If you’re in the real estate space, you’ve likely heard the term “ESG.” While it’s still relatively new, ESG criteria and strategy have become a huge value driver in the real estate industry. It’s no longer enough to simply invest in profitable real estate, as climate-related environmental issues, along with social justice and governance concerns are on the rise. Here’s how ESG practices are impacting - and benefiting - real estate.
What are ESG Criteria?
Environmental, social, and governance (or ESG) criteria are the standards by which conscious investors can review an investment or company. Companies can also create ESG strategies that they share with their investors. These criteria can be applied to a variety of investments, but one major area of concern is within the real estate industry.
In real estate, we use ESG as a guideline to evaluate how a real estate company or portfolio manages opportunities and risks, especially in terms of the ever-changing market. For example, how does the portfolio address changes in social systems? What about economic and environmental systems? All of these areas affect the way in which buildings operate.
ESG issues can be defined differently from industry to industry. However, there are some fundamental ways to describe each category:
● Environmental: A company’s environmental stewardship and environmental impact.
● Social: The way a company manages relationships with its stakeholders.
● Governance: The practices, policies, philosophy, shareholder rights, and internal controls that a company has and its leadership abides by.
How Do ESG Criteria Apply to Real Estate?
ESG practices sound effective in theory, but it can be hard to define how they actually work in the real estate space. Here’s a deeper look into each facet.
Environmental issues have the most obvious and quantifiable effects on real estate. We know that climate change is a huge risk and risk accelerant for commercial real estate portfolios. Our rising temperatures are driving more natural disasters, which is a considerable threat to real estate. These disasters threaten physical safety and present financial challenges, like repair, maintenance, and insurance costs. Environmental issues can also impact pollution and waste, leading to health concerns on a property, which may even result in regulatory and legal consequences.
It’s also worth noting that the building sector has the largest carbon footprint of any industry. In fact, the built environment generates 47% of carbon emissions globally. 27% of emissions come from building operations and 20% come from construction and building materials. That means that we, in the architecture world and in real estate, have a huge opportunity to lessen our carbon footprint. We can use ESG practices as guidelines.
Social issues are less quantifiable but just as important as environmental issues. Social strategy is more about investing in the community and exploring how the investment can offer value to the local people. A company might consider offering financial contributions to the community to lessen ESG-connected concerns that jeopardize the locals as well as the investment itself.
Social criteria should also consider the welfare of the people who provide labor, materials, and assets. Social strategy in ESG can address company standards for labor management and human rights. This includes everything from compensation and skill-building within a company, as well as how its partners treat their people.
Governance strategy tends to involve the same factors across the board, in real estate, architecture, and other industries. That’s because it’s focused on how a company does business. What’s its structure? How are decisions made? How are ESG benchmarks tied into every aspect? This includes everything from executive compensation structure to diversity on the board.
The Benefits of ESG Strategy in Real Estate
Real estate investing is no longer just about making money. The world is becoming increasingly aware of the impact that real estate can have on social and environmental issues. As such, having a strong ESG strategy can benefit all - from investors to companies to local communities.
Infrastructure is closely related to real estate as well as ESG principles. By implementing efficient infrastructure in buildings - such as smart technology, passive heating and ventilation, or more eco-friendly materials - real estate companies can directly help the environment, create a better space for people living there, and increase the performance of their investment.
Companies can use ESG standards to face various infrastructure challenges, like overpopulation. Plus, having ESG strategies in place ensures a smooth closing on real estate deals, as buildings that lack ESG practices are facing more and more community opposition. These oppositions lead to changes and delays which can be quite costly.
ESG practices also give real estate companies a chance to address climate-related resiliency issues. As severe weather events become more common, companies are forced to assess the vulnerabilities of their properties.
With an ESG strategy in place, a company can manage risk more proactively, retrofitting buildings to be more resilient in case of emergencies. This both improves the quality of life for any inhabitants and improves the stability of the investment. It also means that a company or architecture firm will weigh resiliency concerns before investing in future properties, creating more resilient buildings from the ground up.
Communities are far more likely to welcome a new real estate development project in their area when it has an ESG strategy that benefits them. As such, companies must consider how their property impacts the community.
