News Article Cushman & Wakefield Echinox ESG Mihnea Cristescu Romania sustainability
by Ovidiu Nicolae | Interview

Mihnea Cristescu, Project Manager & Sustainability Consultant, Cushman & Wakefield Echinox, spoke with Property Forum about the cost approach to sustainable developments and the role of consultants in shaping real estate projects with strong ESG credentials.

How are developers in Romania approaching the topic of real estate sustainability?

Locally, around 60% of the class A buildings developed after 2009 are green-certified. These 60% do not consider non-class A buildings and therefore we can expect that the absolute percentage of green-certified buildings is considerably lower and that not all developers are tackling the sustainability challenge. The developers who do approach the sustainability topic are naturally guided by the measures that provide the most payback. By far this is the field of green certification systems, where BREEAM, LEED and WELL have established a good local presence and thus provide a relatable benchmark. 

Some developers are looking to upgrade their existing assets with an in-use type of green certification while a smaller percentage of developers are following a green certification process as early as the design & construction stage. Other actions that developers are carrying out are: tracking their resource consumption, creating an ESG strategy, and securing budgets to improve their sustainability. One mentionable action that local developers are not doing is responding to GRESB, which is the leading ESG benchmark for real estate and infrastructure investments across the world.

Mihnea Cristescu

Mihnea Cristescu

Project Manager & Sustainability Consultant
Cushman & Wakefield Echinox

Mihnea provides technical project management, design and due diligence services, and also he is involved in green certification and sustainability projects, for clients such as Emag, Globalworth, Bayer, Ericsson, MLP, One United Properties, Lion’s Head, Floreasca Park, Atenor, Vastint or P&G . He has over 10 years of experience in design and execution, both in Romania and in Germany, coordinating over 200,000 sq.m of industrial and offices buildings, including Bucharest Business Garden – design phase or Hermes Business Campus – design and execution. More »

What are some of the trends that are shaping the local real estate market from a sustainability perspective?

One visible trend is that developers tend to have a more community-engaging approach. Besides the mandatory green space to be provided, which is usually 20% of the land plot, the most socially engaging projects have a semi-public-semi-private space that has the potential to bind the development with the community. 

The same applies also to an interior fit-out: spaces like open space break-out areas or auditorium-like zones create opportunities for impromptu meetings or conversations which bind the staff together. Other trends are tenant engagement actions, such as sustainability workshops or digital platforms and the infusion of smart technologies, especially energy metering, IoT, and energy management systems, all of which provide a clearer view of the functioning of the building.

How are real estate companies managing the cost component of sustainable developments? 

When thinking about the cost of sustainable measures or technologies, it is best to consider a life-cycle-cost approach: the higher upfront cost will be offset by lower operating, maintenance, de-construction, and waste removal costs. While the rule of thumb is that the cost for a green-certified development is around 15-20% higher than a standard one, which is a considerable margin, we have noticed that developers are reserving budgets to build sustainably. And there is a good reason to do so: the least sustainable developments will be unattractive for new businesses, and there is the risk that these assets will become obsolete.

Are building occupiers in the commercial sector aware of the sustainability elements of projects?

Yes, they are increasingly aware. In general, the building occupiers are asking for enhanced quality, related both to improved interior environment and energy efficiency. Thermal comfort, daylight & quality views, and even acoustic protection build occupant comfort, so tenants are especially focused on this topic when choosing a building to move into. Tenants to whom CSRD norms apply or their partners up or down their supply chain are increasingly asking for more targeted data, for example, carbon measurements, climate transition plans, robust governance, social impact of company projects.

How can developers mix their sustainability goals with the ESG strategy?

Ideally, sustainability objectives are integrated into the ESG strategy, which should be revised yearly. Strategic goals should trickle down to isolated gestures, for example: the United Nations have defined the 17 Sustainable Development Goals (SDGs), which includes SDG 3 – Good health and well-being. One of SDG 3 goals is to promote well-being in the workplace. 

This goal can translate into implementing a policy to reduce purchases of consumables containing VOC or, a more practical approach, to implement an indoor environment quality measurement system, which tracks data such as lighting, air exchange, temperature, CO2 level and acoustics.

How can real estate consultancies support the ESG agendas of developers?

By definition, a sustainable consultant has to have a multidisciplinary and integrative approach, so the real estate sustainable consultancy role is rather diverse, ranging from ESG strategies to simple reports on isolated topics, for example, an energy audit. In my view, the most important thing a sustainable consultant does is to start the sustainability discussion and then guide the client to define a vision and list their objectives. 

A first step for this is the double materiality assessment, which highlights both the impact of the real estate development/business on the environment and the environmental impact on the real estate development/business. This is the first crucial step and a basis for the ESG strategy.

What are some of the competitive advantages of ESG-ready buildings in the local market?

Apart from healthier working environments and operational improvement, ESG compliance is seen also as an instrument to enhance marketability, which yields advantages such as attracting tenants, increased occupancy and premium leasing rates. This also strengthens the brand value of the developer or landlord, which in turn creates stakeholder trust. One other key advantage is that the asset value of a sustainable building is better retained across time in comparison to a non-sustainable one. This is mainly due to the fact that a life cycle approach is considered, which implies that a sustainable path has been considered.