Spy in the sky reveals heat loss
Green education for property professionals
Banks demand contamination risk reports
Tough new controls on construction waste management
Copyright: David Lawson - first published Property Week November 2006
Spy in the sky reveals heat loss
The divorce rate among property mangers could be about to soar. Few will have spent much time with their families recently as they strive to meet draconian government targets for energy cuts, and the crisis is set to deepen. Almost a decade ago, local authorities were told by the Home Energy Conservation Act [HECA] to cut 30% from overall consumption in their area. The crunch comes next year, when they must report on progress.
Working out how much heat a property generates is relatively simple but there is not enough money nor manpower to check hundreds of thousands of homes - private and council owned. Managers extrapolate from samples and rely on experience to target worst performers. Energy labelling will help give a clearer picture but the software has been delayed too long to meet HECA deadlines and will apply only to the small percentage of homes which come on the market. A different form of technology is flying to the rescue, however.
Aberdeen is probably the coldest city in the UK but looks set to meet its target after already cutting energy by 27% between 1997 and March 2005. A key factor achieving this is a ‘heat map’ of the city generated by aerial photography specialist InfoTerra.
Thermal imaging normally gives only a broad picture made up of coloured blotches but the city has cleaned up the data and merged it with Ordnance Survey’s Mastermap to identify individual buildings. This still provides only a crude indication of heat generation and throws up anomalies as flights have to take place at night, when buildings may be empty or the heating turned off.
But it has helped target property ripe for action. This can involve planning work on council property or leafleting private owners about the issue. Other local authorities eyeing next year’s targets are now commissioning flyovers to get across an increasingly urgent message. ‘A thermal map is better than a ton of dull reports because it clearly shows heat generation,’ says one manager. That applies not just to occupiers but councillors reluctant to approve spending without hard evidence.
Bluesky, which has carried out surveys of centres such as Birmingham, Leicester and Kirklees, says flyovers cost upwards of £10,000 but this palls beside huge amounts required to met the targets. Aberdeen estimates almost £400m is required to upgrade just half the city’s housing. Most will be paid by home owners and private landlords but they need persuasion to put their hands in their pockets. The city has developed the technology even further to help get the message across, creating a web site map so occupiers can type in a post code to identify individual homes and the energy being wasted. This service has been available for several years and Dan Cookson, director of See IT, which runs the web site, is bemused that other local authorities have not adopted similar techniques.
The maps have already revealed surprises, says Mat Day, head of research and development at Bluesky. Managers normally assume poorest homes are in most need of attention yet upmarket areas in Leicester were revealed as a major problem, because middle classes have colonised older, less efficient homes. The data can also provided benefits beyond raw energy appraisal. South Derbyshire District Council polled other authorities before ordering its own survey from Bluesky this winter and discovered they had found other uses, such as identifying heat loss from schools and targeting of health related initiatives. Rotherham police was handed a novel bonus when it identified hot houses where ‘illegal substances’ were being grown.
Commercial property lies outside HECA rules and energy labelling is even more delayed than for housing, scheduled to come into force in 2008/9. But where extra money has been spent processing data to identify individual buildings, councils have been handed a powerful tool for negotiating with businesses over heat generation.
Day says the technology – which has been adapted from heat sensing equipment in the Chieftain tank – is still too primitive to compete with individual inspections. Flights also must be done at night, when workplaces are usually shut. But within a few years he expects it to advance enough for accurate readings down to single building level rather than giving broad averages. Daytime flights should also be possible, which will make the technique even more useful for commercial buildings
Green education for property professionals
It is hard for anyone with a hint of a grey hair to take climate warnings seriously. After all, the end of the world has been predicted with monotonous regularity in the last few decades. We should have starved in the 1980s when global population reached 5bn, frozen in the 1990s when oil ran out and become lost in anarchy when the millennium bug crippled every computer on earth. But here we still are, 7bn and growing, mostly well fed, toasty warm and merrily flooding the internet with spam. It’s no wonder apathy rules.
A generation of young surveyors don’t need persuasion. The whole thrust of education has swung into the green, particularly since the RICS declared the environment as central to all training. You don’t progress nowadays unless you can advise clients on sustainability. But what about older bosses who decide whether that advice carries weight? And agents who scratch and yawn at meetings, waiting for the do-gooders to hand over the reins?
It is easy to argue that landlords control only a tiny fraction of the 20% of CO2 produced by commercial buildings. Occupiers hold the whip hand, and more evidence came out of the recent CoreNet summit that they consider energy too cheap to bother, and will not pay higher rents to justify green designs. Yet doing nothing is not an option. We are still eating because food scientists worked tirelessly to improve farm yields. We didn’t freeze because countless billions went into finding new oil under the North Sea and Arctic. And those annoying emails exist only because thousands of geeks chased computer bugs out of their wiry nests.
