The construction and real estate sectors are responsible for a significant proportion of the CO₂ emissions in Switzerland and throughout the world. As such, efforts to tackle climate change must not only focus on sustainable design of new buildings – where certifications such as the Swiss Sustainable Building Standard (SNBS) and Minergie are already industry standards – but also extend to existing properties. This will allow real estate owners to increase the sustainability standards of their buildings in the long term. One fruitful approach here is the introduction of «green leases».

There is still no single standard that categorises leases as «green» or sustainable. A green lease is a catalogue of measures that define ways in which tenants and landlords can contribute to sustainability within the context of the tenancy. The contract for the tenancy includes corresponding sustainability clauses. This includes improving the CO₂ emissions of buildings. The tenants and users thus benefit from optimisations and the resulting advantages. Including sustainability clauses in leases can help in achieving two goals. First, it increases the market appeal of the property. And second, it improves energy efficiency and consequently reduces ancillary costs.

Green leases are also key to the achievement of climate goals and implementing the net-zero policy by 2050.
 

Swiss Prime Site sets long-term goals and aligns its business model and value creation with those goals. In 2019, a detailed CO₂ reduction pathway was developed for the entire property portfolio. This forecast an influenceable 75% reduction in relative CO₂ emissions (intensity) by 2050 for the approx. 1.6 million square metres of floorspace. In 2020, the Sustainability Committee of Swiss Prime Site further tightened its reduction target for the property portfolio with the aim of achieving climate neutrality in operations by 2040. Meeting this goal will require additional measures, including green leases. 

Karin Voigt, Chief Portfolio Officer at Swiss Prime Site, and Martin Pfenninger, Head Group Sustainability at Swiss Prime Site, discussed the issue of green leases in the podcast «Law on Air». The host was Sibylle Schnyder, a lawyer specialising in the construction and property sector, and partner of the CMS attorney's office. 

How do Swiss Prime Site’s lease agreements already reflect green lease elements?

Karin Voigt: We want to work with tenants to define a shared attitude towards sustainability. We also use leases to govern the exchange of data, the energy efficiency of installed technologies and the use of renewable energy. Our leases already include clauses that address photovoltaic systems, operational optimisation and energy contracting. We also feel it is important to explicitly allow for the purchase of energy from renewable sources. Building management is another important issue. As far as sustainability is concerned, the key points here are cleaning and consistent waste sorting. Sustainability principles are also central to construction measures. Here, we include sustainable materials and promotion of the circular economy. There are many individual things that, taken together, will contribute greatly to achieving the goal. 

Are green leases already standard in Switzerland?

Martin Pfenninger: Swiss Prime Site is a pioneer here. We have set ourselves the goal of climate neutrality by 2040. But other real estate companies also have sustainability right at the top of their agendas. Through an industry working group, we recently defined a number of elements that might form part of a green lease. Green lease contracts are not yet the standard, but hopefully they soon will be. We have already integrated sustainability issues into construction, management and facility management contracts. Rental contracts are an important and logical next step. This sustainable development is a marathon rather than a sprint. It’s something we always need to bear in mind.
 

What advantages does this kind of contract hold for the tenant? We hear the argument that green leases are primarily associated with higher costs …

Karin Voigt: That’s not the case. For one thing, there is a lot you can do without incurring additional costs. This includes the precise and discerning choice of products for building expansion that improves the quality of the accommodation. And we’re also increasing efficiency and the perception of interior quality with clever sensor technology. Nowadays, ESG issues are key in most larger companies. The properties we own are primarily for commercial use. This means that our tenants are companies. They want and have to be climate neutral by 2050. To achieve this goal, you need to pay special attention to sustainability in your operations and in your real estate use. Our green leases fulfil this demand and help tenants achieve their goals. For us, a green lease is a cooperative instrument that brings benefits to everyone involved – a true win-win solution.

Green leases are not as simple to implement with ongoing rental contracts. What is the legal situation there?

Sibylle Schnyder: It’s true, it’s really not very simple with ongoing contracts. If you impose new obligations on a tenant in an ongoing tenancy, it is known as a unilateral contract change and is something you can only carry out on a termination date. You have to communicate this kind of amendment using an officially approved form. But I think in practice, green lease clauses are often added in the context of mutually agreed contract amendments, such as in a lease extension or in connection with other amendments. In this case, the parties agree on new or supplementary contractual provisions. These can then be set down in an addendum to the rental agreement or in a new rental agreement. 

Is the EU now set to boost green leases?

