Australia Announces Plans for Commercial Building Disclosure Program Extension
by Emma McMahon
On 21st June, the Federal Government in Australia announced its plans to extend the Commercial Building Disclosure (CBD) program. This means that as of July 1, 2017 any commercial building over 1,000sqm that is being advertised for sale or lease will require a Building Energy Efficiency Certificate (BEEC) and a current NABERS Office Energy rating.
Managed by the Australian Government Department of Industry, Innovation and Science, the CBD program currently requires most vendors and lessors of office space of 2,000sqm and above to obtain a Building Energy Efficiency Certificate (BEEC) before the space can be sold, leased or subleased.
The expanded Commercial Building Disclosure (CBD) program will create a level of much needed accountability for the owners of B, C and D grade buildings across the country.
The review recommended reducing the existing threshold to 1,000sqm to help deliver further energy efficiency benefits and to ensure prospective buyers and tenants are better informed. It also recommends extending the validity period for the tenancy lighting assessment from one to five years.
Property Council of Australia research demonstrates that over 60% of the commercial buildings in Australia are B, C & D grade buildings. This makes up 12.5 million square metres of net lettable space. These buildings have an average NABERS rating of 2.4 stars (compared to 3.5 stars for larger institutionally owned buildings) and there is currently little incentive to upgrade in order to improve efficiency.
There will always be a market for these less efficient, mid-tier buildings. They particularly appeal to smaller firms and start-ups that are unable to pay premium rental rates associated with A or Premium grade space.
In fact, a recent analysis highlighted that the market for smaller tenants in the Sydney CBD is the strongest it’s been since 2007.
With mandatory disclosure of energy performance, these landlords will have nowhere to hide, and will finally be prompted to explore energy efficiency opportunities and be accountable for their impact on the environment.
To assist landlords and asset managers, CBRE’s Sustainability team have a number of expert NABERS Assessors that can help. We conduct more NABERS ratings than any other provider in the market. We have also developed a Sustainability Value Assessment tool which includes a physical assessment of individual assets, a report on potential improvement opportunities and details of the estimated return on investment for any upgrades.
The CBD program has already delivered $44 million in energy efficiency benefits and there is no question that a widened program will have a positive impact on the market given that commercial buildings currently account for approximately 10% of Australia’s energy consumption.
Current estimates are that the expanded program will deliver an additional $13 million in energy efficiency benefits by 2028 and streamline industry regulatory obligations – a significant positive for the market.
