Written by Natalia Iamundo
As Canada takes steps towards economic recovery from the COVID-19 pandemic, the health and safety concerns for building occupants are, and must be, paramount. There has been a lot of discussion around the future of office and retail space in Canada, as millions of employees are now working from home and social distancing guidelines limit the number of people allowed in bricks-and-mortar businesses. The issue is better framed, however, by asking how these spaces can be reimagined in a way that not only addresses these health and safety concerns, but that simultaneously fosters much needed economic growth. Both the Canada Green Building Council (CaGBC) and the U.S. Green Building Council (USGBC) have responded with their visions and strategies for the role of the real estate industry in the recovery, with more steps to come.
CaGBC and USGBC Respond to Covid-19
The CaGBC’s report Ready, set, grow: How the green building industry can re-ignite Canada’s economy provides guidance to the federal government on how strategic investing in green building can help to re-ignite the Canadian economy. It stresses the foundational role that the construction and infrastructure sectors play during a time that is critical for climate action.
A key recommendation coming out of the report concerns the retrofit of Canada's existing building stock to become energy efficient. It notes that despite aging infrastructure and economically viable projects, renovations are not happening at the level necessary for Canada to meet its emissions targets by 2030. The barriers to these projects include the perceived high level of risk in energy efficient investments, deficiencies in market capacity to identify retrofit measures, and limited lending products. The CaGBC recommends that the federal government allocate $10 billion toward a first loss loan reserve for loans supporting deep retrofit project, require the use of a standardized approach to underwriting, developing and measuring retrofit projects and consider the use of non-investment grade "green" bonds insured by an institution like the Canadian Housing and Mortgage Corporation.
The USGBC’s new strategy, Healthy People in Healthy Places Equals a Healthy Economy, aims to leverage LEED (Leadership in Energy and Environmental Design) and the community implementing the rating system to support buildings and communities in a post-pandemic world. Actions are underway and on June 9, 2020, the USGBC released four new Safety First Pilot Credits in response to COVID-19 on cleaning and disinfecting office space, re-entering the workspace, building water system recommissioning and managing indoor air quality during the pandemic. The next day, Arc, an affiliate of the USGBC, launched a set of tools and analytics designed to assist companies with re-entering their buildings and facilities. The technology platform allows teams overseeing the sustainability of buildings and places to collect data, manage and benchmark progress, measure impact and improve performance.
The USGBC will hold its inaugural Healthy Economy Forum in August 2020, to listen to global stakeholders on how sustainable practices can help transform new and existing spaces to be healthier and have a positive impact on people and the economy.
Considerations for Building Owners
The economic pressure on landlords and other building owners is unprecedented right now, as they seek to address demand for better ventilation, access to daylight and improved indoor air quality in an environment where there is a reduced appetite for capital expenditures. At the same time, there is a real opportunity to ensure that investment today is directed towards projects that will achieve measurable carbon emission reductions while providing jobs.
Energy efficiency audits offer a concrete way for building owners to evaluate the costs and benefits, financial and otherwise, of implementing various retrofit items to create healthier indoor environments for building occupants. These retrofits can result in significant emission reductions and support the green building technology sector, which in 2018 contributed approximately $48 billion towards Canada’s GDP, an increase of 50 percent in four years, according to the CaGBC.
Bennett Jones’ Commercial Real Estate team will continue to follow these developments and what they mean for the role of the real estate industry in Canada’s economic recovery.