Sibylle Schnyder: We expect that new statutory regulations will boost demand for green leases in the EU. For example, the new Taxonomy Regulation provides for explicit sustainability requirements for the financial sector and listed real estate companies. Green leases could be one instrument for companies to meet these requirements. The European real estate market expects green clauses to become standard in commercial leases with institutional real estate investors over the course of this decade. And this development is likely to be repeated in Switzerland.

Green leases will form the basis for sustainable use of properties in the future. As a pioneer in the real estate sector, Swiss Prime Site has picked up on this issue and derived important measures in the form of green leases. They will help the company and its customers to achieve sustainability goals. Stakeholders increasingly value sustainable rental space. By using green leases, Swiss Prime Site creates additional appeal and it is happy to make this contribution to a liveable, sustainable future.

«Stüggi» – a site with a rich history
Swiss Prime Site acquired the former Stücki shopping centre as part of its takeover of Jelmoli in 2009. The years that followed represented a tough economic period for Switzerland, the bordering regions and the site itself. But when a resurgent Swiss franc led to an increase in cross-border shopping tourism to Germany, the question of the future look of the site was raised. In 2016, the decision was made to completely reposition the historic site in the north of Basel and make it more interesting for everyone. Swiss Prime Site had a clear vision: to make the site much more lively, attractive and exciting through additional types of use. A further goal was to use the existing technology park as the basis for establishing a life sciences cluster in the north of the city. 

Phase I – transforming the existing buildings
To achieve these goals, the project was split into two phases. The first involved repurposing the existing buildings. As part of this, the well over 30 000 m² of retail space was resized considerably to below 10 000 m². The former shopping centre was thus consigned to history. In the retail category, the main focus is now on meeting the needs of the surrounding neighbourhood. The newly available spaces have been complemented by a comprehensive entertainment concept (mulitplex cinema, gym, bowling alley, virtual reality centre, etc.), various food outlets, an attractive co-working space and, most recently, co-living services from Ariv. To improve accessibility and flow for the residents, visitors and the people who work on the site, the links between the individual sectors have been optimised. This was also done with an eye on the not-too-distant future: as around 4 000 jobs are expected to be created at Stücki Park by 2024, there was a need to increase connectivity at the site. Most of the changes to the existing buildings had been completed by 2020, marking the end of the first project phase. 
 

Phase II – strengthening the life sciences hub
Basel has a long history as a home for large and important pharmaceutical, chemical, biotech and medtech companies. Accordingly, the city on the Rhine is also a major location for research, development and knowledge transfer in these industries. The canton of Basel-Stadt opened its technology park on the Stücki site back in 2011. In addition to offices and other infrastructure, it offers attractive and collaborative laboratory and research spaces for innovative startups from the fields of life sciences, nanotechnology, ICT and cleantech. The construction of the technology park also planted the seeds for the «Stücki Park» life sciences hub. 

The demand for corresponding spaces has grown further in recent years. Although this is a general trend, it is especially prominent at Stücki Park. According to Wüest Partner’s Immo-Monitoring (2022/02) report, the life sciences sector has been growing at a disproportional rate for several years now. This is mainly due to changing demographics, greater health awareness in general, a higher prevalence of lifestyle diseases and digitalisation pressure in the healthcare sector. With regard to Stücki Park specifically, the technology park was no longer meeting all the requirements of some of its existing tenants. There was also a need to accommodate promising startups in the area. At the same time, more and more companies from the life sciences sector were becoming aware of the attractive site around the technology park startup incubator and wanted to set up their own spaces on it.
 

The field of life sciences includes all research areas concerned with living organisms, their structures and their processes. The sector invests heavily in basic research, knowledge and technology. Its influence extends to a wide range of other industries, from chemistry and pharmaceuticals to production technology and through to agriculture and nutrition.

The life sciences sector has several clusters in Switzerland. It employs a large number of people in the regions of Basel, Zurich and Lake Geneva, due in part to the regional universities and educational institutions based there. Demand for real estate with research and laboratory spaces is correspondingly high. Life sciences real estate is generally divided into four types of use: research & development, production premises, pharmaceutical logistics and office premises.

Decarbonisation in the real estate sector requires far-reaching measures. The aim is to achieve this through a fundamental shift in energy supply. In this approach, Swiss Prime Site is guided by SDG 13 (Sustainable Development Goal No. 13), Climate Action. This requires innovative technologies that make the switch from fossil fuels to renewables possible in the first place. Buildings should – almost as a secondary function, and as a way of contributing to the smart cities of tomorrow – become actual power stations, producing energy for tenants and, in an ideal scenario, neighbours, too. This also offers the electricity sector the chance to shape the future of energy in a positive way. 

