Home Strategy Real Estate Four Steps To Adopting A Circular Economy In Commercial Real Estate

Four Steps To Adopting A Circular Economy In Commercial Real Estate

Tushar is Founder & Managing Director at Studiokon Ventures Pvt Ltd, an office interior design company focused on turnkey solutions.

Every crisis that hits us is a powerful agent for change. The pandemic has reminded us of human fragility and the importance of taking care of planet earth. There isn’t a better time than now, as we reorganize our business models to meet the changes brought on by the pandemic, to consider a circular economy or cradle-to-cradle approach to business.

According to World Resources Institute, 40% of all waste generated can be attributed to buildings. They also account for 40% of all material resource use by volume. Findings from the United Nations Environment Programme list a number of emission sources coming from human behavior, including production of materials used in buildings. We rarely design a building to be a materials bank – where both construction material and interiors can be recycled, repurposed, leased and otherwise kept out of a landfill. When demolished, a building’s residual value is rarely anything of note. I believe that our economic system is in need of more forward-thinking approaches to building that help mitigate the need for mounting landfills as well as carbon emissions.

While most conscious businesses do talk about the circular economy (CE), these conversations almost always end up being a future goal to pursue, rather than an immediate necessity. That is unlikely to change unless companies understand that CE is not only good for the planet, but helpful to the company’s bottom line. Coert Zachariasse, CEO of Delta Development Company, is one leader looking to reap benefits from a CE approach with building a sustainable business park on the cradle-to-cradle principles. Part of his approach is bringing down costs through partnerships where suppliers are your leasing partners and interiors are reused. 

You can take this moment to look at ways to drive CE strategies yourself, and to help, I’ve outlined several ways to approach change.

Switching To Renewables

Renewable energy can be cost-effective if done correctly. While it may not be the first step you take to integrate the CE approach in your business, there are a number of ways to save the energy you currently use. Most organizations have implemented LED lights, improved air-conditioning systems, as well as added sensor-driven lighting, heating and cooling to conserve energy. Those small steps can grow into investing in renewable energy like solar and wind. Recovery of investment can take time, but as costs of renewables level out or even drop thanks to improved technology, it may be sooner than you think.

Designing A Circular Office

In 2011, a case study by the Waste and Resources Action Programme (WRAP) found that 14% of office furniture was reused in the U.K. in one year and an estimated nine million pounds is spent on disposing of desks to landfills. As the number of companies grows and the size of individual companies expands, it is likely those estimates have gone up since the case study.

It’s not uncommon for businesses to discard much of the interior furnishings when vacating one space to move to another. One way to combat that particular kind of waste is through modular furnishings that can be reused or refurbished to meet the needs of the user. By reusing, you end up extending the life of interior assets a bit further. In the new post-pandemic environment, modular systems offer another big advantage, that of quick customizations. A bookshelf can be re-configured as a space divider, a single working desk can become a larger meeting table – all to achieve agile and sustainable offices.

Why stop at interiors? For larger projects where the circular economy is taken into account, building designs can be altered in support of the CE goal. Buildings can be modified to allow for deep sunlight penetration as well as better ventilation. A building’s core can be designed to be disassembled and flexible. An office building can be turned around to make it a hotel or housing apartments, so it never ceases to be without a function.

Reducing Waste Landfill

Real estate in most countries still follows the traditional procurement, tendering, design and sourcing route – all at the lowest cost. One consideration to reduce use of landfills is by reversing the process to start at the supply chain. Materials can be chosen based on their recyclability after their use in a building is over. Many suppliers can offer environment-friendly recyclable products. You may even find a supplier that can provide an end-of-life solution for the product to avoid the landfill. Some companies already take a similar approach, including DESSO. Their CE goal has them requiring products follow minimum pro-environment benchmarks and take care to recycle the waste generated in manufacturing their office carpet tiles. 

Co-working and flexible offices have been a key development within the circular economy. This is a vital shift from ownership to shared rental subscription. Rather than buying space or leasing large floor plate offices which may lie vacant, would it not be more sustainable to simply lease spaces with access to products and services for as long as you need them?

Reuse What You Can

One place to start is with water. Recycling water can help mitigate the often heavy consumption commercial real estate engages in. Large developers and tenants may have a greater opportunity to invest in systems to recycle the water – which allows them to take the lead in this approach. Any company can implement their own system to repair, refurbish and reuse office electronics for as long as possible. 

Phil Kelly, head of U.K. sustainability and building physics at Ramboll, shared his insight in a recent article noting sustainability – like that found in a CE model – is historically seen as an increase in cost rather than a boost to value. This requires a change in thinking and adapting to a CE model of functioning from start-to-finish has to be a conscious decision by top management. Committing to an ethical approach as a way ahead for a sustainable future, appointing sustainability champions across the organization and setting goals on achieving a circular office all must be driven by the corner office. In today’s world, the options of adopting a circular business model are backed by technology more than ever before. The need now is commitment, whether it’s to small sustainable changes or large overarching decisions. 


Forbes Real Estate Council is an invitation-only community for executives in the real estate industry. Do I qualify?


Avatar

Must Read