There is a growing realisation that this crisis will not go away. It is increasingly likely that occupiers will come on board in a rush, pressured by concerned staff, customers and shareholders. Energy labelling could provide the tipping point. Where two buildings share similar locations and rents, it will be hard to explain choosing the less efficient one. Rents will adjust and valuers quickly start discounting property with low scores.
Those in denial could find themselves isolated, much as happened when crotchety oldsters refused to accept that new technology would transform the property industry a decade ago. The first time a department head stares blankly at a client asking about sustainability could be the last they can expect to have any further business. But it is never too late to catch up. Ongoing education now plays a key role in keeping surveyors up to speed with new trends and moves are already in place to ensure older generations can cope with a greener future.
The College of Estate Management in Reading, which helps top up the knowledge of thousands of property professionals every year, spent months searching for a new principal before choosing an environmental surveyor to replace Peter Goodacre, who is retiring after 15 years. If anyone can reassure surveyors that they can learn new tricks it is Dr Ann Heywood. She has been down that road, gaining RICS accreditation through one of the distance learning programmes which are a CEM speciality, before rising to become a renowned expert with environmental consultant the Waterman Group. She currently heads Principal Purpose, a sustainability consultancy, and chairs the RICS Presidential Commission on Sustainability, tasked with making sustainable development and working practices central to the institution.
‘Green issues have taken developers and surveyors by surprise,’ she admits. ‘Sustainability did not exist as a word until the late Nineties, when the prime minister began to use it when announcing new legislation.’
But professionals should not be downhearted. Despite a first-class science degree and an environmental pedigree, she ‘went back to school’ to do a PhD in sustainability. Surveyors don’t need to go that far, as the CEM is highly experienced in the kind of corporate training needed to bring them up to speed. And she believes that coming in from a commercial property background will help her appreciate the practical difficulties faced by working surveyors. Nor should it be a huge leap in the dark. Attitudes are already changing, she says. It is rare nowadays that whole-life costing does not come up at project meetings. ‘It is not that people don’t know about these issues. They just don’t know how to apply them.’
Many surveyors also don’t realise that they are already being sustainable. They just don’t collect brownie points for activities such as considerate constructor schemes, which are already fairly widespread. These are essentially social activities – making sure there is a liaison person on site to deal with neighbours. And it is these people skills which need learning. ‘I am not worried about any shortage of technical skills but it will be important to handle the more woolly aspects of new legislation such as community involvement.’ Just admitting ignorance and seeking advice and training will be a key force in coping with inevitable change.
College of Estate Management: www.cem.ac.uk
Banks demand contamination risk reports
Soaring concerns over contamination are forcing banks to insist on risk assessments for property loans rather than relying on ‘get out’ clauses. Barclays, Anglo Irish, Allied Irish, Alliance & Leicester, HSBC, Clydesdale, Yorkshire Bank, Commercial First Mortgages, Cheval Property Finance, and GMAC Commercial have recently tightened up their approach.
The common practice of adding caveats on potential contamination risks to valuation reports has already been deemed ‘potentially unsafe and professionally inappropriate’ by the RICS. Now lenders have begun to realise they may face big bills because surveyors are rarely covered by personal indemnity insurance on these problems.
Contamination is no longer an issue just for sites like former gasworks. Planners are demanding investigation of developments as minor as home extensions which can reveal problems that have remained hidden for a century or more, says Giacomo Maini, managing director of remediation specialist Ecologia Environmental Solutions. These include asbestos ploughed into soil when buildings were demolished far in the past, oil from former garages or industry, chemicals from long-forgotten factories and methane from old landfill.
This has led to soaring demand for services such as Landmark’s Enviroscreen, which draws on data from 136 sources to identify potential contamination within 100m of a property. An environmental surveyor then advises whether rules under Part IIA of the Environmental Protection Act require further investigation by a specialist consultant, says Richard Pawlyn, managing director of Landmark’s property and environment division.
But online reports can only hint at such problems, which may need site investigations costing between £800 and £3,000. Remediation then depends not just on the degree of contamination but how the land will be used. A garden will be far more sensitive than a car park. Planning pressure for brownfield development has coincided with tougher laws and a requirement for local authorities to draw up contamination maps. These can reveal problems even in modern housing estates and business parks, as standards are far higher than when these were built as recently as 20 years ago.
Maini says that lenders would until recently ignore the potential problem for loans of less than £250,000 but Pawlyn notes they have begun to realise the huge remediation costs if they don’t carry out a survey and contamination later emerges. If the borrower defaults, lenders face not only a devalued asset but an enormous clean-up bill. ‘There are many examples and in one case the lender was forced to cover over £3m in remediation costs,’ says Pawlyn.
