Modernization key as tenants raise standards

Tenant demand for resilient, green-certified buildings is pushing Philippine developers to modernize projects and tighten compliance, analysts said.

Property developers must ensure that their projects are updated with current building codes and leverage the expertise of third-party evaluators as more tenants prioritize safety and sustainability in their choice of office and residential spaces.

“Global occupiers increasingly prioritize buildings that are disaster-resilient, energy-efficient, and structurally sound, as this supports business continuity, employee safety, and talent retention,” Erika Recomite-Manasan, senior manager for commercial leasing at Leechiu Property Consultants, said.

She said developers that consistently modernize and upgrade their buildings are more likely to attract and retain occupiers compared to outdated properties.

The need for compliance was underscored last month when the Department of Environment and Natural Resources (DENR) flagged the Monterrazas de Cebu residential project for multiple violations of environmental standards.

Developers must secure all required permits and clearances before construction, Ms. Manasan said. These include zoning and building permits from local governments, an environmental compliance certificate from the DENR, utility clearances, an occupancy permit and a fire safety certificate.

Developers must likewise comply with geotechnical and soil testing, structural analysis under the Department of Public Works and Highways and occupational safety and health requirements from the Department of Labor and Employment.

“We advise occupiers to seek the expertise of independent third-party organizations (architectural and engineering firms) to vet the structural integrity of the building, its resilience to fire, earthquake, and flood,” she said.

Ms. Manasan also noted that more tenants are favoring developments with green building certifications amid the looming climate crisis.

These include the US Green Building Council’s LEED (leadership in energy and environmental design) certification; the International WELL Building Institute’s WELL certification; and the International Finance Corp.’s EDGE (excellence in design for greater efficiencies) certification.

Nigel Paul C. Villarete, senior adviser at technical advisory group Libra Konsult, cited the need for local governments to regularly review their comprehensive land use plans  to ensure that real estate developments comply with environmental, social and economic goals.

“It has to be revisited as frequently as possible, because development is constant, especially in urban areas like Metro Manila, Metro Cebu and other metropolitan areas,” he said.

Source: Business World

Manila slips in Global Green Finance Index

Manila fell four places to 91^st out of 94 financial centers in the 16^th edition of The Global Green Finance Index (GGFI) released by commercial think-tank Z/Yen Group as part of its Long Finance initiative.

With an overall rating of 486, the Philippine capital ranked lowest among its East and Southeast Asian peers.

The index assesses the quality and depth of green financial products of financial centers, tracking progress toward sustainable and responsible finance.

Source: Business World

Green is good: Why more developers eye green certifications for buildings

Philippine property developers are increasingly seeking green certifications for office buildings not only because of government energy mandates but also rising demand from multinational companies.

It’s no longer uncommon to find developers touting the sustainable features of their new office buildings, which have received certifications like Leadership in Energy and Environmental Design (LEED), Building for Ecologically Responsive Design Excellence (BERDE), Excellence in Design for Greater Efficiencies (EDGE) and WELL Building Standard.

To get a green building certification, a project must meet certain environmental and sustainability standards. These usually ensure that a building meets high standards of energy efficiency, resource conservation, air quality, among others.

“We see the increase (in green certifications) because of the mandates by the government, such as the Department of Energy, to comply with the laws to Republic Act No. 11285 or known as the Energy Efficiency and Conservation Act,” Jess Niño H. De Villa, Head of Engineering, Energy and Environment of Knight Frank said.

The law requires Philippine businesses to monitor energy consumption, which is the top contributor to net-zero emissions.

“Certification helps ensure compliance with these requirements, avoiding potential fines or legal issues, making it a top reason for properties to adopt green certifications in the Philippines,” Mr. De Villa said.

Green certifications can make a big difference in attracting potential tenants.

“A green-certified building can be more attractive to potential tenants who prioritize environmental responsibility. Green certification can set a building apart, making it a preferred choice for tenants and investors who value sustainability,” he added.

As of now, 31.2% of the 8.5 million square meters (sq.m.) of existing office supply within Metro Manila have varying levels of LEED certifications, Mr. De Villa said.

He noted the NEO Property Management’s real estate portfolio in the Philippines was the first in the world to secure the International Finance Corp.’s (IFC) EDGE Zero Carbon certification. NEO’s entire portfolio is powered by Cleanergy, which delivers 100% renewable energy.