Companies have the chance to create new opportunities in each community by utilizing social impact investing. This involves a variety of projects, such as transforming underutilized spaces into buildings that the community needs and wants. Another example is a multitenant shared space with specific procedures in place to ensure diversity. Rather than investing in a building simply because of financial gain, real estate companies must now also consider the needs of the community, as well.
ESG strategies must be well-researched and implemented - they must also be clearly spelled out for investors. ESG criteria encourage a new level of transparency within real estate companies. Investors want to know what practices are in place to protect the buildings and the people before they invest in a company or portfolio. This forces companies to be ultra-transparent.
It’s also worth noting that many ESG strategies add value to an investment, from improved resiliency to better infrastructure. In this way, ESG strategy actually increases the value for investors and incentivizes companies to be more transparent.
As we move into a new future - one where sustainability, resilience, climate, and social justice are at the forefront of everyone’s minds - architecture and real estate play an important role. The built world has a profound impact on the world around it, as well as the people who inhabit these spaces. As an architecture firm, we have a responsibility to lower the carbon footprint of the buildings we design. We have an obligation to team up with our real estate counterparts to create resilient buildings that benefit local communities. With ESG strategy on our side, we can make buildings that serve everyone - from investors to inhabitants and everyone in between.
In our day-to-day lives, we relate the word façade to deception. But in architecture, where the word originates from, the meaning of the word is completely different and holds much importance. The word façade in architecture means the front side of the building. But what is the importance of the façade in architecture?
The façade of a building is extremely important in architecture as it adds much-needed personality to the building. It also ensures maximum comfort for the inhabitants, proper ventilation, protects the building from harsh weather conditions, etc. It also plays a big part in conserving energy.
Let’s take a detailed look at the significance of the façade of a building and its various aspects.
As the front side of a building, the façade architecture designs play a big role in defining the identity of the building. Although the general idea is not to judge a book by its cover, this doesn’t necessarily apply to a building. When you look at a building, more often than not the first thing you notice is its façade, which makes a lasting impression in your mind.
That is why the façade is one of the most important parts of the building. But what is its other importance? Let’s have a look:
Commercial building façades as well as non-commercial ones can be of different types. These types depend on the function of a building, the material the façade is made of, the building’s design, etc.
Based on building façade materials the facades of a building can be classified into the following types:
Again, based on the weight of the materials, facades can be divided into two main categories. They are:
The Heavyweight facades can again be classified into 4 types, which are:
The Façade Inspection Safety Program or FISP is a law specific to New York City. According to this law, any building that is six stories or more must have its facades inspected along with its appearance. This FISP inspection has to be done once in half a decade.
The aforementioned inspection is very important to the safety and comfort of the inhabitants of a building. That’s why it has to be done by a qualified exterior wall inspector in NY, which makes sense as the law is exclusive to NYC.
If any building fails to meet the FISP regulations , they have to ensure it is corrected within 90 days. After the repair work has been done, a report of the amendment has to be filed within the next couple of weeks. This report will cost the building owners $425 and any request for an extension will cost them an additional $305.
If they fail to do so, then they will have to pay penalty fees according to their offense. If the report is filed later than the deadline, the penalty fee is $1000 for each month. If the owners fail to file the initial report altogether, they will have to pay a $5000 fee. In addition to that, if the necessary amendments are not made, then for each month during the first year, they have to pay a penalty fee of $1000.
If the issue remains beyond the first year, then the penalty fee will be the aforementioned $1000 plus $10,$20, $30, and $40 for every linear foot of unsafe façade with every passing year respectively. Apart from that, if the building doesn’t correct its SWARMP conditions, its owners have to pay $2000.
As more and more people are becoming aware of the aesthetics of a building and its importance, architects around the world are facing the question, “what is the importance of a façade in architecture?” A building’s façade ensures its aesthetics, comfort and productivity are at their peaks. It also helps minimize energy consumption, which is a big issue at present.
The types of façades are usually based on their materials and their weights. If you are living in NY, your building’s façade must be inspected regularly under FISP rules.
1. On What Part Of The Building Is A Façade?
In a broader sense, the word façade is used in both architecture and engineering to denote all of the sides or faces of a building. But the most common use of the word isn’t so broad. Generally, the façade of a building means its front face or side. The façade of a building helps to create a lasting impression of it.