The aim is to develop specific user-focused use cases and business models and to establish innovative thinking in the corporate culture. As part of the programme, participants have the opportunity to develop relevant projects for Swiss Prime Site Immobilien, Swiss Prime Site Solutions, Wincasa and Jelmoli and present them to the Executive Board. These partnerships enhance the Swiss Prime Site Group’s capacity for innovation and competitiveness, promote innovation from the ground up and enhance sustainable growth.

The latest workshop was all about decarbonisation, net zero and buildings as power plants. The large number of applications from interested parties were considered in advance and around a dozen were invited to pitch. The following companies and start-ups made it through to the second round.
 

Enerdrape develops prefabricated geothermal panels with a modular system that makes them easy to install. This technology enables all kinds of new and existing underground infrastructure to be converted into sites fulfilling heating and cooling requirements – such as underground car parks, for example. The solution makes it easier to access geothermal energy close to the Earth’s surface. 

The team at Evodrop provides a water treatment system that eschews the use of salt and preserves essential minerals for drinking water (such as calcium and magnesium). The technology guarantees healthy drinking water free from harmful substances and prevents limescale damage. The latter extends the lifespan of water supply infrastructure, reducing CO₂ emissions in operation.

TVP Solar produces solar thermal high-vacuum flat-plate collectors for industrial uses. The systems help heat water and produce steam in a temperature range between 80 and 180 degrees Celsius, including in difficult weather conditions.

NewGreenTec generates green energy with small hybrid, decentralised wind-solar power stations. The wind turbines are small and compact, making them ideal for the roofs of buildings. The smart technology ensures that electricity is generated all year round, including at night.

SoHHytec offers a system based on solar technology for the on-site production of (sources of) energy. The company, which holds a world record for efficiency in this respect, provides a 100% clean and green system for hydrogen production – that also generates electricity, heating and oxygen.
 

The Accelerator Workshops are part of our Startup Accelerator Programme. Every year we hold several workshops on different topics. The next dates can be found here.

Where Prime Tower now soars skyward, factory workers once performed their day-to-day work in industrial halls. Back then, Maag Zahnradfabrik manufactured machine tools, gears, couplings and gear pumps. Today, the Maag site is primarily associated with commercial businesses, service providers and cultural activities. For the past 30 years, various property owners have transformed Zurich-West into a diverse, liveable and loveable district. The construction of office buildings for Zurich Cantonal Bank and Kuoni next to Hardbrücke marked the beginning of this transformation, which was further accelerated at Escher-Wyss-Platz by the new commercial school run by the business association. In 2004, Swiss Prime Site acquired the Maag site and gave it new prominence with the construction of Prime Tower and the surrounding buildings.

From a closed industrial site to an open district centre
Today – almost 20 years later – Maaglive has ushered in a new chapter. The sustainable building project aims to create a new and lively centre for the district. In future, people with a wide variety of different lifestyles will be able to live, work and spend their free time here. As part of a commissioned study, the building owners chose a design by the renowned Berlin-based architectural firm Sauerbruch Hutton. The project envisages reopening the historically listed Building K and adding a residential tower and cultural centre, which will open up the area. The restored «Lichtstrasse» will make the area more accessible and provide important connections to the neighbourhood while at the same time creating a landscaped district square that will be open to the public. Pedestrian paths and bicycle connections as well as a variety of trees with dense foliage will give the district’s new centre a pleasant urban atmosphere.
 

Maaglive represents living life 
More than anything else, people are what can bring a place to life. Beginning in 2027, the new district centre on the Maag site is expected to consist of Building K, a 14-storey residential tower and a cultural pavilion with various public uses. Residential living, cultural offerings, work and restaurants will be woven together to create a lively mix. The historic Building K will only be minimally renovated and will feature hospitality, studio and co-working spaces. 

Emotionality and diversity drive the vision behind the culture pavilion
The culture pavilion, designed as a wooden structure, will serve as an «indoor public space» and lively venue for the arts, creative industries and local residents, as well as the city of Zurich and beyond. The culture pavilion will provide a new place for cultural activities that is permanent, flexible and inspiring. Such activities previously took place on a temporary basis in the former Maag halls and only at certain times and days of the week. The facilities will be available for use 24 hours a day, which is currently not possible. The ground floor will feature an open design and, together with the city square, will serve as the district’s new gathering spot. Pop-up stores and quieter meeting areas on the first floor will also enrich the new pavilion. Rooms on the top floors will provide ample flexibility and can be used for larger exhibitions, seminars as well as meetings or presentations. 

