After nearly 30 years, the European Bank for Reconstruction and Development (EBRD) is moving out of its original headquarters, One Exchange Square, a huge office block next to Liverpool Street Station in London. The bank is due to relocate this year to Five Bank Street, a new office tower three miles away in Canary Wharf.
For the owners of One Exchange Square, the expiry of EBRD鈥檚 lease is an opportunity to overhaul the 1980s building and render it fit for a world grappling with climate change and post-COVID-19 working trends.
In a week when London faced the prospect of 40掳C heat, the need to retrofit office buildings and decarbonise the built environment was given a new sense of urgency.
LaSalle Investment Management and development manager M3 Consulting have received a resolution to grant planning permission to redevelop One Exchange Square into a 13-storey scheme with 422,000sqft of workspace and 15,000sqft of retail. The project will be 100% electric and net-zero carbon in operation, and the developers will retain 90% of the existing structure, which they say will have half of the embodied carbon of typical office building of comparable size.
One Exchange Square was acquired in 2012 by Permodalan Nasional Berhad (PNB) from German fund manager KanAm. The Malaysian state-owned institution made the purchase as a core real estate investment. But more recently it has enlisted the help of LaSalle to redevelop the building, placing the investment firmly into value-add territory.
鈥淭he business plan for this asset has evolved over time, from a core income strategy into a higher-returning net-zero value-add strategy鈥�, says Brett Ormrod, net-zero-carbon lead at LaSalle.
PNB itself has recently introduced a sustainability framework with 10 environmental, social and governance (ESG) 鈥榩illars鈥�. Under the environmental pillar, PNB is committed to achieving a net-zero portfolio by 2050.
One Exchange Square is just one illustrative example of a challenge facing owners of offices across London, the UK and elsewhere. Significant amounts of investment will be needed across swathes of assets to bring them into line with net-zero targets. But this will need to be balanced with financial-performance objectives 鈥� as recently explored in the latest edition of 91传媒在线 magazine.
Ormrod says 鈥渋nvestment performance was paramount鈥� in the decision to redevelop One Exchange Square. 鈥淏ut it鈥檚 an object lesson in how financial returns and sustainability can be closely aligned,鈥� he says. 鈥淲e are generating value for our investors by creating a net-zero central London office, which will allow the occupiers to reduce their carbon emissions.鈥�
Ormrod, a trained mechanical engineer, joined LaSalle in January this year, having previously led net-zero efforts for Lendlease鈥檚 urban regeneration projects in the UK. He says LaSalle, a member of the Better Buildings Partnership, is 鈥渃ommitted to a refurbishment-first approach鈥� across its portfolio.
鈥淥ur refurbishment plans employ circular-design principles which will minimise the use of new construction materials, with more than 10 material types identified for recycling, recovery and reuse from the existing structure,鈥� he says. 鈥淭o put this into perspective, the saving on the steelwork alone equates to around half of that used to construct the Eiffel Tower.鈥�
By retaining the building鈥檚 foundations and 90% of the structure, LaSalle will save approximately 6,800 cubic metres of concrete, avoiding 1,100 truck trips to site. 鈥淭his translates to a 50% reduction in the building鈥檚 embodied carbon footprint compared to an industry benchmark for a new building,鈥� Ormrod says.
By contrast, the upfront embodied carbon, or the carbon associated with the extraction, manufacture and transportation of a building鈥檚 construction materials, accounts for around 35% of a newly developed London office, according to research by the Royal Institution of Chartered Surveyors. 鈥淚n the past, this percentage was typically much lower; however, as the national grid continues to decarbonise through the addition of renewable energy, the share of a building鈥檚 embodied carbon only grows larger,鈥� Ormrod says.
He cites the International Energy Agency, which estimates that two thirds of existing buildings today will still be operating by 2040. 鈥淩efurbishments that retain large amounts of the existing structure and envelope will inherently have a lower embodied carbon footprint,鈥� Ormrod says. 鈥淯ltimately, the strategy of retaining and refurbishing, coupled with improving operational energy performance and electrification of the heating system, will need to be employed at scale if the industry is committed to reaching net zero.鈥�
