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Builder-developer Built and investment manager Investa have joined forces to turn tired, old city buildings into environmentally sustainable office spaces in the CBDs of Sydney and Melbourne.
Rather than demolishing and constructing new buildings, the $400 million sustainable adaptive reuse “brown-to-green” project will repurpose existing properties into sustainable A-grade commercial office buildings.
The project aims to reduce embodied carbon to 40 per cent, with a target for buildings to be Scope 1 and Scope 2 net zero. The developments will be a minimum 5-Star NABERS weighted average rating for the portfolio while adhering to Green Star and WELL building ratings.
“Repurposing ESG-obsolete assets to create bespoke, high-quality and amenity-rich workplaces with leading ESG credentials for forward-thinking employers to occupy is a theme we strongly believe in both from an occupier and investor perspective,” Investa chief executive officer Peter Menegazzo said.
The companies are actively screening potential sites in the $80 million to $90 million range in the CBDs and fringes of Australia's two largest cities, with potential to extend to markets around the country.
Investa says it has flagged interest from a handful of investors. “This theme is resonating strongly with investment partners, with a number of investors actively engaged in reviewing opportunities,” Menegazzo said.
A report by global real estate services company JLL states that 80 per cent of older “mature city” office buildings in Australia’s CBDs will continue to be in use in 2050. However, existing commercial buildings will need to be retrofitted at a rate of between 3 and 3.5 per cent a year to meet net-zero commitments.
“Owners who have not invested in their assets, or who have held onto low-grade stock, face both asset devaluation as well as asset obsolescence. It is here where the venture will focus,” Menegazzo added.
Built CEO and managing director Brett Mason said there was a high market demand for sustainable assets from both investors and tenants.
“We’re excited to partner with Investa and create an opportunity that offers a unique ability to identify, deliver and manage high quality ESG commercial office developments in the one venture,” Mason said.
Built has constructed boutique developments such as Sub Station No. 164 which saw the conversion of two disused heritage industrial buildings into a contemporary, character-laded, 6-Star Green Star office tower. The retention of the original buildings in construction reduced embodied carbon by 23 per cent in comparison to a conventional build.
Built also secured an international fund partner and fully leased the building during COVID and challenging economic conditions, showing the market demand for these types of assets.
The building company also worked with Investa on the $430 million redevelopment of the 23-storey high-tech office tower Barrack Place in Clarence Street, Sydney, completed in 2018.
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