“If you go into a planning discussion now and mention demolition, you are already on the back foot.” Speaking at EG’s ESG Summit, Landsec’s sustainabilty director Alexa Laird set the scene for a discussion addressing some of the toughest questions facing the real estate sector.
Do we need to build any new buildings? Should we? Are we heading towards a future where retrofit and refurb are the only options? In short, has carbon killed development?
“The narrative has completely refocused to look at why retention should be the starting point, with the onus on the developer to prove why that’s not viable,” added Laird. “We now need to understand what this actually means.”
This is what players behind some of the most iconic buildings and developments in the UK considered and debated on a panel delving into what decarbonisation means for the future of the built world and whether such dramatic changes are spawning a new breed of developer.
Informed decisions
In terms of what the focus on building retention means for the future of the built world, the panel was unanimous on one point – it does not mean carbon has killed development.
“It definitely hasn’t killed it for us,” said Steve Sanham, founder of development company Common Projects. “I think the carbon agenda and the increased focus on embodied carbon is making the industry think harder, which is not a bad thing.
“Moving the embodied carbon of our existing buildings and proposed buildings up the list when we’re making decisions at every single stage of the development process is important.
“As individuals, we spend a lot of time thinking about how we can recycle and reuse or refill things like our washing up liquid bottles. These are decisions that are easy and have moved up the list of importance for us as individuals. And I think developers can move important decisions about the future of this planet further up their lists too.
“I don’t think carbon has killed development. It is just pushing us to make better, more informed decisions.”
Nektarios Gkanis, senior manager and commercial real estate lead at the Carbon Trust agreed. “I wouldn’t say carbon has killed development. It is providing an opportunity to reform. There are regulations pushing for that and there is a lot of demand coming from tenants, whether that is residential or commercial tenants, for high-quality buildings.
“Developers have to think harder about how they are going to deliver those buildings. Retrofit? New-build? You need to weigh up each project and choose the most effective path in each case.”
Landsec’s Laird built on Gkanis’ argument by pointing out that a blanket requirement for retention over demolition will start to cause problems. Rather, there needs to be consideration around what is right for a development on a case-by-case basis to avoid what she referred to as “carbon tunnel vision”.
“There is a risk that we become so focused on carbon we start to make suboptimal decisions for other elements of a development. By reducing everything in a building and focusing on every single kilogram of carbon, you can end up with highly inflexible structures and that is not a long-term solution,” she said. “We haven’t been through that thought process yet.”
She said some inherited buildings are no-brainers for retrofit – those with strong bones. But there are more awkward projects where quality of space and flexibility “just isn’t there” and that is when you have to start making value judgements.
Clarity on planning
For Montagu Evans partner Simon Rogers, what the real estate sector really needs is clarity.
“Carbon has undoubtedly made development better,” he said. “We have more knowledge about what we do and the outcomes of that is we have more skills and techniques.”
However, he also said it has “undoubtedly made it harder”.
“In current economic conditions, being challenged to adopt retrofit first or having more cost obstacles placed in the way of new-build development can feel daunting,” Rogers said. “But it is not a challenge we should avoid. What we need to help us meet that challenge is clarity. The industry, on all sides, needs a clear and trusted mechanism so that we get better outcomes across the board.”
Rogers identified the planning framework as one of the biggest issues.
“However hard we push and however much people are willing to invest time and thought into how we can do this better, it is very difficult to do that if there is no clarity in terms of how that should be assessed, what should drive decisions and what weighting carbon has in those decisions.”
Rogers referred to the Marks & Spencer Oxford Street case, in which permission to demolish and redevelop the flagship store was refused, sparking industry-wide debate.
“No matter what side people came down on with that case, what everybody hoped for was a degree of clarity off the back of it,” he said. “The disappointment was that, in the end, that was the one thing we did not get.
“If a clear framework is provided, we will see more energy, more investment and more appetite put behind it. At the moment, people are not sure what they are putting their weight behind and it is causing paralysis in progress.”
At a London level, Arun Rao, principal policy and programmes officer, environment at the Greater London Authority, said there is a recognition for that need for clarity. It is something the GLA is trying to deliver through detailed policy and an understanding of the challenges developers are facing as they try to deliver what is best for the city.
“In London, we are in the business of setting very ambitious policies,” he said. “We have always had targets set far beyond what is required at national level and that has typically concentrated on operational emissions.
“In the past few years we targeted embodied emissions,” he added. “We are trying to shift the norms around development to prioritise retention but we still want to see development in London, that’s a key focus.
“We want to make sure we are not stifling development in the city and understand how best to target our policies so we are being ambitious in reducing emissions but making sure that is achievable and realistic.”
The new breed?
As to whether questions around retrofit and refurb versus new-build and moving decarbonisation up the agenda is leading to a new breed of developers, the panel was unconvinced.
“I question whether there is a new breed of developer or whether the developer of the moment has been around for a while,” said Common Projects’ Sanham.
“One of my first projects was at Urban Splash and we were not making decisions based on carbon – let’s not pretend to be vanguards – but we were making decisions on the basis that these buildings deserved to stick around because of their history, life and soul.
“I don’t know how different developers are now. I just think people are thinking differently.”
“The new breed of developers are not the ones leading,” added Landsec’s Laird. “You have got so much more cost risk, planning risk and programme risk when you do not consider carbon properly. As a developer you have to consider all of that. Those that don’t will fall behind.”
The experts
- Alexia Laird, NZCBS task group for embodied carbon and sustainability director, Landsec
- Nektarios Gkanis, senior manager, commercial real estate lead, Carbon Trust
- Arun Rao, interim principal policy and programmes officer, environment, Greater London Authority
- Simon Rogers, partner, Montagu Evans
- Steve Sanham, founder, Common Projects
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Photo © Telling Photography
