Webinar description
Transforming the built environment towards net-zero emissions requires an urgent and collaborative effort on all fronts, withproperty operations presenting one of the greatest opportunities for accelerated progress. The operation of buildings in 2021 accounted for 30% of global final energy consumption. Given the vast majority of buildings in 2050 are already built, achieving zero emissions from existing stock through operational efficiency should be a priority for building owners and managers.
Our panellists delve into:
• Where net-zero lies in the operations priority list;
• Net-zero targets and the roadmap to get there;
• The key contributions that operations teams can make to net-zero efforts;
• The importance of an embedded culture of sustainability to drive company-wide success and;
• How industry headwinds could affect net-zero plans.
Our speakers
Our all-star panel of industry experts facilitated an engaging conversation about this timely topic, sparking a discussion on the role of operations in achieving net-zero. The panel features Scott Crellin,the National Director of Group Property Operations at GPT; Lisa Hinde,the Head of Sustainability at Colliers; Jon McCormick, the Head of IFM and Asset Services at Cushman & Wakefield and our CEO David Walsh.
Webinar transcription
Introduction
Anthony 00:02
Hello and welcome. My name is Anthony Caruana and on behalf of CIM, I'd like to welcome you to today's webinar. During this webinar, which is the second in a series of four on the future of property operations, we're going to explore the role of operations in achieving net zero for property groups.
But before we start, I'd like to respectfully acknowledge the traditional custodians of the land on which we are all meeting today and recognise that these have always been lands where learning is taking place by storytelling and through the sharing of experiences. We pay our respects to elders past, present and emerging. In that spirit of storytelling and sharing, that's really what this webinar is about today. It's about sharing the experiences of some really great panellists who are going to bring what they've experienced through their careers in property and also for your opportunity to ask us questions and ask the panellists what you'd like to hear from them as well.
So we kicked off the series in August with a really lively discussion on embracing data and digitisation. After that webinar, we're really looking forward now to having another really insightful session. And we're delighted to see so many passionate and curious industry colleagues listening in today. So we're expecting about 230 or 250-odd participants today. So I can see people are still arriving and coming in, but we're going to make a start straight away.
Our panellists today, it's easy to say all-star lineup, but it really is an all-star lineup of industry experts. They're all super passionate about accelerating progress towards a sustainable future for the built environment. So we're going to welcome Jon, Lisa, Scott and Dave and thank them for joining us today.
Jon McCormick is the head of Integrated Facilities Management and Asset Services for Cushman & Wakefield in Australia and New Zealand. He's been in the business for over 25 years with properties and facilities management in Australia and across the world. And before that, he had six years in the commercial construction industry. So I'm sure that that's a really unique blend of different skills and experiences that are coming into the discussion today.
Jon 02:05
Good afternoon, everyone.
Anthony 02:08
Lisa Hinde is the Head of Sustainability at Colliers for the Real Estate Management Services team, and her key focus is on developing long-term sustainability, health and well-being strategies to support her colleagues’ and clients' ambitions. Lisa has been a longtime collaborator with the Green Building Council of Australia, NABERS, and the International Wellbeing Institute and various expert reference groups and advisory panels that help shape the standards that we're all in use today. So hi, Lisa.
Scott Crellin is the National Director of Group Property Operations at GPT. He has over 20 years of experience within the sector and he is a committed property professional specialising in all facets of operational asset management. Good day, Scott.
And finally, we have Dave Walsh, the founder and CEO of CIM. CIM is a world-leading building analytics software company. I've been part of the CIM story I think for about four years now. It's been quite a while since I’ve been working with Dave, and he's just incredibly passionate about this topic and about making the building industry better. He was inspired to create the company because of a black hole that he saw in the way data was being used in commercial buildings. And Dave and the CIM team work with major property players around the world to drive operational efficiency through data-driven facilities management.
So the topics we're going to talk about today that our panellists are going to get into are net-zero targets and the roadmap to get there, where net zero lies in the operations priority list, key contributions that the operations team can make to your net-zero efforts, the importance of an embedded culture of sustainability to drive company-wide success, and how industry headwinds could affect net-zero plans.
Just in preparation for the webinar today, I was reading an article about half an hour ago about how carbon credit schemes are now something that the government's going to be seriously looking at, which are going to affect some of these discussions in the future.
As you're watching and listening, if you have any questions, please put them through to us using the Q&A option that's available to you through the webinar software. If your question is for someone specific, please make that clear so that we can make sure we get it to the right person. And if we run out of time, we're going to log all the questions and we're going to respond to them after the webinar. So if you do have a question that we don't get to, we're not going to abandon you. We will come back to you after the webinar with an answer.
In the next few days, you’ll also get a link to the recording for this so you can come back and listen to anything that you want to revise or come back to later. And once the webinar is over, there will be a very short survey for you to fill in, just to let us know what you thought about the event today so that we can continue to improve and refine what we're offering out to the market.
Net Zero Targets
Anthony 04:53
So let's jump into it straight away. The road to net zero is being widely discussed, especially when it comes to specific targets committed to by different organisations for hitting that milestone. Some targets are being labelled as too ambitious and others are being labelled as not ambitious enough. Lisa, can you tell us how Colliers is building their own net-zero roadmap and supporting that of your clients?
Lisa 05:14
Thanks for the question, Anthony, and thanks for having me on the panel. I’m really excited to hear the discussion points and I'm sure we're going to cover quite a lot of ground in this session, which is exciting. So in terms of Colliers’s net zero roadmap, I think it's safe to say that the race to net zero is definitely on. I think we've been building to this point in this industry for quite a number of years, and it's finally getting to the point where there's absolutely a hands-on. The race is happening. We've got to make these commitments and we've got to meet them. In terms of the role that Colliers plays in that piece as a supplier, as a service provider to industry, there's a lot that’s in our remit to consider, particularly given the operational control of a lot of our activities.
With the way that organisations approach net zero, particularly with the introduction of new requirements around greenwashing claims and the ACCC coming out requiring that alignment with industry expectations, there's no room to hide anymore it seems. Not that that was ever the intention, but I think it's making a lot of organisations, particularly ours, really focus on making sure we're capturing everything that's expected of us in that review, in terms of meeting net zero obligations.
And so from Colliers’s perspective, and a lot of the agents operating in this space, we're aligning to Science Based Targets Initiative, and we've chosen that on the basis that it requires actual emissions reductions. We can't buy our way out of it. We need to be implementing actionable initiatives that will see our emissions go down. And to be able to do that, considering that over 90% of our emissions are based on our client operations and our client inventory, which is really fun, we need to be taking our clients along for the ride. Otherwise, when we hit that target, when we're required to hit that target, the emphasis will be on how we've performed in relation to our clients' portfolios as well.
So in terms of servicing that, we're building an internal team to really guide that process around mapping not just our emissions, but our clients’ emissions, and doing that at a global scale. So it's a huge undertaking, but we've definitely set that target for ourselves and our challenge is now mapping our scope through emissions, which is always fun.
Anthony 07:56
Cool. So, Scott, how is GPT going about this and trying to approach their net zero?
Scott 08:00
Thank you. And like Lisa said, thank you for having me today. Very similar. Obviously, net zero for us has always been part of GPT's strategy and underpins everything that we do. Luckily, we've been able to achieve our ISO 14,001 accreditation for our environmental management system, which is great. We achieved that operationally last year, and we've been able to get our capital team and our development team certified this year, which is a great result.
I think some of the words that we're going to hear today are all going to be around performance and progress, and I don't think you can underestimate the importance of literally tracking what you do, understanding where your emissions are occurring and the richness of that data in how you go about stopping the leakage. And having been in GPT for over 20 years, I can look back to where we were even ten years ago and see that we've had a 40% reduction in our emissions. I think it’s an outstanding result.
I think the other thing that literally underpins the importance of this, and Lisa mentioned it as well, and that is about people and building that team capability. I like to think that GPT has probably got best-in-class people on our sustainability team who really help sort of drive that strategy and look at all of our programmatic responses to emissions and emissions reduction. I think it goes a long way in also educating our broader team, so those roles that might not be directly linked to environmental performance internally, but making sure that they're aware of what impacts that they can have on their own consumption and how that might translate, even right down to their home environment.
I think the other big thing about sustainability and emissions control for us, it's not actually just about achieving net zero for GPT, but also, just as importantly, how our assets will become more resilient to climate change in the future. So I don't think for us it's about relying on governments to write policy or incentivise as much. I think you've actually got to control your own destiny in terms of how you get there and how you make your assets resilient for the future.
Anthony 10:26
So, Dave, obviously with CIM, you operate across a number of different organisations and you get to see what's happening in lots and lots of different types of buildings and across the whole built environment. How are you seeing some of the other industry players approach this?
Dave 10:41
We have a lot of experience with GPT. They were our very first client with Wollongong Shopping Centre. This isn't lip service to GPT, but even from the first time of working with them, they really were thinking almost five or ten years ahead of the rest of the market. I mean, I remember the first version of the software we had, we went around and showed it to different sets of people, and then showed it to the GPT team and to Scottie. They were immediately kind of intrigued with going to a deeper level of it because they showed me their kind of plan. And at the time, it was the exact thing that everybody does now, which was: gather as much data as you can, empower the people that are running large, complex facilities, help them fix issues faster, and then get everything tightened up. But then after that, upgrade your equipment, look to renewables, and then power purchase agreements.
But they were absolutely not starting at kind of the other end, which people were, if you go back maybe seven or eight years ago, people were going straight to power purchase agreements and that's just an inefficient way of deploying capital. So the journey that I went on with GPT was just that: empowering the people to help them get to the bottom, the operations team, to get to the bottom of tricky issues within BMSs, within mechanical equipment, improving the hot and cold complaints and the actual tenant experience.