2. Is A Façade Structural?
Yes, the façade of any building is a structural aspect of it. There are two ways you can look into first, the façade is the building’s face or the walls. So there’s no way that it won’t be structural. Second, facades are classified according to their materials and their weights. This aspect also points to the fact of facades being structural.
3. What Is A Rain Screen Façade?
Rain screen facades are a kind of façade that is installed on a building no matter if it’s new or old. This façade has two layers. The first layer is where it gets its name from as it staves off rain. The second layer serves multiple purposes. It provides insulation to the building, ensures too much air isn’t leaked out as well as carries the load of wind put on the building.
4. What Does A Façade Engineer Do?
A façade engineer is a mastermind behind every façade out there. They handle everything about a façade. The design of a façade, its installation, removal, and repair, everything happens under the supervision of a façade engineer. They ensure newer buildings get the perfect facades while also taking care of the facades of the older buildings. If a façade is damaged or facing any difficulty, these engineers ensure the issue is quickly resolved.
When designing a building, the architects need to make sure that they design the building in such a way that no matter what the weather condition is, it doesn’t affect the people inside. That’s where the building envelope comes into play. But why is building envelope important?
The building envelopes work as a barrier between the exterior and the interior of a building. It protects the inside of a building from the weather conditions outside. It also holds up the building’s structural integrity, controls its flow of air, and reduces stress on various mechanical systems in the building.
Let’s take a detailed look at the importance of building envelopes and other related topics.
There are various measures taken by architects to protect the interior of a building from the surrounding environment. The residential building envelopes as well as the nonresidential ones are prime examples of such measures.
The reason building envelopes in architecture are so important are:
The functionality of building envelopes depends on the type of envelopes. Building envelope systems are of two types. They are:
Apart from these two, there are other kinds of building envelopes as well, based on where they are situated. These are:
Factors such as the climate and culture of a region as well as the availability of resources play a big part in determining building envelope materials. In general, materials such as boards, slate, asphalt, bricks, metals, foam, fiberglass, etc are used for building envelopes.
A building envelope company also uses stucco, timber, vinyl, etc for building its roofs and windows.
The requirements for building envelopes differ from country to country. For example, building envelope requirements for buildings in Canada can be seen . If you live in a different country, check out your government’s directives to find out what the requirements are for building envelopes.
Why is building envelopes important? Because it is necessary to ensure the building is protected from the harshness of the outside environment and its effects. The proper materials are needed to construct a perfect building envelope. It can be of various types depending on its function and where they are situated.
A whole host of materials are used to construct a building envelope which depends on factors such as climate, culture, etc. Different countries have different requirements for building envelopes, so it’s suggested to learn the requirements before designing a building envelope.
An efficient building envelope is an envelope that isn’t merely a barrier. Rather this envelope will actively respond to the environment outside the building and creates comfortable spaces. These envelopes will include materials that are resistant to high temperatures at the front of the building. Other attributes include door and window seals that are very efficient allowing minimal air infiltration from outside.
2. What Are Building Envelope Issues?
Building envelopes face some major issues when there is a fault in the design or the envelopes fail for some other reason. The most common issues of building envelopes are:
3. Why Is The Building Envelope An Important Consideration For Sustainability?
Nowadays almost every major decision is made based on sustainability. Building envelopes are no exception to this either. As envelopes create a much-needed balance between the environments inside and outside of a building, they minimize energy expenditure.
As the consumption of energy is reduced, the sustainability of various energy sources is increased gradually. This is why building envelopes is an important consideration for sustainability.
4. How Does A Building Envelope Protect A Building From Moisture?
One of the biggest selling points of the building envelopes is their ability to prevent moisture from damaging the building. But how do they do that? Building envelopes create an almost airtight seal. As a result, too much air can not enter the building. If the flow of air is limited, so will the flow of moisture.
5. What Factors Influence The Design And Construction Of A Building Envelope?
Since the building envelope is an important aspect of the building’s architecture, architects need to follow a few rules when it comes to constructing and designing them. The factors that influence a building envelope’s design and construction are: