of Melbourne’s Director of Climate Change and City Resilience Tiffany Crawford and CBRE’s Victorian Executive Managing Director Dean Hunt to discuss the potential that retrofitting presents as the City of Melbourne strives to achieve net zero emissions by 2040.

The city isn’t alone, with New York on a similar journey - one that Tan is very familiar with from the 10 years she worked in the Big Apple before relocating to Australia to take on her CBRE ESG role.

During her time there, she spent six years overseeing the corporate real estate energy and sustainability program for a major global bank on Wall Street and also sat on a technical advisory group associated with New York’s Local Law 97, which imposes strict emissions reduction and energy efficiency requirements on buildings. 

“New York owners were initially slow to act, but there is now a clear realisation that tenant activity affects landlord performance,” Tan notes.

Affordability has been another New York issue, which has required support for financing options and has been critical in shifting the needle.

There’s also been clear evidence of the benefits in having a precinct-based approach to achieving net zero targets as a way to reduce inequality, provide economies of scale, allow for holistic planning and provide an increased sense of community.

Precincts also need to have greater diversity and, rather than being just office focused, have a mix of tenants across residential, retail, commercial, education and health care. This is something that New York has benefitted from, allowing for energy to be used on a 24-7 basis – utilising the electricity grid more effectively.

For large-scale retrofits, Tan believes much can be achieved at an operational level and she advocates that building landlords assess three key areas:

  • Shutdown – what can be permanently or temporarily turned off?
  • Rescheduling – can you better match operations to use?
  • Optimisation – how can the same internal conditions be maintained by being smarter behind the scenes?

On the optimisation front, one strategy gaining popularity in New York – but not so readily used in  Australia – is real-time carbon monitoring.

Tan relates it to harnessing off-peak electricity, in that a building’s carbon footprint will vary depending on the time electricity is produced. So, by making real-time adjustments there’s scope for footprint reductions.

It’s also critical that net zero and climate action be inserted into capex planning and Tan notes that the lens is now shifting beyond traditional ROIs, to the role that better sustainability credentials can have in attracting top tier occupiers and investors.

When it comes to Australian CBDs, the City of Melbourne has been one of the leaders in transitioning to clean energy for several years. 

Their next focus area is targeting emissions in privately owned buildings, recognising that commercial buildings account for more than 60 per cent of all carbon emissions in the city.

Addressing this issue, just in existing mid-tier buildings, will require 80 Melbourne CBD properties to be retrofitted per year – well above the current average of about seven.

The City of Melbourne’s Zero Carbon Buildings Plan, due to be released later this year, will help achieve these ambitious targets as will the ability to draw on the experiences of other cities globally.

Says Capp, “The challenges of retrofitting are not unique to any building, precinct or city. That’s why it’s so pleasing to see this level of local and global collaboration as we race towards our climate goals.”