Very quickly, that was always their strategy, before they go onto the next step, which the wider industry has really adopted as well now, which is before you move on to equipment upgrades, really optimise what you have. And I think the good thing for CIM is that the GPT team pushed us so hard, we were able to really kind of do well in the retail sector. So, thankfully, now I think our tech is on about 68% of all premiere shopping centres in the country. And I think a fair bit of that was kind of the high bar that GPT set. And every time we kind of came back with a new version of the technology and of the platform, they were like, look, we need to see this level of detail, it needs to be faster, it needs to bring more control and joy to the onsite team. It’s helped us and I think definitely GPT, when you look at where they are in the various different sets of international indexes, GRESB and stuff, they really know what they're doing and internally managed as well in that retail side of it.
So when you then look out to the managing agents, they've definitely jumped on board as well with just exactly even what Lisa was saying, the commitments they have within their own business but then into their clients’ assets to really raise the bar. Because everybody that's running a facility has control over what does and doesn't get fixed and the speed of resolution. And the operations team, I think we're going to talk about this a lot today, but they're absolutely key part to making sure of that 20% to 25%, even 30% of emissions is reduced and maximised.
Anthony 14:06
That's great. And I know you've often said to me that the cheapest energy you can buy is the energy you don't use. I guess the same goes with emissions and getting to net zero. The lowest emissions you can have are the ones you just don't create in the first place. And that's always been one of the targets and one of the things you've spoken about. Lisa, one of the questions that’s just come in from our audience is, why do you think Australia did so well relative to other regions in the GRESB results that were announced overnight?
Lisa 14:36
We're continually punching above our weight when it comes to the results from GRESB. I think it comes down to transparency and also the market here is incredibly collaborative. So when we see scores improving year on year, you see the collective group of sustainability representatives kind of getting together and saying, so what did you do that led to you getting this point? Or how did you achieve this and how can we do this across our other assets?
But I'm also conscious that there's a lot of movement at the moment just in terms of assets and portfolios and acquisitions and changes in terms of the ownership structures for a lot of larger REITs at the moment. And so the benefit of that is a lot of those policies and procedures are now being transferred to more and more properties, which from a sustainability perspective is quite a good thing. But I think when you're only talking about a few points’ difference between a sector leader and both of them operating out of Australia, there's going to be an increase in that competitive nature between those funds to continually try and outperform each other. Part of our role in supporting that is working quite closely with our managed portfolios to identify those gaps ahead of the next cycle, to make sure that any of those opportunities to improve are also embedded in the way we manage the property. So really identifying those key elements and any of those portfolios that are performing highly.
And congratulations to all the sector leaders. We're really excited to celebrate you next month. As a plug to a Colliers event, we're hosting in Sydney for the Oceania results next month. So look out for that. We're just really excited to see how well we continue to perform in this region.
Anthony 16:27
Thanks, Lisa. So, Scott, for you. You've mentioned that the government is moving on climate initiatives and net zero, but perhaps things aren't moving quite as fast as some people might like. Is it up to the property sector to be the leader here and push things along, rather than waiting for the government to set the policy? Do you want to be the leaders or the followers here, I guess.
Scott 16:52
That's a great question. I'd say they've got to go hand in glove. I think for property owners and the assets that we manage for our investors, you do need government support, you do need to make sure that is incentivised. I don't think it's necessarily totally fair to push what is a global issue onto the property sector more broadly, although we do make up I think 40% of total emissions. So I think you've got to do it hand in glove. I don't think it's necessarily one responsibility or the other, but what I would say is, as a sector, I don't also think we can wait and sit idle for those policies to come to fruition. I think we've got to get on with what we know and make those changes proactively.
And I think in terms of protecting our investment, doing things like our smart energy hubs, battery, solar, load flex demand response, those sorts of things, you're going to need to do those. We know that the energy grid, particularly in Australia, is going to come under pressure, so you've got to be thinking about what you can do to reduce your emissions to make sure that it's not going to have an impact on your building, insofar as you can.
I do think the property industry is probably leading the way for all industries in terms of some of the technology that we've installed and what we've been able to achieve in what is a relatively short period of time. So, as I said, I think it's got to go hand in glove. We certainly have a role to play, but that said, I'd love to see government speed up, because if they don't actually get a road bus plan around this, then the reality is, we'll still be talking about it in five or ten years time.
Operations
Anthony 18:47
Thanks very much, Scott. So we've kind of touched on the role of operations in some of this a little bit already in some of the discussion we've already had. But I mean, ops teams play a huge role in effectively managing commercial properties, so it's really important to understand how they fit into that whole wider sustainability conversation. Where do net zero goals sit on the operations priority list for some of your large organisations? Scott, ops teams are already dealing with a lot of stuff day to day. At GPT, how do you guys balance the traditional operational focus areas with net zero targets?
Scott 19:24
So, for us, I would say net zero targets are a core part of their role. I wouldn't describe that as not being traditional. As we said earlier, it's been a big focus of our organisation for a long time. So it's core.
