COVID-19’s staying power will likely affect all industries throughout 2021. Construction will not be exempt in terms of supply chain interruptions and softening demand.
Almost all segments within Industrial, Commercial and Institutional (ICI) construction appear vulnerable. In fact, in a recent U.S. survey of contractors, over 75 per cent reported that a project had been postponed or cancelled.
Two sectors where demand is noticeably lower are downtown office space and sprawling retail malls. There’s little doubt that even after the pandemic runs its course, these will not fully recover for some time. Repurposing existing building stock for alternate uses is becoming an option being increasingly explored.
Coincidental to lower demand, governments at all levels have made long-term pledges to reduce carbon emissions and GHGs. As has been widely publicized, construction plays a huge role in this.
These changes to the urban landscape — the COVID-19 pandemic, in combination with policies to reduce operational carbons and the GHGs associated with new construction — will create new opportunities for the building industry.
Perhaps to reflect the need for the construction industry to adapt to these forces, maybe the ICI acronym should be reframed as Initiative, Creativity and Innovation.
“Bring on deep energy retrofits,” say energy efficiency specialists.
According to guidelines released last year by the United Nation’s Joint Task Force on Energy Efficiency Standards in Buildings, between 75 and 90 per cent of buildings standing today in Europe will still be in use by 2050. The numbers in North America probably don’t differ significantly.
The UN group reports that buildings in the developed world, “consume over 70 per cent of all electricity generated and 40 per cent of primary energy and are responsible for 40 per cent of carbon dioxide emissions from related fuel combustion. Buildings are central to meeting the sustainability challenge.”
In North America, leadership towards change is coming from the new Joe Biden administration. Unlike his predecessor, President Biden appears to accept the dangers posed by global warming. He believes moving his country’s real estate sector dramatically towards sustainability is both possible and necessary.
According to his transition team’s website, Biden plans to upgrade millions of American homes and buildings by 2024, and further the carbon footprint of existing buildings by 50 per cent by 2035. The 2024 objectives alone have the potential to generate one million jobs.
How? By incentivizing deep retrofits that, “combine appliance electrification, efficiency and on-site clean power generation.”
This level of commitment in the United States will pressure Canadian governments at all levels to step up and provide similar incentives for our existing buildings.
Of course, the motivation to repurpose elements within Canada’s current building stock already exists due to the coronavirus. In fact, there couldn’t be a better time to repurpose and retrofit. Tenant occupancy is now at historic lows. Renovation disruption is minimal.
As reported recently in the Globe and Mail, one publicly traded Canadian real estate company has been doing just that.
Even before the pandemic, Allied Properties Real Estate Investment Trust had undertaken a review of its entire national portfolio to identify properties with higher than average operational energy costs. The Globe and Mail reports that with an investment of $2.3 million, partly supported by government, Allied had, “generated $1-million in energy savings in 24 buildings in just less than two years.” It’s a small step in the right direction.
Success depends on tenant engagement, Allied’s Barbara Ciesla told the Globe and Mail. “We form a ‘council of occupiers’ who work with us and inform the process. They let us know their objectives on sustainability and we share ours.”
Deep retrofits and building repurposing might be the green shoots of new business that contractors need in an environment where new commercial projects are being held back. According to Bala Gnanam, vice-president of energy, environment and advocacy for the Building Owners and Managers Association of the Greater Toronto Area, “incentives or not, there is clearly a business case to do energy efficiency projects.”
John Bleasby is a Coldwater, Ont.-based freelance writer. Send comments and Inside Innovation column ideas to editor@dailycommercialnews.com.
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