45 (140) 2020
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Cities to suit the environment – and the population

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The BPCC’s Michael Dembinski talks to Tomasz Buras, CEO, and Jakub Jędrys, head of building and project consultancy, at Savills Poland, about the green agenda driving the future development of the built environment – and how Covid-19 is changing the debate about the future of cities.

MD – Are office tenants in Poland interested in renting space that’s certified as being environmentally friendly?

JJ – Poland has an advantage in that there are lots of new developments on the market; the number of square metres of high-quality office space continues to rise. The latest proptech trends are being implemented in Poland without hesitation in most new office projects. Europe is led by the BREEAM* standard from the UK, with more than 80% of certificates being prepared in line with this standard. The US market is more familiar with LEED**.  In Poland, the question we hear from office tenants is no longer “does your building have LEED or BREEAM”, but rather it’s “how good is your building according to these certifications? – is it Good or Outstanding level?” – rather than “do you have a certificate at all?” This is good for the environment and tenants. The trend is driven by companies’ global guidelines regarding leasing the office space. Many corporate tenants won’t look at a building that’s not certified, as their headquarters recommend to choose ecologically friendly properties.

MD – BREAM and LEED are about the effect a building has on the environment, from its construction, throughout its use, right up to its eventual demolition. What about the effect a building has on the people who’ll be working inside it throughout its lifetime?

JJ – A new trend on the market is the WELL*** certificate, which considers the well-being of a building’s users. As of today, only a couple of buildings in Poland have it; but this is a similar situation to as when LEED and BREAM certificates first began to appear on the Polish market.

MD – Will the demands created on office buildings by Covid concentrate developers’ minds on the people-friendliness of their future projects?

JJ – We need to wait a bit to see how Covid-19 will affect the office market. We start to see a tendency to bring people back to the office. More and more companies are implementing social distancing and other safety procedures in their offices to allow people to work together again as lockdown is having a tremendous negative impact on the economy. To have a building that’s friendlier to users will become an advantage to have. People will feel safer returning to offices certified as being compliant with the highest standards.

MD – Looking at the real estate market from the perspective of investors at this time of historically low interest rates, it remains an important asset class. Are investors also looking at real estate through an environmental prism?

JJ – ESG [Environment, society and governance] is very important for investors. There are landlords and developers looking to improve buildings’ carbon footprints and reduce their energy consumption. The construction industry has been very conservative. Little has changed over the past fifty years. However, investors are now starting to ask how much energy the building will consume? How much of that energy will come from renewable sources? The change is happening not only in the office sector but also on the industrial market. Warehouses and factories of 50,000m2, and schemes of this scale are not rare in Poland, these are big enough properties to put photovoltaic farms on the roof.

TB – Not just industrial buildings’ roofs – Poland is driving innovation with printed perovskite panels; Saule Technologies, a company founded in Poland, is beginning to produce photovoltaic film using perovskite that can be applied to office windows. The first such panels are in place; Skanska is leading the pack for offices. This will be a revolution.

MD – how about stand-alone PV farms, ones covering many hectares of formerly agricultural land?

JJ – There are first private projects of this type happening now in Poland; this will be a trend – Poland plans to reduce its dependence on coal-powered energy. But the number of PV panels installed on houses over the past 12-24 months is impressive. This trend will continue to scale. It’s easy to put up PV farms. What’s more difficult is to put all that energy into the grid – new infrastructure will be needed. And we cannot forget about wind energy. We are at the dawn of the biggest offshore windfarm project, planned by PGE.

MD – Returning to Covid-19 and its effects on out cities – will it reshape the way we live and work? Will people want to move out of city-centre apartments to live in houses far out in the suburbs, for example? What impact will this have on real estate?

TB: The debate about the future of cities has been going on for some time. The first reaction to Covid-19 is like reading the first page of a 20-page document and taking immediate action based on what you’ve just read, without reading the remaining 19 pages. People are currently looking at a 12-month change perspective. But the 50-year change will show us even bigger trends, bigger wheels – demographics, food, water supplies – these issues are more important. More people will prefer to live in houses far away from the city centre if working from home becomes standard in the long term; otherwise it would mean for them commuting even longer, leading to congested and polluted roads. It’s too early to say how it will end. This debate should certainly be happening – our cities are exposed to pandemics and therefore lockdowns. Then there is the question of the place of technology in life of cities. Technology will certainly have answers for many problems of urban life in the future. Property technology – prop tech – is about collecting data. Our job will be to learn how to use this data. Imagine if every office building’s underground car park was connected into a city’s public parking network. Your office has free spaces? Put them to public parking. This is how smart cities will operate.

MD – Our cities will be smarter, for sure – but will people still want to live there?

TB – It is a matter of how will people want to interact with each other. Will there be less traffic, public transport, fewer planes flying – are we ready, are we happy to limit our social interaction? Cities attract and keep people, they offer quality of life, connectivity, quality of infrastructure. Urbanisation is difficult to stop. Yes, there is new interest among home-buyers in suburban houses and ground-floor flats with gardens. But will there still be two years from now?

JJ – The spread of urban centres is limited by the costs of extending utilities and public transport out into the suburbs. Savills offices are slowly becoming inhabited again, but with 60% more space per person. Some people can quite happily remain working from home. It is indeed a dream for some, but it is a nightmare for others. Not everyone can afford their own home office, and some are digitally excluded because of poor internet connections.

TB – Working from home has also shown that office work isn’t just about productivity. It’s also very much about creativity – we need others around us to spark our creativity. How our cities will eventually look will come down, I believe, to demographics: young people will want to live and work and enjoy their free time in city centre. It’s where education happens. Singles are attracted to city centres – but then young families will seek a bigger house, more space outside to bring up children. The cost of education and the cost of accommodation will be key determinants. Will people choose to retire to the peace and quiet of the countryside or stay close to the city centre and its amenities – this remains to be seen.

MD – Another effect of the pandemic has been to spur the growth of e-commerce. In the UK, it jumped from around one-fifth of all retail sales in February to over a third in May. In Poland, it made a similar jump, though from a much lower base, from around 8% to around 12%. Will this growth continue? What effects will it have on our cities and the environment?

TB – Some time ago, a colleague of ours from Savills Spain was amazed at the number of trucks and vans out on Poland’s roads. It shows the importance of logistics to our economy and the scale of e-commerce revolution. Compared to Spain, Poland’s economy is growing again. E-commerce is booming, it has been before but now it is boosted as a result of Covid-19. It’s easy to order online, easy to collect packages. The frequency of courier journeys has gone up – and there’s automated pick-up through InPost and at convenience stores. There is an environmental cost to this; last-mile logistics – couriers will soon become the largest source of CO2 emissions – deliveries must go electric or another environmentally friendlier solution.

* BREEAM – British Research Establishment Environmental Assessment Method – the world's first method of assessing, rating, and certifying the sustainability of buildings, with over half a million buildings certified around the world.

** LEED – Leadership in Energy and Environmental Design is a green building certification programme, developed by the US Green Building Council, and also used worldwide.

*** The WELL Building Standard is a system for measuring, certifying and monitoring features of the built environment that impact human health and wellbeing, through air, water, nourishment, light, fitness, comfort, and mind.

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