I think, in terms of what role do they play, they've got to understand the DNA of their buildings, how they operate, where their emissions are being generated from, and what they can really do to stop inefficient operation. And we rely heavily on platforms like PEAK to give us that rich data, those insights, so that we can make those data-led decisions that are driving those emissions down. So I think, particularly when it comes to Scope 1 emissions, the guys understand that inherently at their assets, they've really got an understanding of where that comes from. Like I say, what's failing, and they're planning for equipment replacement, looking at efficiencies, looking at technology, all with the aim of going, give me more data, give me more insights, tell me where the next layers of opportunity are.
They also need to inextricably link in with sustainability teams and capital teams and development as well, because whilst they'll run the day to day, as I said, how we position these buildings for the future and how we retrofit those buildings, it'll be a challenge. The buildings that are already 20, 30 years old today, how do you make sure that they're not rubble in another 15 years' time? How do we continually invest in those? And the operations teams within GPT has some amazing thoughts about how we might go about that. So, as I said, a core part of their role is understanding that DNA of the infrastructure and where the consumption is being held on Scope 1 emissions, that's absolutely where they've got to play.
Anthony 21:23
So, Jon, welcome to the discussion. You've got to hear a fair bit from some of the others as we've gone along here. Can you talk to us a little bit about what the Ops teams at Cushman & Wakefield are doing to work with their clients on this?
Jon 21:37
Yeah, I'll probably go back a step. Lisa talked about, for a managing agent like Cushman & Wakefield, Colliers, and others, the majority of our emissions, if you're looking at scope one, two, and three, come through the properties that we are managing and actually over 90% of those emissions. So we have also set Science Based Targets. And one of those, specifically in relation to clients, is actually engaging with clients who produced about 70%, and accurately measure how much those clients emit and get to 70% of the emissions by 2025. And encouraging those clients to also set Science Based Targets. That's a real challenge. And this is going to be measured. So by 2025, 70% of the buildings that we manage, we need to engage with those clients and make sure that they have science based targets. So that's how we're dealing with it at a macro level.
How does that work in practice? Thankfully, most of our larger clients are already on the journey. So there's a big tick there that will cover a fairly large proportion of those emissions. The real challenge is, as you get to some of those smaller investors, the owner operators, some of the government agencies that we manage property for. Anybody who read the paper this morning, I think there was something there from KPMG saying there's some laggards in terms of sustainability reporting, including a number of government departments.
So really, for us as a managing agent, it's really starting to educate. And when I talk about education, it's educating the clients. But it's also, going back to some of the things David said initially, our own teams within these buildings, educating them about what their role is, then getting to optimising the assets that we are managing. And then it's only at that stage then we start to look at upgrading and looking at different ways of changing those assets. Because my experience over 20-odd years is that a lot of the assets we're operating are not running anywhere near their design capacity in terms of efficiency. And that's more an issue relating to the property and facilities management market in terms of what we've done in terms of deskilling some of the people within those teams over the last 20 years. And so education is a really important part of this.
Anthony 24:21
So just adding onto that a little bit, where do you see operational efficiency on the list of priorities when you compare it to things like renewables and offsets? You kind of talked there about some of this potential for better operational efficiency in some buildings and with some building owners.
Jon 24:36
I would say most buildings. And I know some of the premium assets are run really well and really efficiently. We've seen huge improvements in NABERS ratings and that sort of thing, and certainly CIM assists in doing that. But a large proportion of the assets that we do come across are not even operating anywhere near their original design standard. And that's the challenge, because we can't just say our sustainability team is going to come in—apologies, Lisa—and do this.
As I think Scott said, it's always been part of the role of the Property and Facilities Management team to run assets as efficiently as possible, whether that's talking about energy, water, the waste those assets produce, that is inherent in their job role. I think we've lost a little bit of that over time and that now the expectation is we might manage relationships there, but in terms of the technical operation of those assets, we're not necessarily delivering from an industry perspective what we should be.
Anthony 25:46
So Lisa, we've got an audience question for you and I'm going to kind of combine it with perhaps one of the things that we had discussed in preparation for the webinar. We talk about how do you get your sustainability priorities high up the operations priority list. And then someone in the audience has actually asked, do you think that assets owned by publicly listed firms will be under more pressure because of external, because they're publicly listed? It's an out there thing and people are more concerned about ESG and so forth?
Lisa 26:17
Yeah, great question. So just in terms of the requirements there for funds moving forward. And to be honest, I can see the challenges just with the privates, but when it comes to publicly listed funds, there is this expectation from a number of stakeholders in that entire process, from the investors through to lenders through to occupiers. There's no escaping this moving forward. So I think it's been quite humbling to see the interest from privates emerge that previously wouldn't have touched this with a ten-foot pole. And that's off the back of, I think, lenders to them having that conversation around, where are you moving towards and how is this affecting your capacity to take on this capital?
And I think we're seeing that move where it's not necessarily seen as a detrimental angle to take, where previously it was seen as, we just have to do it because sustainability requirements dictate that we've got to go down this path. But now it's seen as a value add in terms of not only the energy savings, operational expense savings, but also in terms of unlocking additional capital. Green bonds are certainly coming into play. We're seeing an influx in industry standards reflecting this move. It's all converging now, which is really exciting for our team. I think the skill set that we can certainly bring to the table is assisting the navigation of that.