Residential tower: a perfect symbiosis between life and work
The residential tower, planned as a wood hybrid construction, will round off the site’s extensive range of uses. It will offer space for new forms of living and working. In future, the ground floor will be home to a shop, a café and the reception for the workspace. The work and conference area will lead up a large staircase to the first floor. The upper floors are intended for residential properties, ranging from studios to two- and three-room flats. Tenants will have access to additional work and communal areas on the floors. The attractive new residential concept is complemented by a fitness area, a library and a large, well-landscaped rooftop terrace. 
 

Sustainable added value for Zurich-West
The new trio of buildings consisting of the residential tower, Building K and the culture pavilion will surround a tree-lined square in the district. The sustainable building concept is in line with the city of Zurich’s plans to lower temperatures, which helps solve a highly relevant problem, especially in a district with many asphalt surfaces. For example, the lush landscaping of the open spaces and rooftops helps reduce the negative effects of hotspots in Zurich-West. Plans by the architectural firm Hager Partners AG in Zurich envisage an open green urban space with many tall trees covering an area of approximately 4 000 m². This «urban forest» with native plant species will be an area that invites people to take walks and spend time in it. 
 

Maaglive Festival
The Maaglive Festival was held on the historic Zahnradstrasse in front of Building K on Friday, 26 August 2022. Residents of the district, neighbours, tenants and their friends and families were invited to celebrate the submission of the construction application. In addition to musical acts and artists, there were interactive activities catering to young and old alike. From improvisational theatre and caricaturists to a large canvas on which anyone could draw or paint, there was a little something for everyone. Well-attended project presentations in Atelier K provided an opportunity to learn more about the project by directly engaging with the construction model and project plans and speaking to the project manager and architects. 

News about the project, events in Building K and the exciting Maaglive Talks can be found at:

www.maaglive.ch

A year ago, two announcements by Mark Zuckerberg sent expectations soaring for Web3, the next iteration of the internet. He renamed the Facebook Group Meta, while also investing billions in developing virtual platforms. Since then, companies in numerous industries have been prompted to extend their business models from the physical space into the virtual metaverse, thus positioning themselves as far-sighted organisations. Real estate developers and players from outside the industry have invested millions in «parcels» – pixels on platforms such as Decentraland and The Sandbox. In retail, brands like Nike have opened virtual flagship stores and are now selling digital product collections. Yet while all this is going on, such efforts to become pioneering players within the metaverse have met with incomprehension from many. Meta has lost around USD 500 billion in market capitalisation since the group was renamed. It could be argued that this issue has proved more polarising than almost any other. If we are to draw any conclusions about the role that the metaverse may play in the real estate sector, we need to ask three key questions.

Firstly, are people likely to spend more time in the virtual realm in future? The fact that gaming is already the foremost entertainment medium across all age groups is often overlooked. Over a third of humankind – three billion people worldwide – play video games on a regular basis, and a growing proportion of them are doing so with virtual reality (VR) headsets. Admittedly, apart from gaming, there is little evidence of a mass movement into completely virtualised parallel worlds. But could we not argue that today’s hybrid world is, in fact, a precursor to such developments?

Thirdly, companies should take a nuanced view of the appeal of different business models in the metaverse. Despite the risks, such as the high power consumption of many VR and AR applications, the development of virtual platforms and expansion of physical reality offer serious business opportunities. This is especially true for commercial real estate. Given the creeping «servitisation» of real estate, the metaverse may actually be the least capital-intensive way of «developing» extra space and expanding one’s portfolio – just virtually. The investment risks will pay off provided that such ventures offer new added value for users. With this in mind, real estate companies should not only concentrate on transferring their existing business models to virtual platforms, but also try to complement their existing business models and assets in a meaningful way. Areas with clear potential include virtual digital twin-based services for site users, simulations of building developments and user behaviour for planning and marketing, and the enhancement of retail spaces with social commerce. Holding future meetings and workshops in the metaverse using avatars would prove inexpensive (as it avoids the cost of room rental) and low in emissions (as the participants would not be required to travel), yet more immersive than 2D video calls. This represents both an opportunity and a risk for owners of commercial properties as value would shift along the chain.   

The fact that only large tech companies are currently shaping the development of digital infrastructure is not a desirable development and runs the risk that the adverse societal consequences we have already seen due to the proliferation of social media will be repeated and exacerbated. To prevent this, real estate developers could contribute to and benefit from the appeal and economic benefits of the «living space» of the metaverse through targeted innovation. Until the metaverse reaches the peak of the Gartner hype cycle, the proof will be in the pudding.

This story appeared in the publishing supplement to NZZ Real Estate Days 2022. 

