Rethinking The Australian Office

FIGURE 7

40

35

30

25

20

15

10

Years since last refurb

5

0

3

3.5

4

4.5

5

5.5

6

NABERS Rating

Source: NABERS, Cushman & Wakefield

Landlords who refurbish their buildings typically not only enhance energy efficiency but also upgrade key features like the lobby, façade, and common areas, collectively improving the building’s overall quality and tenant appeal. Furthermore, a building that achieves a NABERS 5- or 6-star rating is considered ‘excellent’ or ‘market leading’, which allows analysis to focus on the effects of moving from a ‘market standard’ to ‘market leading’ rating, and thereby quantify the gains that a landlord potentially can achieve when investments are made to improve an asset to above average quality. Accordingly, the dataset comprises nearly 200 Grade-A and Grade-B buildings in the Sydney and Melbourne CBDs. Premium grade buildings were excluded as almost all are already NABERS 5 or above, thereby offering more limited scope to upgrade the asset. Grade-C and Grade-D buildings, as well as smaller Grade A-and-B buildings were not included as not only are they small in number, but the majority do not have a NABERS rating.

The top 20% of offices are likely to be fine, while the middle 60% of office buildings are likely to have to be repositioned and the bottom 20% risk becoming obsolete. THE TRIFURCATION OF OFFICES:

TOP 20%

MIDDLE 60%

BOTTOM 20%

11

CUSHMAN & WAKEFIELD