While the cost of securing green certifications can be costly, it can still be worth it for developers.

“In general, (the cost of the) certification is still quite low in terms of the savings that you can be able to gain and for the revenue,” Mr. De Villa said.

STRONG DEMAND

Demand for green certified buildings in the Philippines is also driven by multinational companies.

“It’s largely because of the Western companies and Western tenants moving to the country, requiring their buildings to be LEED certified. Their head offices in, let’s say, London and the US, have certain requirements for the office space that they need to occupy here,” Leechiu Director of Research Roy Amado L. Golez, Jr. said.

Mr. Golez said most of the newer buildings are compliant with green building standards, mainly because they don’t want to lose out on the tenants whose parent companies are based or headquartered in Western countries.

“It has become a must-have. If you don’t have it, your market might be smaller,” Mr. Golez said.

CBRE Philippines Country Head Jie C. Espinosa said global companies make green building standards a “first hurdle” when choosing office spaces.

“There are certain cases, that these occupiers consciously negotiate provisions in their contract, that down the road developers need to be proactive in providing sustainable features into their buildings,” Mr. Espinosa said.

Green leases, rental agreements where tenants and landlords set sustainability-related targets, benefit both parties by raising the value of the property and creating incentives for tenants.

Mr. De Villa said domestic companies also see green-certified office buildings as an ideal location for their operations, as they also seek to comply with evolving environmental standards.

He also noted that tenants that want to integrate sustainability in their operations are willing to pay premium rates to secure office spaces in buildings with green certifications.

ADOPTION HIGH IN METRO MANILA

Central business districts in Metro Manila have seen significant gains in green building adoption in recent years, CBRE Philippines Director of Advisory and Transactions Services Garri Amiel P. Guarnes said.

Based on CBRE data, the office segment in Fort Bonifacio has seen its green building adoption rate jump to 73% in 2024 from 63% in 2022.

For Alabang, the green building adoption rate inched up to 67% this year from 49% two years ago.

The green building adoption rate in Ortigas rose to 66% in 2024 from 42% in 2022, while in Quezon City, it went up to 45% in 2024 from 42% in 2022.

However, green building adoption in provincial locations is lower than in Metro Manila, Mr. Guarnes said.

“This was due to developers being more focused towards third-party outsourcers but moving forward, these companies or the clients they serve would implement their sustainability targets,” he said.

In Davao, 24% of the office stock is green certified, followed by Cebu with 23%, Iloilo with 16% and Pampanga with 8%.

However, Cebu is leading in terms of the rate of increase in adoption, Mr. Guarnes said.

In Cebu, 44% of the recent completions between 2020 and 2024 have green certifications, while 16% are still under application.

FIVE-STAR BERDE

For Aboitiz InfraCapital, Inc., its 800-hectare LIMA Estate in Lipa-Malvar, Batangas, is one of the strongest examples of a green-certified property.

“It’s been recognized as a five-star BERDE, which means it is implementing sustainable practices that are aligned with the global standards,” Aboitiz InfraCapital, Inc. Economic Estates Vice-President for Inventory Generation Group Jolan P. Formalejo said.

BERDE is a local green building system rating that was developed by the Philippine Green Building Council.

Mr. Formalejo said the developments inside the estate, such as the Outlets at Lipa and the LIMA Tower 1 were five-star BERDE certified in 2022.

LIMA Tower 1 holds a BERDE certification for environmental sustainability, and has pre-certification from the WELL Building Standard, which assesses features promoting health and well-being.

“Hopefully, once we start to operate LIMA Tower 1, all the tenants will appreciate the operational savings that they can achieve,” Mr. Formalejo said.

He said the Smart Water Network, wherein its water facilities turn into interconnected and intelligent systems, operated by LIMA Water Corp., resulted in 30% savings in operations and uptime of 99.3%. It is also less than 5% in terms of wastage of non-renewable water.

“Soon we will be developing our Tower 2. We’ll also gear up for these certifications,” he said, adding that The West Cebu Estate and Mactan Economic Zone 2 Estate are aiming for five stars this year.

Mr. Formalejo noted these green certifications make the locators feel secure knowing their business operates inside a sustainable development along with the assurance that all these facilities and systems are future proof.

Source: Business World