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COVID-19 Health crisis and real estate: what relation to the ecological transition?

Authors: Yves-Laurent Sapoval & Regis Meyer, Ministry of Ecology and Solidarity Transition, France - Co-chair and focal point of GlobalABC

 

Any major crisis is an opportunity to question existing social organization and unleash underlying forces of change to respond; these forces of change may be part of other developments. This paper aims to provide a quick overview of the questions the real estate sector is faced with in the context of the COVID-19 pandemic and how these may contribute to the fight against climate change. This overview is covering five topics:

 

Professional relations

The COVID crisis highlights a strong interdependence of the actors in the real estate and construction value chain: the containment and the pandemic risk are affecting the relations between professionals and the availability of raw materials and raise the question of the price of these relations and raw materials.

- the ecological transition requires greater coordinated action; this new perception of interdependence, vulnerability but also of resilience can turn into an advantage;

- The practice of remote working in the design phase (architects and engineers) will probably accelerate the interest in developing BIM for projects and lead to limit waste and construction through better initial coordination.

- The solidarity between lessors and lessees, or lessors and tenants is questioned. Should the payment of rent be maintained or adapted to the circumstances (in case of vacancy or financial difficulties)? This solidarity is also at stake and activated for sustainability stakes, for example through green leases, or in the sharing of energy saving gains from housing leases.

- The impact on the development of the off-site (such as partial prefabrication in an industrial environment and/or the dry sector - e.g. wood construction) seems unclear; but the gain in time linked to these implementation of such solutions could compensate for the loss of time due to a lower concentration of workers per site.

 

Connectivity

The COVID crisis reveals the value of the building as a "hub" for connection to networks (particularly telecommunications networks), but also the positive impacts of its connection to the natural environment (private outdoor space, proximity to natural space...), and to the local or micro-local socio-economic environment (building, neighbourhood): the quality of a property reflects the quality of these connections, but also the possibility of disconnection.

- Organizations have adapted to remote working, raising the question of the nature of the need for office real estate. After commerce and the emergence of e-commerce at the turn of 2010, the office sector will have to redefine itself in the face of digital messaging services, online meeting management, webinars, etc., which are becoming widespread. Climate benefits may include a decrease in work-related mobility and transport emissions. The decrease in office space requirements could however be counterbalanced by a larger surface area needed per person to limit promiscuity (and thus questioning the open space...).

- At the same time, working in homes will be a new function that housing will need to provide. Also, the remuneration of the employee for the service currently provided free of charge, such as the work space or the consumption of telecommunications or electricity or even heating at home will be raised if teleworking becomes the norm.

- The containment in dwellings underlines the unique value of an external space ensuring a contact with nature (balcony, terrace, garden,...).

- Promiscuity in public transport will reduce the number of passengers for a certain time. In the longer term, the criteria of proximity of public transport in the choice of a property could also be extended to the proximity of soft traffic or cycle paths that encourage walking or cycling. 

 

Protection

The COVID crisis reveals the value of the building as a refuge, a shelter. It is likely that the functions of air flow control and air renewal will be intensified to filter and prevent the introduction of germs into the premises and disperse the remaining ones.

- In countries with cold or temperate climates, the ecological constraint leads to reinforcing the insulation and airtightness of the façade; ventilation is done in a controlled way.  This evolution is favourable to the installation of MERV>13 or HEPA filters complemented by a UV-C germicidal treatment limiting the presence of pathogens in the incoming or re-circulating air. The Passivhaus Institute has already highlights the benefits of allergen control.

- However, building occupants remain the main potential vectors of pathogens. The management of airborne pathogens (directly or indirectly through aerosols), outside of traditional sanitary facilities, raises questions about sanitary ventilation standards, and the need for an emergency plan (Increase in ventilation rate, Increase in filtration level, 24/7 system operation, mobile filtration equipment, calibrate temperature and humidity unfavourable for the targeted pathogen...), or even to develop pressurized zones. These new permanent or temporary measures should result in an increase in energy consumption.

- However, the importance of natural ventilation should not be questioned. Air circulation simulations in the design phase can ensure efficient natural ventilation able to dilute and extract pathogens. This approach has been validated by the WHO and is the subject of many projects, even in health establishments.

- The interest of "buffer" zones between the outside and inside, providing decontamination airlocks or temporary delivery/storage functions, could increase the final demand for surface area.

 

Asset valuation

Paris green building

The COVID crisis is weakening the leisure real estate sectors (concert hall, theatre, cinema, hotel, restaurant...) and other sectors where human concentration is sought (shopping centre, conference centre, business centre) by the new spatial constraints.

- The real estate value of these sectors depends on the number of visitors. Spatial density rules will be questioned in order to reduce promiscuity, probably leading to permanently or temporarily limit the maximum occupancy rate of the premises, and to reduce the number of visitors, and therefore the revenues of the operators. The capacity of operators to invest in sustainable renovation could be more limited as a result.

- Elevators, like transports, are also crowded places, for which new rules will have to be established.

- However, certain sectors will see their real estate value increase, such as storage centres and data centres linked to the development of digital and e-commerce, accelerated by the health crisis. The local food trade could also benefit.

 

Policies

Finally, the current health crisis underlines the vulnerability of the real estate sector but also its resilience and underlines the building as being a public good.  Moreover, the real estate sector could represent a strategic sector reviving economic activity after confinement. The temporary drop in energy prices should not prevent us from pursuing action on the development of zero-carbon buildings.

- The long period of confinement has helped to focus attention on the quality of housing (daylight, levels of noise, air quality, etc.), its adaptability (reconfiguration of interior spaces) and its location/connectivity (proximity to food shops, nature, etc., but also digital connectivity). This quality should be considered as a public good. Also, policies of energy renovation that aim to ensure an increase in quality should also include a digital component (estimated at 10% of the total cost).

- Awareness of the extreme vulnerability of our society to a pandemic crisis, highlighting the potential obsolescence of many assets and rules, should lead to mobilize even more real estate and construction actors to face other global and systemic crises such as the upcoming climate crisis which might herald greater potential obsolescence.

- The advantage of the construction sector is its largely local, labour-intensive industry with significant economic effects (jobs, investments). Economic recovery plans could usefully include support for the construction or renovation of low carbon buildings, based on lessons from the health crisis.

Yves-Laurent Sapoval & Regis Meyer, Ministry of Ecology and Solidarity Transition, France - Co-chair and focal point of GlobalABC