The Environment Agency says there are around 100,000 sites on around 200,000 hectares of contaminated land in the UK, says Eric Shearer, a partner at Knight Frank. ‘Assessment of environmental risk is no longer optional but an absolute necessity,’ he says. ‘It is only a matter of time before someone is caught with their trousers down because they have not dug more deeply.’
Recent court cases have ruled that land owners and developers can be liable for clean-up costs or damages for pollution that took place decades before they were involved. Rupert Dodson, a partner at Cushman & Wakefield, agrees that lenders have tightened up but has not seen demand for contamination reports. That may be because his firm mainly handles property such as city centre offices, where this is unlikely to be an issue.
But he feels banks are probably commissioning their own checks directly. Lawyers are certainly enthusiastic users of services such as Enviroscreen, so surveyors who ignore the issue could face a backlash as their valuations are bounced back.
Mixed use redevelopment around the famous harbour area of central Whitstable in Kent by Banbury Estates was into its second phase when tarry sludge began to emerge from piles being driven to protect archaeological remains. The original survey had not warned of contamination, probably caused by waterproofing of boats over the centuries. Attempts to clean up only made things worse, as the pollution merely spread through water under the beachfront site. Work was held up for more than a year but further delays – and soaring costs – were eased when Ecologia Environmental Solutions was brought in to design and build a bespoke system of remediation.
A network of 22 wells were bored throughout the site to draw groundwater through a filtration centre housed in a specially built basement. This enabled construction to continue while decontamination took place. Claque Architects even managed to include the unit in such as way that when completed last year the development won a Kent Design Award, matching a similar one for the first phase. The equipment has continued to operate without disrupting occupation of the homes and famous oyster bars and restaurants. Ecologia is now planning to return and decommission it over the next few months.
Tough new controls on construction waste management
Few developers and almost no agents care what is carted off building sites. They are concerned only with the value of what is left behind, leaving anything that involves dirt under fingernails as the responsibility of builders and contractors. That is about to change. Voluntary site waste management plans [SWMP], which carefully set out how materials are sorted and removed, have been ticking along for some time. But the government is keen to ratchet up pressure in line with other green policies and they will become compulsory on every development worth more than £200,000 before the end of next year.
Again, many developers will dismiss this as a matter for builders but any extra costs will be passed on, warns Mike Payne, construction manager for Envirowise, the government-funded advice centre. They may need to go back to their spreadsheets and recalculate anything now on the drawing board. Most big construction companies already know that around 5% of profit is eaten up by waste removal, which is why they have been so enthusiastic about voluntary SWMPs. But the vast majority of smaller ones have virtually ignored encouragement to clean up their act. Compulsory plans will come as a big shock to them and their clients, according to Payne. But they could be surprised to find the figures look even better under a stricter regime of waste control. ‘Preparing plans will have a cost but this must be set against proven savings,’ he says.
The average waste skip costs more than £1,300 to process, according to the Building Research Establishment. Landfill tax alone costs the industry £200m a year at the current rate of £21/tonne, and this will continue to rise at £3pa to a target of £35/tonne. Yet merely separating waste into different skips can reduce these bills. Contractors are strictly governed on where they can take each type of material for dumping – particularly anything hazardous - so they will charge less for ‘clean’ skips.
At least a third of waste should never need to leave sites. Recycling excavated soil alone can save up to £500,000 on large projects. That can double when dealing with contaminated land – an increasingly common problem as rules are tightened over what is classed as hazardous waste. Onsite bioremediation is three times cheaper than ‘dig and dump’, according to studies by Taylor Woodrow.
At least one property giant, is well aware of the potential savings Ian Coull, chief executive of Slough Estates, has been tramping the land as chairman of the Sustainability Forum to get the message across to the rest of the industry. Other big names will need little persuasion, as they are already using government guidelines to process waste. But many smaller operators could be caught out, with a consultation paper due in the New Year and compulsory plans likely to be in place as part of the Clean Neighbourhoods Act before the end of 2007.
Developers should be asking builders at the stage they go out for tender whether they can meet these potential new demands, or they could face shocks later on. It will not be easy to factor in waste planning once contracts have been signed, let alone once diggers and demolition plant move on site. In fact, shocks may come long before laws are changed. Planners already demand information on the potential impact from lorries carrying waste from sites. While new government rules are likely to kick in only on projects costing more than £200,000, planners are unlikely to ignore smaller ones. Some are now making demands for a set proportion of material to be recycled into new development.
How they will monitor these rules when resources are already stretched to the limit remains questionable but with increasing emphasis on green issues, it is not unreasonable to anticipate sites being closed after snap inspections reveal contractors are bending the rules. Apathy about this ‘dirty’ end of the business could come back to bite developers and it will not just be the bottom line that suffers. Insiders anticipate developers could be considered ultimately responsible and become a target for hefty fines.
Construction generates:
Costs:
Potential recycling savings:
[Source: RICS, BRE, Envirowise, Taylor Woodrow]