Untapped opportunities for Australia's mid-tier buildings

Australia’s cities are built on untapped opportunities — specifically, up to 80,000 untapped opportunities that need government support to meet their potential — if a new report is to be believed.

Mid-tier, or subprime, buildings are typically defined as having been constructed between 1960 and 2000 with outdated and inefficient technologies, resulting in buildings operating well below their potential. The sector is characterised by varied ownership structures that contribute to market failures, including split incentives between owners and tenants and a lack of information and awareness among building owners and operators.

“Currently, the mid-tier sector is poorly positioned to deliver greater energy efficiency or help reduce peak demand for energy, both of which are increasing priorities for governments,” said Francesca Muskovic, policy manager – sustainability and regulatory affairs at the Property Council of Australia.

“The market failures characteristic of subprime buildings make them a natural priority for governments to lead practical policy interventions that will deliver real benefits across the economy.”

‘Opportunity knocks: Accelerating energy efficiency for mid-tier buildings’ finds that up to 80,000 buildings in Australia are classified as ‘mid-tier’ and that these buildings are a powerful mechanism to help better manage our increasing demand for new energy. The report proposes a new policy framework to realise new sources of energy efficiency and reliability for Australia’s mid-tier building stock, using existing policy levers.

It is supported by a coalition of industry associations and local governments, including the Green Building Council of Australia (GBCA), Property Council of Australia, Australian Institute of Refrigeration, Air Conditioning and Heating (AIRAH), Energy Efficiency Council, Facility Management Association of Australia, City of Sydney, City of Melbourne and CitySwitch.

“Mid-tier buildings account for around 80% of Australia’s office buildings and 50% of floor space,” said Jonathan Cartledge, head of public affairs for the GBCA.

“We know that high-performing buildings in Australia consume around a third less electricity and produce a third fewer greenhouse gas emissions than the average mid-tier building — so we are talking about a massive opportunity to improve efficiency and cut emissions.”

In addition to the new policy framework, the report also puts forth five immediate actions for governments:

1. Reduce the threshold required to disclose energy performance of buildings.
2. Expand disclosure requirements to new sectors with a focus on tenants.
3. Support business through targeted tax incentives for building upgrades.
4. Governments to lead by example through higher efficiency requirements for their own tenancies and offices.
5. Invest in research to improve our understanding of energy opportunities across the building sector.

“Many are familiar with the challenges of improving the performance of the older building stock across our cities,” said Cartledge. “But these challenges will only be met through a combination of measures delivered through government leadership and with industry support.

“The recommendations put forward in this report provide an appropriate mix of regulatory oversight, to deliver greater transparency, and tax incentives to encourage action on the ground.”

The collaborating organisations now invite governments to work with them to realise these opportunities and accelerate energy efficiency for mid-tier buildings. According to Cartledge, “With government leadership through progressive policy and ongoing collaboration with industry, we can transform our built environment and leave a legacy of healthy, efficient and resilient buildings.”

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