And I think to Jon’s point, the sustainability team is often called in, but ultimately our preference is to make ourselves redundant because ideally a lot of the work that we're doing, to do it at the scale that we need to be doing it, that aspect needs to be enrolled and included as part of the KPIs of everyone operating an asset. And I think it's not necessarily a huge departure from the way that we previously looked at the role of a managing agent in addressing some of these challenges. It's more around assisting those teams to navigate the standards and how they're updating and adapting to the market.
And I could go on this for quite a long time but I think there's such a huge challenge that we have in terms of translating the right information to the right people and making it accessible. I see that as our big challenge. We have the technology, we have the solutions, it's getting it in the hands of the right people that will see that change happen quicker. I hope that answers your question.
Anthony 29:21
I think it does, thanks Lisa. So Jon, what are some of the key contributions that your clients’ ops teams actually make towards net zero targets?
Jon 29:35
We've talked about it time and time again. Part of it is that education of firstly the people running those teams but then also educating the client in terms of how they can best use their asset. I suppose over the years I've tended to focus on, why wouldn't you operate an asset as efficiently as possible? When we started this journey, and going back to the original point, I think commercial industry started early on this journey compared to some of our global competitors. So back in the early 2000s it was hard to convince people to do it, but ultimately there was an economic reason why you did it.
By running your assets more efficiently and reducing your water use, your waste creation, it actually costs less to run those assets and you can pass on the outgoing benefit to your client. So it protected your revenue, increased your net operating income, so there are good economic reasons for running assets efficiently. It's just become far more important now that people finally got on board with what's happening in terms of climate change and the fact that we have to decarbonise the built environment.
So I think part of our team’s role really is educating those clients. It's optimising all the properties that we actually manage and hopefully create change as an industry to force government policy to move down a similar path, because ultimately if we can get the grid to be effectively 100% renewable, a lot of the challenges disappear from the commercial industry. And that's an interesting place to be.
If you look in Tasmania, I think they're currently operating on 99% renewable power. Are there the same incentives in Tasmania to upgrade your efficiencies in your buildings? David might be able to answer the question. Has he been able to roll out his platform in buildings across Tasmania? Because it's not the same driver.
Dave 31:50
We do have clients down there and it does come down to the economic return, right? Because it's renewables, but it's still not cheap.
Jon 32:05
Yes, and that's what I'm seeing with this transition, and Lisa talked about it, the cost of energy is still going up. And you look at New South Wales, I think we're operating at about 25% renewable power. There's still a long way to go. And if we can contribute to reducing carbon emissions and also save our clients significant costs by being far more efficient, it just makes economic and climate sense.
Lisa 32:32
It puts that pressure onto us, doesn't it, to create those business cases that then get approved? But I guess it requires that insight. And I think from what Jon has mentioned, being that close to our clients and being able to be the party that's receiving the bills and receiving that data to say, okay, this is where these improvements can be made, this is the way that you can reduce your operating expenses and then also contribute to your own ESG targets. It's incredibly powerful and an incredibly great place to be in terms of navigating those conversations with clients.
Anthony 33:16
So, Scott, can you talk to us a bit about the role that your Ops teams play at GPT and perhaps even give us a bit of a real life recent example of how your Ops team is contributing towards your sustainability targets?
Scott 33:30
I'll give you a real example of something that's been incredibly exciting for the group, and that's been the rollout of our smart energy hub at Chimside Park. So that's a 650-kilowatt solar system on the roof attached to a two-megawatt battery, some of the largest batteries in a commercial property in the country, if not the largest. And where that gets us to is, we can run that asset basically for 6 hours, totally stand-alone off the grid if we need to, so effectively run it in island mode.
Our operations team, in that scenario, they're a huge part of that infrastructure upgrade and that investment. It's one thing to build it, but you've then got to be able to operate it and you've then got to make sure that not only are you operating it, but is it actually optimised. And again, where I think the role of operations manager is really crucial, is it's understanding how that building operates.
And we're in three sectors. We're in obviously, industrial, office, and retail. And those three sectors all have different drivers. They've got very different customers. So what might work in retail might not necessarily translate into one of those other sectors. So you really do need that sector specialism that can only come from the asset management part of the business. And obviously the operations guys are core in that.
I think when I look at, what does their day-to-day consist of? Again, singing the praises of CIM, the reason the PEAK platform was rolled out across our whole entire retail group is because it saves us an absolute bomb of energy. Dave talked about Wollongong earlier. We brought CIM in there off the back of a development that was commissioned, and I think from memory, even though it was commissioned, signed off or verified as being complete, I think we saved something like 25 or 30 percent in year one of our total energy expense because it was just running that inefficiently. So that was a great collaboration between CIM and our operations teams.
They are in there, they're under the hood of these buildings looking at, like I said, what is going on and trying to find where that next layer of optimisation is. I think where I see probably some of the challenges in the future, particularly as we get more sophisticated with tech and we get more data, is what the operation structure of the future looks like? I know there's a lot of groups now that are internalising energy performance teams. That's certainly on the discussion that we're having is, do we start to build that capability now internally? How far down can we get these assets to run?
