The woman driving property values with sustainability strategies

When Australian property valuations professional Caitlin Uren moved to London in 2016 for a job with JLL, she expected to stay two years. She ended up staying six, steering her clients through calamities such as COVID and Brexit and helping them deal with the impact on their commercial real estate assets.

Now back in Melbourne, Uren is JLL’s head of environment, social and governance (ESG) for capital markets in Australia, bringing her UK experience to investors back home. By helping create strategies and unlock opportunities in the transition to net zero carbon, she is ensuring sustainability is front and centre.

“Sustainability is now intrinsically linked to value,” Uren says. “The UK and Europe are ahead of Australia in terms of government policy and investment in renewables, but we’re catching up really quickly.”

With real estate responsible for around 40 percent of carbon emissions, decarbonising building operations, retrofitting older properties and cutting carbon in new developments is key to achieving net zero goals. JLL Research shows that 79 per cent of occupiers are prioritising location searches for buildings that help reduce emissions.

Uren is quickly making her mark. The JLL national investment and ESG teams recently worked together to provide a sustainability overlay to the sale of the Geoscience Australia headquarters in Canberra, a purpose-built state-of-the-art facility which already had many attractive selling points: a 9.6-year weighted average lease expiry (WALE) with a government client and attractive on-site amenities including childcare.

Improving the building’s NABERS environmental rating through an energy improvement and net zero pathway program was key to retaining the government tenant and contributed to the A$365 million sale, a figure that not only broke city records, but brought buyer Charter Hall’s investment in the Canberra market to more than $1 billion.

Darkest days

Sustainability and how to mitigate risk is now a given in any conversation about real estate. The energy crisis gripping the world in the wake of the Ukraine war is only highlighting the necessity of reducing the reliance on fossil fuels and improving the energy efficiency of our buildings and investment in renewable energy.

But the topic has been a motif throughout Uren’s career, dating from her final year at Ruyton Girls School in the Melbourne suburb of Kew, when she was the school’s first-ever ‘sustainability chairperson’. At Royal Melbourne Institute of Technology, she wrote her thesis on how cities can mitigate their impact on the environment through planning policy.

It was during the darkest days of COVID, while she was in London, that Uren honed her skills. With all transactions on hold, and the grimmest of economic forecasts about the future of retail real estate on the table, she worked with clients to upgrade existing buildings to increase their desirability and income.

Such “asset repositioning” became its own business line in JLL in 2020 and Uren moved back to Australia a year later to be the ESG lead in the field.

The green deal

Sustainability was already a major focus in the UK in 2016. It was, Uren says, “a massive focus for JLL, and the UK government was more focused on renewables and climate change than we were in Australia.”.

The European Union – which the UK decided to leave in 2016 – has been a harbinger of change in the field. Since the EU’s Green Deal was first set out in 2019, the EU has issued a barrage of initiatives that will affect investors from London to Sydney.

These include a ‘taxonomy’ specifying the criteria that must be met in order to determine whether an activity is environmentally sustainable. PricewaterhouseCooper’s recent survey of European institutional investors showed that 75% planned to stop buying non-ESG products within the next two years.

The ESG on real estate is a complex one and the market is still understanding how it will affect the sector. It entails thinking about a broad range of issues, from climate resilience to social value and how to repurpose buildings built in a previous era.

“Knocking down buildings entails a massive carbon cost,” Uren says. “The greenest building is the one that already exists.”

Institutional investors and banks are already speaking with their feet, with a plan to tighten investment and lending criteria, offering products such as sustainability-linked loans. Lower rates for reducing emissions provide property owners with financial incentives to decarbonise their portfolios.

No longer a laggard

After being considered a laggard on net zero commitments, Australia has fallen into line with the rest of the world on a commitment to reducing emissions to net zero by 2050.

Cities are leading the charge, with Sydney and Melbourne setting targets of net zero carbon by 2035 and 2040 respectively. Australia’s successful NABERS environmental ratings system has just launched in the UK.

Australia feels like the right place to be, Uren says. The next decade is a pivotal time for companies and cities to significantly cut their carbon emissions.

“There has been so much progress in the year since I’ve been back,” she says. “It was the right time to come home and bring lessons learned from the UK.”