Decarbonization of buildings will boost their long-term profitability, according to the results of a new study led by Fonds immobilier de solidarité FTQ. 

“The findings are conclusive: The value of a sustainably designed building can increase by as much as 45% in the 10th year following construction,” said Montreal-based Fonds in a news release.

The research was conducted by Akonovia in collaboration with Vertima, which completed life-cycle assessments, and BJC for the financial modelling. Fonds said the study used complete data from the past year to model the financial performance of a multi-residential building in the Fonds portfolio. The building was constructed in 2018 at a cost of $60 million.

For the purposes of the exercise, researchers discounted the construction cost of the reference building to $100 million, and its useful life was set at 60 years. The sustainable measures chosen to improve its energy performance and reduce carbon intensity, including operational and embodied carbon, entailed an additional investment of $6 million dollars, or 6%.

“The additional investment in optimizing the building’s environmental performance was well worth it, especially since climate change is getting worse and its impact will be felt ever more acutely in the real estate industry,” said Serge Cormier, vice-president of ESG, value creation and sustainable real estate, at the Fonds.

“We’ve shown that investing in a building’s sustainability and in both its physical and financial resilience is key to fighting climate change and to increasing its value.”

Groupe Devimco, Hydro-Québec and Énergir partnered on the research project, known as Générations 1.5 ̊C. The findings were presented recently to about 300 members of Quebec’s real estate and finance industries.

“Based on the findings of the study, developers should consider making the additional upfront investment that sustainable construction may entail,” said Caroline Girard, Devimco’s vice-president of property management.

“It is more important than ever that operational and embodied carbon be reduced in new construction. As well, it’s worth noting that sustainable buildings can also offer additional value in terms of customer experience through the quality of spaces and indoor air.”

Éric Bernier, director of business customers and energy solutions for Hydro-Québec, said the results show that carbon emissions related to energy consumption are only part of the equation. A true decarbonization must consider embodied carbon emissions, such as those associated with construction materials, which account for a large proportion of a project’s greenhouse-gas emissions.

Hydro-Québec’s most important finding was that energy-efficiency and power-management measures can lead to an almost zero-carbon building that does not increase the energy or power demand.

“For a number of years now, the energy-efficiency market has been looking only at the payback period for projects, targeting a five-year period,” said Philippe Hudon, president of Aknovia. “Against the backdrop of accelerating climate change, we should be looking more at the risk of not investing.”