But like I said, they can't do it in isolation. You do need sustainability teams who bring that subject matter expertise to the table. You do need the capital team to plan for asset enhancement, equipment replacement, and making sure that what we're putting in from a performance brief perspective, like for example, you replace a chiller, does it have the lowest possible ozone-depleting potential refrigerant in it? Is that written into your performance scope? So that's a huge part of our capital team.
And then you've got the developers, they've got to be looking at how we build these things and how we make these assets still relevant, not for necessarily today or tomorrow, but in another 30 or 40 years down the track. So they're a crucial part. They are absolutely key in terms of that day-to-day optimisation, but they are also a key cog in the wheel in terms of how we set these things up for success longer term.
Culture and Data
Anthony 37:36
And that's really important, because we're now starting to talk about the engagement of people. And once we start getting into this engagement of people, we're now talking about how do you get culture to be part of the sustainability drive within an organisation right across the company? As we drive towards net zero, it's going to create change naturally within organisations and I assume that involves everyone all the way through the entire business.
Lisa, what are some of the keys to successfully embedding sustainability into an organisation's culture?
Lisa 38:08
That's a great question, and it depends on the audience for a lot of these initiatives. I find that from a service provider perspective, if we're building sustainability as part of the culture of delivery of services, I think facilities managers and property managers are kind of like the IT team in a way. You only really hear from the client when something's gone wrong. Otherwise everything is running smoothly and there's very little reinforcement in terms of a positive experience from the client side. I know there's definitely clients that are wonderful and will support the teams regardless. However, it tends to be the case that it's just an expectation that performance is good.
When we introduce a sustainability program or an initiative that's a bit out of the box thinking and apply it to a portfolio under management, we get that really positive response from the client and that positive response ricochets around the team. And I find that's a really great way to engage those members of the team that wouldn't necessarily have been celebrated. And we do that through applying for the awards for, say, facilities management that we're currently up for, for one of the assets under management in Sydney. And that was purely based off this program that we put forward that the facilities management team and the property management team just lapped up, because they knew the occupants were really excited about it, they knew that the owner was really excited about it. And through that, it just kind of reinvigorated their emphasis on performing really well in that space. And I think, you know, our role as sustainability professionals, you know, being quite a small team in comparison to the 14 million square metres of real estate under our management in Australia, we kind of have to rely on that network of really getting people excited about the prospects of applying sustainability to this industry.
And then internally, it's not so much changing hearts and minds. I think it's a great way to really engage with the younger cohorts who are coming through, are really invigorated by performing well, working for an organisation that has the right ethos that they want to follow. If I pronounced that right. And just engaging with a workplace that really reflects their values and I think that tends to drive a lot of the great initiatives and the innovation that we're seeing come out of the teams under management.
So yeah, I think it's a really exciting time and a great industry to be in, particularly in all facets of the management space.
Jon 40:53
I'd like to pick up a good point Lisa made earlier about making her role redundant as sustainability manager. I'm a true believer that it needs to be embedded right across the property and FM teams. And it used to be. I sometimes look back, for those old enough, when I started working in the late 80s, we didn't actually have HR managers. When I was working at Lendlease, you were expected to manage your own people. We've now sort of outsourced that all to the HR managers, as I said, and I'm not necessarily comparing like for like, but sometimes you do move the responsibility when you create these new roles such as sustainability teams and sustainability managers. And the challenge for those teams is now to get it reembedded back into what property and facilities managers do every day of the week.
Anthony 41:45
That's very much what we saw with our H&S. It became a problem, so we created our own H&S team, and now H&S is kind of something that everyone has to do. We all make sure we don't leave power leads across the hallways and all that sort of stuff.
So I mean, Jon, one of the things you talked about a couple of times there is educating FMs, facilities managers. How do you educate the facilities managers of the future so that they can kick start and sustain emissions programs?
Jon 42:13
It's a challenge, because even general education for FMs is difficult to find. Most people don't leave school and believe they're going to become a facilities manager. Most school leavers don't even know about the facilities management industry. It's something that people who have listened to me before, I have tried to provide paths and develop pathways for people leaving school or going into TAFE or going to university and discovering the facilities management industry.
In terms of specific education, in a previous life, we've had to develop our own sustainability courses for those FMs. And going back some time, it's interesting, we're finding there was a report called the Low Energy High Rise done by the Warren Centre. And I'm going back a decade, and sometimes being on this call, I think I've just missed a decade and I'm joining the conversation, because we're still back with what we were talking about a decade ago in terms of how do we actually provide the right education and pathways to get people into this industry and prepare us for the future?
I think we've got a great opportunity now, because people are suddenly realising that the built environment contributes 40% to emissions. What can we do around the built environment? Who manages that built environment? And it's basically property and facilities managers. So it’s starting to get a lot more profile. We need to make sure that we've got the right pathways into the industry so that people have the right education, because most people have come or fallen into this space from other disciplines.
Lisa 43:56
Just add to that as well, I think the role of an FM is changing so rapidly because of our technology embedded in property now, we're becoming very smart as an industry. And so that skill set of a traditional FM is changing in terms of being fluent with upgraded systems and IoT and all that. We were at a shopping centre yesterday and a robot delivered our food. FM is managing all these new requirements that are coming through and I think that is a really great opportunity to leverage the next cohort of facilities manager, to say this is a really exciting field to be in and you get to do all these fun activities that match to your skill set as buildings become more technology-based.
Anthony 44:48
One of the things I love that Dave recently put on LinkedIn that Davina said is that you can either go with the carrot, the stick, or the tambourine as you're kind of building these cultures inside organisations. Do you want to talk to us about maybe some of the roadblocks you've seen as companies are trying to ingrain some of these new sustainability initiatives?
Dave 45:07
I’ll go back a step and then answer the roadblock one. The area we focus on is obviously many times termed to be back of house, the HVAC, BMS lifts, the energy side of it, the equipment performance, and it's really hard. And so to Jon’s point about the deskilling of FMs, there was a time when I started in the industry only ten years ago, there would be a kind of a specialist across a number of buildings and now there's a generalist across even a larger quantity of buildings. So it's a very dynamic role, operating a large complex facility. And it's fun, but certain parts of it are quite technical.
So it kind of comes back to providing good data and making it easy, because good data ends up making the life of a facility manager significantly different. It brings them more control and better decision making around what's going wrong and how to fix it and who's going to fix it. And then what happens is, with the contractors that are on the site, you make them more accountable. And what we find, and Scott would know this across all the GPT assets, is 99% of the contractors value the contract that they have with GPT or with Colliers or with Cushman & Wakefield. They don't want to lose that contract. They want to go to buildings and fix things. And the operations manager wants them to fix things that they should be fixing during standard maintenance. And then they want them to pick up the things that are broken, because there's a repairs and maintenance budget on every single asset. Or if you don't have a R&M budget, then it becomes a liability.
But the challenge for a lot of the Ops teams is actually getting to the root cause of what's wrong and like managing like dozens of these micro projects to get things fixed. And that can be like, an example can just be even a chiller. If a chiller is short cycling, coming on and coming off every half an hour, instead of just running correctly like it should, you waste energy, but you also damage the compressor in the chiller, etc. So you hit two line items for the owner or for the operation, the property manager. You're hitting the energy line item and then when the compressor fails, then you need to upgrade it, so you have a capex item.
So the ability to get good data into the hands of the facility managers and make it easy. I mean, yes, there's a requirement from government to step up and provide more help. And yes, industry needs to provide more education. But from technology providers, they also have to make the whole user experience significantly easier, because you can't expect someone who's not mechatronic, a controls engineer or electrical engineer, to just be able to get to the root cause of a complex staging issue in a BMS or a complex HVAC issue.
So, you know, we’ve seen what technology has done to music with Spotify or with directions and moving around with Google Maps. The same thing is happening with buildings, where you're able to get a generalist that can embed collaboration amongst the supply chain. And 99% of the supply chain welcome it, because they don't want to go to buildings and check things that are working. A good contractor wants to go and fix things that are broken and that's what everyone wants, right? But it's also a technology part to it.
Anthony 48:51
That's really interesting, because we're moving into human skills and soft skills. We want people that can problem solve, that can collaborate, can bring people on the journey, can communicate clearly and all those things, but they're using the data to actually understand what the real problem is so that they can do all those things to solve the problem rather than spending all their time trying to figure out what the problem really is.
Future/headwinds
We're going to jump ahead a little bit, guys, because the discussion has been pretty vigorous and pretty full on. So we're going to jump into just talking about a look into the future and some of the headwinds that we're facing.
Jon, there are plenty of headwinds in the industry and some of them are pretty well known. How can operators and properties effectively navigate the headwinds now and into the future so they say that course towards net zero?
Jon 49:36
There are a lot of headwinds and I could pick out a couple. One thing that I'm interested in is actually how, in the commercial office market, how we're dealing with flexible working, because they’re a major user of energy and a major emitter. But we're using these assets three out of seven days a week. Have we advanced as a manager and industry to actually start to make sure these buildings are optimised to operate, now that we're seeing these flexible work patterns?
And there are various players who say, well, this is only happening in major cities where we haven't been able to justify the commute into the city centres and that's why people are still working these patterns. 80% of the cities worldwide are back to pre-pandemic occupancy rates. But I think there's a real opportunity in some of the larger cities and the larger properties to really refocus on optimisation in the short term. And part of that is to help the owners of those properties, because they're worried about, are the capital values of those properties going to be maintained? What are the rent levels going to be? Are we going to see a huge contraction in terms of demand for that space? We've got a large supply coming online in various cities which are facing those problems.
So certainly the concern is, will these asset owners, especially the smaller and not the publicly listed ones, sort of back away from doing anything towards jumping on this journey to net zero if they've got economic headwinds associated with their major investments? So I think there's some opportunity there.
Anthony 51:36
So Lisa, what are you seeing from the Colliers perspective? What are some of the big issues you see and how are you planning to tackle them?
Lisa 51:45
Yeah, well, I mean, I don't think anyone anticipated a global pandemic a few years ago. I think that was a bit of a spinner in the works. And seeing the ramifications of that, just in terms of the economic impacts and political impacts, fallout around the world, just in terms of different mandates, different preferences from investors really kind of dictating what happens here in Australia. And a lot of our assets are controlled by investors overseas. I think we receive quite a number of requests in terms of adhering to various standards, and often conflicting standards, in some cases, from multiple investors. And so in terms of headwinds, all of that is occurring in this industry.
I don't think in terms of resourcing and the skill set in the market at the moment, there's enough professionals to maintain the consistency around that. Like, I think just thinking back to university days, and we had a briefing about the energy market in Australia and the complexity associated with that. And we were being briefed by a member of the team that set up the emissions trading scheme for the Australian government under Julia Gillard. And she came to the session and said, there's three people in Australia that know how this industry works and two of them are lying. That's how intensive some of these systems can be.
If you're looking at just one industry in one country and then looking at what's happening around the world, I think in terms of being able to navigate that, we need to get better at adapting to investor requirements. And there's some work being done just in terms of standardising a lot of that reporting and standardising a lot of that understanding of what that means for property. However, that's a huge challenge.
We spoke earlier before the session started just around resourcing. And I think we're all feeling the pinch in terms of finding the right people and putting them in the right positions. And I think if we're going to be able to navigate that, we need to be better at training and then we need to be better at mobilising the workforce to adapt with portfolio changes, or if a joint venture is created and the information needs to be transferred in quick succession to match the targets. There are a lot of challenges, but in saying that, it's never been a better time to really drive that business case and make sure that those elements are in place moving forward. I hope that ends it on a positive note.
Anthony 54:39
Well, we'll find out how positive it is in a minute, because I'm going to ask Scott to tell the future. Scott, so we've got to 2030, which everyone keeps talking about net zero 2030. And let's assume that we didn't get there. Industry didn't hit that net zero goal of 2030. What do you think might have gone wrong?
Scott 55:00
I think there could be several things that go wrong in that. I think, again, if I bring it back to government, we've got to have a clear roadmap and we've got to get faster at that roadmap and we've got to embrace probably some really different technology, whether it's things like direct air carbon capture, or dare I say it Lisa, nuclear power. The point there is, we've got to get clear on this transition to a low carbon economy, because if we don't and it's disorderly, then that will be a cause of failure.
I think the other thing that is concerning, particularly given the global climate, but where are we going to be when it comes to supply chain demand, so on natural resources or minerals required for the type of technologies that we're talking about? I think we're already seeing challenges in that today, so where that could be in another 20 years’ time could be problematic.
I think the other thing for me is testing the supply chain. At GPT, we get sold the dream by a lot of people in terms of what technology can do. I know there's a lot of debate about what is the role of AI, and AI for me is not there yet, it's just simply not. So I think you need a BMS, I think you need analytics. AI has a role, but the development of AI needs to be such that it actually delivers something. So every platform that we've tried so far just hadn't quite got there for us yet. So that would be the things that I see as a hurdle.
Anthony 56:44
And interesting, we did have a question come in from the audience about the use of AI with building management systems to help energy reduction. So we'll try to get an answer. I'm not sure who asked that. But whoever did, we'll try to get an answer to you after the webinar, because I think that's a fascinating topic just all out on its own and we’d probably spend an hour trying to figure that one out between us, even with a panel of really great experts who are here.
Dave, perhaps just in the last minute or so that we've got before the webinar wraps up. Can you tell us what are your final thoughts on what property owners and managers should embrace to accelerate that progress towards net zero?
Dave 57:19
With the things you can’t control, like external evaluations and crazy macro energy crises being caused by wars and whatnot, the only thing you can do is focus on what you can control and that's the operational performance and leaning in beside the operational team, getting to issues quickly, and I go back to that collaboration piece. Teams that are working well together to fix issues end up saving a fortune and that's the only thing you can do. If the price of the asset is decreasing, the only thing you can do to protect profit is to reduce the outgoings.
Conclusion
Anthony 57:58
And that's probably a really great place to finish there. Thank you very much to all of our panellists. Thanks to everyone who came today and sent their questions through. We didn't get to everyone's questions, but we'll do our very best to answer them all after the webinar.
Thanks to Jon, Lisa, Scott, and Dave for sharing their insights. Really do appreciate it. For those who are watching in now live, please, there is a survey that you'll see just at the end of this. It's very quick, it's very easy and we really want you to fill it in because it's important to us so that we can make sure that we get things even better for the next webinar.
The next webinar in the series on the future of property operations will be coming up and it's going to delve into all things for facilities managers and how the role of the facilities manager is evolving. So please keep an eye out on CIM’s LinkedIn page and your inbox for that one to come up. But thank you everyone for your time today. We really do appreciate it and we look forward to seeing you next time.
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