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The business case for green infrastructure A Developer’s perspective

This article explores how developers can benefit financially from incorporating green infrastructure, such as living roofs, into their projects. It discusses the calculation of yield, the reduction of voids and rent-free periods, and the potential financial gains for developers. The article also highlights case studies and the potential for collaboration between developers and the government to achieve sustainability goals.

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The business case for green infrastructure A Developer’s perspective

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  1. The business case for green infrastructureA Developer’s perspective Brad Bamfield Chairman The Whole Life Cost Forum MD The Solution Organisation Ltd 07803 133110 Chairman@wlcf.org.uk B.Bamfield@thesolutionorganisation.com

  2. Why do Developers Develop ? • To make money • To improve business reputation • To make money • To improve the facilities for occupiers • To make money • To improve the built environment • To make money

  3. But really • Developers make money by improving YIELD

  4. Calculating yield • Yield is a complex calculation • Rent x number of years • Includes • Letability • Saleability • Void • Attractiveness to occupiers

  5. Developers love yield • Yield is the inverse years purchase • So it’s the opposite to expectation • Yield = 100 / Years purchase • So 5% yield is better than 10% • 20 years purchase vs 10 years • Reduce yield = happy developer

  6. Developers hate voids • The void is the time from completion to occupation • There is also a rent free period • Reduce void = happy developer • Reduce rent free = happy developer • Reduce both = very happy developer

  7. Ecstatic developer • Decrease Yield • Reduce void • Reduce rent free

  8. What can do that? Living Roof

  9. Bottom line • A 20,000 sqft building @ £18.50 per sqft • with 8% yield • Value £4.625M • 0.5% improvement in yield to 7.5% • Value £4.933M Yes that is £308,000

  10. Reduce other impacts • Now reduce voids by 3 months • And rent free by 3 months • Adds additional £185k Yes that is £493,000

  11. Living roofs Reduce the developers yield by 0.5 to 1%

  12. Project Relationships • Capital Cost 1 • Revenue Cost 5x • Business Cost 200x 1 : 5 : 200

  13. Improving returns through Living Roofs • 2 very similar central London multi-let offices • One has living roof • One has 35% lower void period • One receives 20% higher rent • Case study being developed

  14. Springboard Centre, Somerset • Non commercial property • Living roof 5 year payback • Energy only • Case study www.thesolutionorganisation.com • Includes review of bio-diversity

  15. Laban Centre, Deptford

  16. Laban Centre, Deptford • Here the roof improves the conditions in the building for the users • Costs were unnecessarily high through lack of planning and coordination www.livingroofs.org

  17. & Government Working together? Developers & Planners • What does the developer want? • To sell the development! • How does the developer sell the development? • By ensuring people want to live/work in it!

  18. Working together? Developers & Government Developers & • What does the Government want? • They want to save the world! • How does the Government make this happen? • By regulating through planning and building control!

  19. Living roofs • Make money – • Contribute to saving the planet • Improve the working environment lots of it. Sustainability in action

  20. The result • Developers & Government; • Why can we not work together ? want the same thing

  21. Conclusion • Developers want to make money • Living roofs make money for developers • The Government wants to save the world • Living roofs save the world • Its just how do we convince people • Force • Or profit

  22. Brad Bamfield Chairman The Whole Life Cost Forum MD The Solution Organisation Ltd 07803 133110 Chairman@wlcf.org.ukB.Bamfield@thesolutionorganisation.com

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