Anyone who is currently involved in the real estate market will be aware that the certification of buildings is a hot topic. «By certifying our properties, we are increasing transparency while at the same time establishing a frame of reference. We are also laying the foundation for long-term environmental, economic and social added value for all stakeholders. And since last year we have coupled our ambitious climate goals with our financing strategy. Each improvement in sustainability allows us access to more attractive financing», says René Zahnd, CEO Swiss Prime Site of their ambitions. In development projects, the certification process increases the sustainability performance and also acts as a useful quality assurance tool. The ability to identify potential early on and derive measures to improve ESG aspects is an essential part of this for Swiss Prime Site, and also forms the basis for key – sometimes strategic – decisions about asset management and development & construction. When it comes to the certification of existing properties, Swiss Prime Site plays a leading role in the market, having completed their first real estate certifications over ten years ago. 

These are implemented through the promotion of e-mobility, photovoltaic systems, sensor technology that improves wellbeing and, last but not least, ongoing dialogue with our stakeholders. This is because the real estate industry is obligated to increase their contribution towards reducing emissions and consumption of resources. Swiss Prime Site launched a certification strategy for its existing properties last year. After conducting extensive analysis of different certification systems and a feasibility study of existing properties, a detailed implementation plan was created. A dedicated project team has already implemented more than a dozen pilot certifications. Wincasa, a group company of Swiss Prime Site, took over the project management responsibilities and is working with an external provider, ATP Sustain. 

When certifying real estate, the size of the portfolio is a key factor – when it comes to implementing the certification, it makes a significant difference whether only a handful of properties are being certified or – as in the case of Swiss Prime Site – over 180 properties. In addition, not all certification systems are suitable for a property’s specific situation. This is the case if the property being certified is a site containing several different buildings. Further complications include the different interfaces between owners, tenants, property management and operators, and the specific type of rental agreement (e.g. single tenant, multi-tenant or even triple-net models). For the certification process to be a success, therefore, comprehensive data gathering and documentation are essential. It is also important to involve and communicate with the various parties – asset management, management service providers and tenants. There is particularly strong interest and increasing demand among international clients for certified buildings. This is very encouraging to see; achieving net zero by 2050 across Switzerland and the transformation to greater sustainability requires proactive and cooperative collaboration. One example of this is what are known as «green leases».

BREEAM certification (Building Research Establishment Environmental Assessment Method) is a sustainability assessment method used to certify projects, infrastructure and buildings. The system was established in 1990 by the Building Research Establishment (BRE) and sets benchmarks for the environmental features of buildings throughout the design, specification, construction and operation phases. The parameters can be applied to both new builds and renovation plans. The results are divided into five categories – Certified, Good, Very Good, Excellent and Outstanding.
 

«Stüggi» – a site with a rich history
Swiss Prime Site acquired the former Stücki shopping centre as part of its takeover of Jelmoli in 2009. The years that followed represented a tough economic period for Switzerland, the bordering regions and the site itself. But when a resurgent Swiss franc led to an increase in cross-border shopping tourism to Germany, the question of the future look of the site was raised. In 2016, the decision was made to completely reposition the historic site in the north of Basel and make it more interesting for everyone. Swiss Prime Site had a clear vision: to make the site much more lively, attractive and exciting through additional types of use. A further goal was to use the existing technology park as the basis for establishing a life sciences cluster in the north of the city. 

Phase I – transforming the existing buildings
To achieve these goals, the project was split into two phases. The first involved repurposing the existing buildings. As part of this, the well over 30 000 m² of retail space was resized considerably to below 10 000 m². The former shopping centre was thus consigned to history. In the retail category, the main focus is now on meeting the needs of the surrounding neighbourhood. The newly available spaces have been complemented by a comprehensive entertainment concept (mulitplex cinema, gym, bowling alley, virtual reality centre, etc.), various food outlets, an attractive co-working space and, most recently, co-living services from Ariv. To improve accessibility and flow for the residents, visitors and the people who work on the site, the links between the individual sectors have been optimised. This was also done with an eye on the not-too-distant future: as around 4 000 jobs are expected to be created at Stücki Park by 2024, there was a need to increase connectivity at the site. Most of the changes to the existing buildings had been completed by 2020, marking the end of the first project phase. 
 

Phase II – strengthening the life sciences hub
Basel has a long history as a home for large and important pharmaceutical, chemical, biotech and medtech companies. Accordingly, the city on the Rhine is also a major location for research, development and knowledge transfer in these industries. The canton of Basel-Stadt opened its technology park on the Stücki site back in 2011. In addition to offices and other infrastructure, it offers attractive and collaborative laboratory and research spaces for innovative startups from the fields of life sciences, nanotechnology, ICT and cleantech. The construction of the technology park also planted the seeds for the «Stücki Park» life sciences hub. 

