Creating a sustainable blueprint through a green lease

October 12, 2023


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Dan Scott

Marketing and Pitch Director, New Zealand

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A 100% employee owned and operated organisation, Tonkin + Taylor’s branded by-line states 'Together we create and sustain a better world', and with projects such as Mangakotukutuku Stream Diversion in Waikato, Hawke’s Bay Coastal Hazard Risk Strategy and the Earthquake geotechnical investigation of Port Hills among many other projects, you can see the sustainable drive and ethos of the company front and centre.

nz-tonkin-taylor-2023-sustainable-blueprint-1080x1080-1As New Zealand’s leading environmental and engineering consultancy, Tonkin + Taylor are immensely proud to showcase their strong sustainability values and this has been highlighted through their recent move into the NZI Centre at 1 Fanshawe Street. CBRE sat down with Brendon Ryan, Supply Chain & Property Director and Sandra O’Brien-Kelly, Senior Environmental Scientist from Tonkin + Taylor to discuss the reasons behind the move and how negotiating a green lease has resulted in an exceptional outcome for both Tonkin + Taylor, co-tenant IAG, the landlord Roxy-Pacific Investments (RPI), and ultimately the building itself.

How green is green?

When discussing their sustainability drivers, both O’Brien-Kelly and Ryan light up. O’Brien-Kelly says, “Our Pathway 2025 outlines our purpose, vision, values and strategy. Our purpose is that together we create and sustain a better world, highlighting the importance that we, as an organisation, place on sustainability. We have a vision around inspiring sustainable futures as this is key to where we want to be working towards and part of our strategy is that sustainability is embedded in everything that we do. which is why this was key to our business strategy when we began looking at our next property move. We needed to have a building that would let us showcase this focus.” 

As an environmental and engineering consultancy they are a business of sustainability experts, environmental engineers and scientists, water engineers and air quality and waste experts, and the list goes on. Ryan explains; “Day-to-day we help our clients manage their impacts on the environment and to become more sustainable, so when it comes to the premises we occupy we should ‘east our own cooking too.’”

Sustainability has been core to Tonkin + Taylor, evolving over time, and with the younger generation now joining the workforce, it’s something that requires even more thought and attention. This means that this way of thinking is really embedded in the company’s strategy, and how this is interpreted is different for each of their people with everyone contributing in different ways. 

As an organisation that is fully employee owned Tonkin + Taylor consulted a lot with their people around what they wanted in the building. The main requirements were being close to a public transport hub, Green Star Rating, close to amenities and access to surrounding parking. O’Brien-Kelly says, “It also came through strongly that our people wanted an outdoor area, solar panels, EV charging and rainwater harvesting. When we started looking at what was available, we could definitely retrofit many options, however 1 Fanshawe Street already had it or RPI was already planning to put it in place. So the property aligned incredibly strongly with what our people told us they were looking for.”

Once they started working with the landlord, it was obvious from a sustainability point of view that they were all on the same page. 1 Fanshawe Street had a 5 Green Star Rating design in place, a 5.5 NABERSNZ rating and RPI was already in the process of obtaining a Green Star performance rating, with a target of 6 Stars. 

“RPI actively set up a sustainability management committee that we are part of along with co-tenant IAG,” O’Brien-Kelly says. “We work together to look at ongoing sustainability initiatives and procurement etc. We have a very active landlord who was engaged with us from the start and who is making sure that 1 Fanshawe Street is a great building. It was really appealing to us.”

Commercially this focus makes sense because it brings better tenants and higher profile. RPI has gone above and beyond. For example, solar panels were added to the roof space to light up the outdoor sign, but they exceeded Tonkin + Taylor’s expectations when they covered the space with solar panels to try and do more. Likewise, Tonkin + Taylor’s Ecology team are helping design and replant the roof top garden with New Zealand native plants, which will provide an amazing space for tenants and clients and will continue to raise the bar. Ryan says, “As a tenant we are pushing the boundaries of what we could be doing and we love the idea that the whole building is going to be better off with us being a tenant in situ.”

Negotiating a green lease

Nick Theyers, Director of Office Leasing at CBRE, was part of the team that negotiated the complex lease consisting of two separate lease agreements for the upper floors and the ground floor being a shared facility and meeting rooms. Theyers says, “RPI and Tonkin + Taylor are respectively leading the way with their partnership approach to this type of lease, which is relatively new in the market. A ‘green lease’ is where there’s specific clauses within the lease that speak to the green and sustainable elements of the building, how it operates and the ongoing upkeep. With 1 Fanshawe Street, both RPI and Tonkin + Taylor had similar goals and were aligned with their focus on sustainability, resulting in a green-focused lease in a premium CBD asset.”

Jamie O’Reilly, Investment Manager at RPI says, “We believed a strong sustainable focus within leases was missing in New Zealand and was something RPI wanted to champion. We’ve used green leases in Australia with a lot of success, especially when partnering with government entities and we’ve worked hard to develop and adapt the framework to suit the New Zealand market."

nz-tonkin-taylor-2023-sustainable-blueprint-1080x1080-5“The process requires a lot of elements being pulled together and our approach to work collaboratively with the tenant means the lease doesn’t need to be onerous on either party. Working with Tonkin + Taylor really confirmed our sustainability aspirations are on-track and we’re excited to be on the journey with them and IAG.”

Ryan says, “While we don’t have a particularly large property portfolio and we understand there are investors in the regions who are focused right now on survival, it’s increasingly becoming a hygiene factor of why wouldn’t you offer sustainability features going forward. It’s a continuum and if we contribute to raising the bar across New Zealand and Australia that would be great.”

O’Brien-Kelly adds, “For Fanshawe Street it felt like all parties put ideas forward to create the green lease, so it was a very collaborative piece. We were able to put forward ideas we wanted to see, make changes and have strong input. Together we arrived at a place where everyone was comfortable and excited; it was a trifecta of parties who collectively wanted the same thing.”

The green lease has supported Tonkin + Taylor’s sustainable and wider business strategy through stating the sustainability requirements. This include obligations on the landlord and tenants to achieve a NABERSNZ rating each year, allowing monitoring and management of energy. There are obligations for all parties to cooperate on sustainability initiatives around better management of waste, use of resources and water, and improving environmental awareness. 

“The sustainability management committee drives ongoing sustainability initiatives. It considers the whole-of-life of the building and how we can strive to improve both as a landlord and tenant, so it really fits with our ongoing efforts to embed sustainability into everything that we do,” adds Ryan.

Recognising the benefits 

“It has helped add to our Tonkin + Taylor employee value proposition. Graduates are an incredibly important part of our business and they expect, if not demand, this type of work environment and sustainable focus, so it helps us attract good candidates and retain our great team. It becomes another reason to join Tonkin + Taylor and be part of our organisation,” says O’Brien-Kelly.

Though the workspace is fully operational, unfortunately COVID-19 impacts have meant there hasn’t been a full complement of people into the office yet, though this will begin to change. The workspace boasts beautiful large footplates and neighbourhoods to promote collaboration and company-wide thinking. Ryan adds, “We believe the future of work is baked into the sustainability strategy being implemented. We’re excited to start welcoming more of our clients and guests into the space and showcasing the sustainability features of the property.”

Attaining a NABERSNZ rating was always something Tonkin + Taylor was going to investigate once they had moved. O’Brien-Kelly says; “As part of our green lease, RPI agreed to do NABERSNZ rating for the building and we would achieve one for our tenancy, so that’s the next focus.” 

“NABERSNZ is an annual assessment of the buildings operational efficiency,” adds Theyers. “The cost of the annual assessment for NABERSNZ is passed onto the tenant through the OPEX, however any improvements required to improve the buildings NABERSNZ rating would fall as a cost to the landlord. Therefore this green landlord and tenant partnership approach to improving the building’s efficiency together is important as there are additional costs to both parties. As the building becomes more efficient, however, there will be operational cost savings over the long term.”

Ryan says, “Our advice to others on this journey is to get senior buy-in for a sustainable property strategy as early as possible. Our New Zealand Chief Executive, Penny Kneebone, and Group CFO, Gary Stone, attended our weekly meetings and were fully engaged to make this central to our move from the very beginning. Anything less than that and you’ll face challenges as sustainability risks becoming an afterthought.”

“Having the right landlord is also key, even more so than the building, if you’re aligned in your thinking and goals you can make changes as you go forward. A Green Star Rating was always key for us; we knew if it had a high rating then it would have a high level of sustainability standards already integrated,” concludes O’Brien-Kelly.

O’Reilly adds from landlord perspective, “Ensuring you ask the right questions early in the process when you are in the market for new space is key, asset sustainability ratings, green leases, carbon reporting are all great indicators of a landlords awareness in this space. A proactive landlord should be able to help guide a tenant through this process on what is best practice without them having to commit to large amounts of upfront capital. 

“A green lease is a great way of setting up a partnership with your landlord based on your business shared sustainability objectives and should be an ongoing working document for both parties to work collaboratively.”