Four Ways to Build a Sustainable, Net Zero City

Posted by Knight Frank Newcastle on 20th July 2021 -

Net zero targets are increasingly being set by all, be it at a country, city or corporate level, and they're becoming more immediate and stringent. But how deliverable is a net zero city? And what needs to be done to see this achieved? We explore four key themes.

The volatility witnessed in light of the pandemic has been challenging for many on a personal level, but in a wider context, it's been a rare chance to step back and consider what we really want from cities. We had a tantalizing glimpse, for example, of a cleaner London, where pollution levels fell dramatically at the start of the first lockdown and parts of central London saw a 55% fall in nitrogen dioxide levels almost overnight.

As Flora Harley, Partner, International Residential Research, Knight Frank, explains: “Over 700 cities have joined the race to zero, which is encouraging as they will undoubtedly be the deciding factor in achieving the target. With cities accounting for 70% of global emissions, as the UN Secretary General has said, 'Cities are where the climate battle will be won or lost'.”

But what action is needed now to deliver on our long term, net zero targets?

The 15-minute city

According to William Matthews, Partner, Head of Commercial Research, Knight Frank LLP: “Concepts such as the fifteen-minute city, [in] which amenities are close enough to be reached on foot or by bicycle have rightly been gaining traction. One major conclusion for real estate is that the need for mixed use development has never been greater. But we have to ensure that this isn't narrowly defined around the ability to reach the essentials of work, home and shopping. The concentration of cultural amenity, art, education, and sport is needed to create vibrant communities”.

But as Dr Stefania Fiorentino, Lecturer, Planning and Urban Regeneration University of Cambridge, Department of Land Economy, explains: “There are challenges linked to these concepts. The first one is it works really well in certain urban morphologies or in dense cities like Paris, and that's why the mayor of Paris has supported this concept [in] the aftermath of the pandemic very strongly. But even normally, it takes only half an hour walking distance from one part of Paris to another, so in that sense it's not really a ground-breaking discovery. It's quite difficult in cities like London which are larger and [more] complex in terms of how public transport [is] organised.”

The power of a good deadline

Jerome Frost OBE, Chairman of Arup UK, India, Africa and Middle East (UKIMEA), says a key step is the power of a deadline: “I'm a firm believer in the power of a good deadline to drive change. When you believe in that deadline, what you do is you focus on action and you focus on collaboration and [you] focus on innovation. London has committed to 2030, moving its deadline forward from 2050 for [its] net zero ambitions. That must be a good thing, so long as people believe in that deadline.

“That deadline needs to be a serious one. The way to make it more serious is to introduce and understand the true cost of carbon going beyond that date, and by recognising that cost and by implementing (or intending to implement) means by which you realise that cost, that starts to make that deadline very real. People start to realise that costs will be incurred if they don't meet [it] and therefore, they start to work towards [it].”

Retrofit first

When it comes to sustainability in real estate, retrofitting existing buildings – rather than starting from scratch – can deliver some serious carbon savings at a much quicker speed. Juliette Morgan, Head of Sustainable Development, British Land, explains: “We signed up to the AJ retrofit 100 campaign, which means that none of our development projects get through the investment committee without justifying whether they can reuse the building in situ, and so our priority is to retrofit first. We've seen both on 1 Triton [Square’s] completion and 100 Liverpool Street’s completion that when we retrofit substantially, we can meet our 2030 targets, so we're below our 500kg of carbon per metre squared on both of those buildings.

“I think we might see a shift in customer attitudes to appreciating retrofitted buildings because of the carbon saving. So, seeking that grade A, brand new [and] shiny might flip to, ‘actually, I quite like the integrity of using the original frame’, and certainly we've seen that with the letting speed of 100 Liverpool Street and 1 Triton. So, it's not the case that we'll never demolish and rebuild again, because you can get plot density and efficiency – and there may be buildings that we can't bring back up to standard – but if you like, the policy and the data has demonstrated to us that retrofit first is the way forwards for the majority of our development portfolio. That's how we look at it.”

Financial incentives

Of course, financial incentives will play a huge role in supporting landlords, developers and investors. As William Matthews explains: “Support will be [forthcoming] from the finance world, and the Bank of England’s remit now includes a duty to support the Government’s net zero carbon ambitions. The Government has set out plans and funding for London to become a centre for green finance. In fact, [it’s] really begun to take off with multiple examples of real estate loans being provided at preferential margins, sometimes 25 to 50 basis points lower, if pre-agreed sustainability outcomes can be achieved.

“And the wider context is that the global financial regulatory environment is rapidly moving towards ever greater disclosures that will force the adoption of sustainability metrics. So, there's a clear incentive for lenders, developers and investors to promote product that meets the requirements. Having the right incentives is ultimately a key factor ensuring that real estate plays a full role in achieving London's net zero carbon targets.”

These insights were first explored in our virtual event A Sustainable, Net Zero City. You can watch the on demand version