The demand for corresponding spaces has grown further in recent years. Although this is a general trend, it is especially prominent at Stücki Park. According to Wüest Partner’s Immo-Monitoring (2022/02) report, the life sciences sector has been growing at a disproportional rate for several years now. This is mainly due to changing demographics, greater health awareness in general, a higher prevalence of lifestyle diseases and digitalisation pressure in the healthcare sector. With regard to Stücki Park specifically, the technology park was no longer meeting all the requirements of some of its existing tenants. There was also a need to accommodate promising startups in the area. At the same time, more and more companies from the life sciences sector were becoming aware of the attractive site around the technology park startup incubator and wanted to set up their own spaces on it.
 

The field of life sciences includes all research areas concerned with living organisms, their structures and their processes. The sector invests heavily in basic research, knowledge and technology. Its influence extends to a wide range of other industries, from chemistry and pharmaceuticals to production technology and through to agriculture and nutrition.

The life sciences sector has several clusters in Switzerland. It employs a large number of people in the regions of Basel, Zurich and Lake Geneva, due in part to the regional universities and educational institutions based there. Demand for real estate with research and laboratory spaces is correspondingly high. Life sciences real estate is generally divided into four types of use: research & development, production premises, pharmaceutical logistics and office premises.

A new era of sustainability
The extent to which an extraordinary event or crisis ushers in a new era should be left for historians to decide. It is likely that they will identify historic «turning points» in an ever-shorter succession. That’s because the effects of individual events take on greater global and societal significance in a globalised world. It may prove particularly difficult to pin down the exact «turning point» for bringing about a new era of sustainability. The very first environmental policy measures date back to the 1970s. The decision by individual countries to abandon nuclear energy could also be regarded as a crucial turning point, provided they do not scrap this priority because of other events. The fact is that sustainability has lost political relevance in the face of the coronavirus pandemic, the Ukraine crisis and their cumulative effects on the availability of resources, but it has regained significance as a broader issue. The unexpected shortage of fossil fuels and other important commodities has served to promote new and alternative structures for obtaining and distributing such resources. A comprehensive reconsideration is underway on a global level. The most recent crises have thus contributed to ushering in a new era of sustainability.

Buildings require a great deal of capital and resources. They are responsible for a large portion of CO₂ emissions and waste production.

Social and economic transformation
The fact that we are facing a growing number of complex and multi-faceted challenges is undisputed. In addition to the immediately apparent effects of ongoing inflation and price increases, as well as supply and material bottlenecks and a growing number of sustainability-related regulatory framework conditions, societal developments that are indirectly related to these events also play a central role. Customer requirements and employee expectations towards companies are changing. The pandemic has accelerated the transition to new models of work, which have led employees to demand more flexibility and a modern infrastructure. The conflict in Ukraine and its effects have revealed supply chain dependencies and caused energy prices to spike. This has promoted sustainability efforts to expand decentralised renewable energy production and to use regional products and services. But it has also brought about changes that contradict universal sustainability goals, such as resorting to the use of coal-based energy and the decision by the EU to classify gas and nuclear energy as environmentally sound. 

These developments have thrown existing practices and business models into question and are having a significant impact on the real estate industry. Buildings require a great deal of capital and resources. They are responsible for a large portion of CO₂ emissions and waste production. Furthermore, they affect society as a whole because they serve as living, housing and work spaces. Property owners such as Swiss Prime Site and its tenants are directly affected by the aforementioned price trends for energy and materials.

Finite resources in linear systems cannot be scaled indefinitely
We owe our prosperity and post-industrial growth to the use of fossil fuels and finite resources in a linear economic system. In the face of increasing consumption and population growth, this means that resources will become increasingly scarce and environmental problems will get much worse. The prevailing economic system does not consistently take external effects and the resulting environmental costs into account, nor has it been designed with sustainable growth and scalability in mind. It will undoubtedly reach its limits, slowly but surely. While we cannot change the past, we must take advantage of this turning point to transform our economic system in view of the obvious limits and resulting consequences. Whether this occurs under the banner of climate and environmental protection, to secure long-term earnings or supplies, or simply out of conviction is of secondary importance.

