What is the Circular Economy?
The circular economy has become one of the new buzzwords when talking about Real Estate and sustainability. The term refers to a method of design where waste and the disposal of items is designed out at the outset of a product or building or development.
Historically, and due to the wealth of raw materials that our earth contains, design does not really take into account what happens when a product or building is no longer used or needed or has become obsolete or defective. As a consequence, landfills are full of thrown away items that are neither simple nor cost effective to recycle. However, we can now recognise that our planet's resources are not infinite, at current consumption levels we would need the resources of 1.7 earths to sustain us. Earth overshoot day – the day we go past the sustainable resource use each year falls on August 22nd this year. All resource use after that date is unsustainable.
In order to ensure that we have sufficient resources going forward we need to move from a linear model of use: Take – make – break – replace to a circular model where reuse and recycling are designed in from the outset and the amount of waste is cut to zero or as close to it as possible.
Schiphol Airport recently went into partnership with Phillips to source their lights as a service. Not only are all the lights, costs and maintenance dealt with by Phillips but the lighting they have used is already designed to be upgraded and recycled so that no component part of it becomes obsolete or useless and has to be thrown away. However, their light as a service also means that the lighting is part of a circular economy model as well. The products are made in a future proofed design; the lights are used by the client without being owned by them and at the end of their useful life in that specific form they are returned to the company for repurposing.
Impact on Real Estate
Real Estate represents a significant chunk of carbon emissions and resource use and built environment industries need to start cutting both the carbon emissions and the excess resources in order to comply with the government mandated cuts to carbon emissions. One way they can do this is by ensuring that circular economy principles are adopted into their ways of doing business. This means different things for different parts of real estate but is a key driver and is strongly encouraged by national and international organisations and governments.
Models of Circular Economy in Real Estate
There are various models of how the circular economy can be adapted and used in real estate:
- flexible models of use for a building to ensure that space is not underutilised;
- adaptable buildings and sites so that buildings are not demolished before they reach the end of their technical life. A resilient building that is adaptable to a changing market will have far greater use and lifespan;
- relocatable buildings, like the Circular Building mentioned below, that can be moved to more convenient areas depending on its use and requirements;
- products as services, like Schiphol airport purchasing light as a service, in the future heating could be provided this way and perhaps even plant and machinery, such as lifts.
DEFRA reported in 2018 that construction was responsible for 59% of waste to landfill in the UK. There are many ways that the circular economy can be embedded in a development or building and help reduce that figure.
Modular buildings and developments, which utilise off site manufacture, are a key way of eliminating waste. An off-site manufacturing process that significantly reduces waste is followed by the modular units being delivered to the construction site almost entirely complete which reduces time and waste on site where it is harder to prevent construction waste or protect materials. Modular buildings are also designed for deconstruction as well as construction which virtually eliminates the waste generated from demolition.
Additionally other aspects of building and developments can use methods or products which are circular, a recent UK Green Building Council showcase provided ample evidence of the wealth of products available to builders and developers:
- A Belgium firm, Façade Click demonstrated their re-usable cement free brick facades that had equal insulation values to more traditional brick facades.
- Lindapter, a British company, showed their system of metal clamps for construction as a quick, re-usable, and effective alternative to welding or cutting. Their Circular House, designed in concert with Arup can be assembled and disassembled with ease.
- Stormboard make hoardings made of recycled plastic which can be used multiple times and then entirely recycled themselves so produce no waste whatsoever.
The new London Plan requires all new developments to provide a Circular Economy Statement setting out how the circular economy would be part of their new development. The built environment sector in London alone consumes 400 million tonnes of material each year and accounts for 48% of waste in the capital. The Circular Economy Statement that now needs to accompany planning applications requires applicants to set out how they will conserve resources, how they have designed to eliminate waste, and how they will manage waste sustainably.
Landlord & Tenant
Landlords should think about reinstatement in terms of complying with the principles of the circular economy and how the construction costs could be at least partially reclaimed as long as tear out and dispose method isn't used. When a property is fully reinstated it can lower the energy efficiency rating of the building; it can also lead to significant waste heading to landfill. However, if even at the fit out stage, both parties are considering how best to deal with reinstatement, including provisioning for re-use of non-obsolete items, ensuring decorative parts that could be recycled such as carpet tiles, desks, demountable partitioning as examples, are advertised or sold to interested parties or redistributed via furniture recycling sites. The construction/deconstruction costs can be markedly reduced as can the amount of waste going to landfill.
Tenants can even adapt to a more sustainable model by considering how they provide their products. The café chain Pure provides free still or sparkling drinking water to all of their customers, provided that their customers have a re-usable bottle to fill. Some cafes are now refusing to serve coffees in re-usable cups on certain days as a way of nudging their patrons to start thinking about the waste they generate.
Whatever your role in Real Estate, the circular economy will have an impact and should be a consideration for you.