Sustainability and the circular economy as value drivers
Sustainability is far from being just a «necessary exercise». For Swiss Prime Site, the largest listed real estate investor in Switzerland, as well as many other companies, sustainability has become a value and innovation driver. This also applies to the concept of the circular economy, which not only aims to minimise our environmental footprint but also make a positive contribution and create new business opportunities. It is a matter of transforming our business and value creation models by taking environmental, ecological and social aspects into account. The challenge of switching to a circular economy lies in its complexity. It is necessary to consider company-specific products and services. The entire business and value creation model is also brought into focus, making it necessary to have more intense discussions with stakeholders about the supply chain as a whole. We need a transformation led by the business community that can rely on internationally valid standards and a binding regulatory framework. Current developments have made it even more difficult to tread this path, but we cannot rule out that such developments may also make it possible to tread it more quickly.

Circular economy and the contribution of real estate
When considering the amount of waste produced, energy and resources consumed and the resulting emissions, it is obvious that companies in the real estate sector play a central role in society and must take responsibility for bringing about a transformation. When it comes to operational carbon emissions, many companies now provide the necessary level of transparency. Buildings are now powered to a greater degree with renewable energy and, where possible, designed to actively produce energy. As this development continues to advance, a greater focus is placed on investment properties and the embodied carbon of buildings. Swiss Prime Site’s «Müllerstrasse Zürich» project, which is the most well-thought-out project of its kind in Switzerland, is a good example of this. 

Although the life cycle of real estate is often depicted as a circle, its related processes are aligned with the prevailing linear economic system. Standing in contrast to this is the holistically defined concept of the circular economy that can serve as a guiding paradigm for a long-overdue transformation. The basic idea is to transform today’s model of «take, make, use, waste» and incorporate the concept of the circular economy into processes on the design, product and material levels. For buildings, this means building only what is truly needed, building less and preserving existing structures, being smart and efficient, and using the appropriate materials and technologies.
 

Two aspects in particular must play a part in how we think, behave and make decisions when it comes to the circular economy. First, we must consistently take the whole real estate life cycle and necessary adaptability (e.g. flexibility of use and extending the use phase) into account. Second, we must factor the externalised effects and costs of today’s system into our decisions (environmental impact). The public debate and business activities related to climate protection and sustainability still fail to consistently factor external effects and their environmental costs into the overall costs. New is usually cheaper than recycled, and the courage to implement a CO₂ price that is effective in reducing emissions is lacking.

What costs less in the short term may end up costing more over the long term because not investing in the sustainability performance of buildings carries substantial risks (marketability, regulatory developments, etc.). The effects of climate change and the consequences of exploiting and polluting our environment bear on processes that occur at a comparatively slow tempo. 

They fail to effect a turning point for this reason. It is sudden, unexpected and painful events that force us into a new age of holistic sustainability. Perhaps historians will one day describe this era as post-industrial – that is, if knowledge and information are actually used by a society rooted in circular principles to avoid repeating the errors of the past.

The article was published as part of the NZZ publishing supplement «Sustainability». Authors: Urs Baumann, Chief Investment Officer and Martin Pfenninger, Head Group Sustainability at Swiss Prime Site.

We meet Emilia Nenakhova in the expansive meeting area on the 33rd floor of Prime Tower. After a quick coffee, we settle into a corner, take in the view of the city skyline and chat about this quite exceptional project. 

What was special about this modification?
For me, what was most unusual about this project was that I had two hats on. On the one hand I was part of the project management and on the other, the future user. To approach the project with a neutral, needs-based mindset, I had numerous discussions with my colleagues to garner their input and expectations, and took them into account wherever possible. 

What are the stages in an office planning project like this?
That varies in each case. The starting point has to be analysing the status quo and understanding the goals – the vision. Then you have to develop a budget and a schedule. Later, you dive into the advanced project planning. That stage is about requirements, selecting stakeholder groups, holding workshops and the preparation of detailed area and materialization studies, as well as the coordinated scheduling and relocation planning. In the implementation phase, coordinating and monitoring the schedule are key. And lastly, it’s a question of adhering to deadlines and – most critically – the budget.

That sounds a bit like a moving target. How did you go about it?
The most important thing by far was to get my colleagues on board, so we put together a team of ambassadors. Every department in the company was represented. Regular dialogue with our «sponsors» higher up was also vital. It was in this context that we reached decisions on issues raised by the team of ambassadors. 
 

And how much say did employees have?
We held numerous workshops to capture requirements. In some instances, we used grass-roots democracy and took a vote on certain things. Sometimes there were ordinary consultative meetings, with a few longer ones now and again. 

What stakeholder groups were involved?
Internally, we had individual representatives from management, our «sponsors», and the team of ambassadors – the staff representatives. Externally, we had invaluable support from a workspace consultant and our furniture supplier. Their professionalism and creativity helped us a great deal, and their pragmatic approach was perfect for us.

What were the challenges or hurdles that you encountered?
Supply times and punctuality are the two most significant. And then, of course, the budget control that goes along with that. Construction issues such as delivery and fire protection also played a key role.

How did you maintain an overview?
Disciplined time management. It sounds very painstaking. And it is. But without it we would probably still be working on it today! That’s why it’s important to make sure you always keep an eye on the schedule and build in a buffer for contingencies and unexpected challenges... basically, that you expect the unexpected. Good planning also reduces stress. And it helped that the «construction site» was only a few metres from my workspace, so I could be on site quickly. At the same time, this was also a challenge that directly affected us, as we were rebuilding on the 34th floor during ongoing operations.

Can you build sustainability aspects into this kind of project?
Of course! Sustainability was one of the requirements from the start. Our goal was to create office space that aligns with the healthy building approach. For example, our air quality was already high, but we thought about how we could improve it even more. We found a special mineral paint that not only looks good on our walls, but also has air-purifying characteristics. Another example is the acoustics. We use a variety of materials to ensure we can focus on our work. A lot of it is Cradle to Cradle certified, by the way. Optimal greenery with all sorts of plants makes a great finishing touch. 

What flexible elements did you use to enhance the new office landscape?
We wanted to create an environment that allows for a variety of activities and forms of work. For example, you can book a regular office workspace online for a half day or full day if you need to. But for short visits to Prime Tower, there are numerous flexible work areas where you can sit and really concentrate on your work. And for smaller tasks in between there are sofa corners and standing desks. After a little more than six months, we can see that this concept is working very well.

Learn more

Swiss Prime Site is aware of its responsibility when it comes to climate protection and has been committed for quite some time to contributing towards the 1.5-degree goal of the Paris Climate Accord and the Swiss Federal Council’s climate neutrality goal for 2050. To that end, in 2019 the Company developed a CO₂ reduction pathway for the entire property portfolio and strengthened it further in the reporting year. Swiss Prime Site is using active management principles to implement a reduction pathway well below the 1.5-degree scenario. By 2040, around CHF 650 million will have been invested in achieving climate neutrality over that period for the whole property portfolio. In addition to investments in renewable energies, the majority of the expense will be in building renovations. At the same time, resources will be invested in measures to replace heating systems. In this way, the Company is taking its own steps to reduce emissions as far as possible. Where there are the anticipated unavoidable emissions, we will evaluate additional measures outside the property portfolio to achieve its climate neutrality by 2040.

More about the reduction pathway

The Akara Group was founded in 2016 and has since evolved into a FINMA-regulated fund provider with a focus on residential and commercial real estate. The group employs around 50 real estate specialists and offers real estate services in the areas of development, realisation, management and marketing. The real estate assets under management, amounting to around CHF 2.3 billion, comprise a real estate fund for tax-exempt pension funds, a private equity product for qualified investors, and a development pipeline of more than CHF 240 million.

The plan is to integrate the Akara Group into Swiss Prime Site Solutions during the course of the 2022 financial year and to merge the two fund management companies. Through the planned merger, Swiss Prime Site Solutions will grow into one of the leading Swiss real estate asset man­agers, with real estate assets under management (including development pipeline) of more than CHF 6.5 billion and an expected EBIT contribution of CHF 27–28 million in 2022. The acquisition will enable Swiss Prime Site Solutions to increase its customer base considerably and to expand the existing investment platform with additional product and fund categories, such as real estate private equity investments.

More about the AkARA Group

Under the UN’s 17 Sustainability Development Goals, SDG 11 focuses on cities and communities. These should be inclusive, safe, resilient and sustainable, with a balance between social, economic and ecological sustainability. Swiss Prime Site is further developing the Maag site with these aspects in mind. «maaglive» will complement the existing office spaces on the site with living and cultural spaces. The intention is to open up a significant proportion of the flexibly usable spaces for cultural activities. The three buildings will also be arranged around a tree-lined square. Together with other green spaces, this will contribute to heat reduction in Zurich-West. This goes hand in hand with Swiss Prime Site’s climate goal of reducing emissions to net zero by 2040.

More about «maaglive»

Madaster is an online registry for materials and products used in construction. The documentation, registration and archiving of the materials used in buildings and construction projects promotes intelligent designs, avoids waste and makes it easier for them to be broken down and recycled. The partnership with Madaster is consistent with Swiss Prime Site’s sustainability goals and measures. One excellent example of an innovative circular project as part of a total renovation is the new site for Google in Zurich (Müllerstrasse 16/20). Construction work started in July 2021 and aims to transform the 24 000 m² building into an ultra-contemporary space with the highest sustainability standards. After completion at the end of 2023, the building will be certified in accordance with SNBS and Minergie standards.

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