INTERVIEW Sustainable pioneer seizes green momentum

Coen van Oostrom's development company Edge is pushing the boundaries with its new generation of ultra-sustainable and tech-enabled buildings, as the property industry braces itself for a massive switch to carbon-neutral real estate.

Coen van Oostrom exudes the excited air of a man whose moment has arrived.

After more than 20 years of developing sustainable buildings with his former company OVG Real Estate, now rebranded into Edge, he is seeing the rest of the world wake up to the need for climate-friendly real estate.

The Dutch entrepreneur recently attended the annual World Economic Forum in Davos  where, together with several other CEOs, he met with Frans Timmermans, the European Commission vice president responsible for the EU’s recently launched Green Deal policy. That meeting, combined with recent pledges by some of the world’s biggest corporates to make their real estate portfolios carbon-neutral within the next two decades, has given fresh impetus to his own vision of a more sustainable built environment where buildings are energy-efficient, healthy and digitally smart.

Not that Van Oostrom needed convincing of the need for greener buildings. His company has been in the vanguard of transformative real estate for more than two decades – first in the Netherlands and Germany, more recently the US, and from next year, the UK. His company’s slogan, ‘The world needs better buildings’, is something Van Oostrom has not only preached but also practised for years – to widespread industry recognition. His office buildings have been showered with sustainability awards; The Edge in Amsterdam’s Zuidas business district held the honour of the world’s most sustainable building between 2016 and 2018, and recent projects such as the Edge Olympic Amsterdam, where Edge’s HQ is based, are breaking records for worker health and wellbeing (see box 1).

On the day this interview was held, for example, a delegation from the Urban Land Institute toured Edge Olympic as part of the organisation’s annual European conference. Among the visitors and taking notes was Dan Doctoroff, CEO of Sidewalk Labs, the urban innovation arm of Google parent company, Alphabet, which is working on a high-tech district in Toronto. ‘I think he was inspired by being here, considering he is standing at the forefront of developing the first buildings,’ says Van Oostrom. ‘He looked at what we had built and asked about the sort of problems we had faced and said – wow, we’re going to have that learning curve ourselves.’

Underpinning the Dutchman’s excitement is the sense of urgency that now appears to be taking hold among policymakers and business leaders alike about the need to take action to address climate change.

‘At Davos, Timmermans got several CEOs together, including myself as the only real estate industry representative,’ says Van Oostrom. ‘He addressed me and said: 40% of carbon emissions come from buildings and so we need to engage with the real estate industry, because we are going to do this Green Deal and it will involve upgrading and retrofitting buildings big time.’

Building renovation
Timmermans’ remarks, says Van Oostrom, effectively boil down to an invitation to the real industry to join the negotiations on future legislation. The overarching objective of the European Green Deal is to reach net-zero greenhouse gas emissions across the EU by 2050, a goal that will be enshrined in a ‘climate law’. Because of buildings’ large share of carbon emissions, retrofitting is seen as ‘low-hanging fruit’ in meeting carbon reduction goals. One of the key elements of the Green Deal, therefore, is to at least double or even triple the renovation rate of buildings, which currently stands at around 1%.

‘EU-wide legislation is now being drafted in a centralised place. But the real estate industry doesn’t have a lobbyist in Brussels,’ Van Oostrom explains. ‘I’m not saying that we should lobby against a Green Deal but if you want to do a deal you have to be at the table and you have to say: this legislation works, that doesn’t and what would really help us is if we had this subsidy or those European Investment Bank funds etc.

‘The car manufacturers, the oil and energy industry - they all have teams in Brussels to be part of that discussion and to steer the debate in the right direction, but the real estate industry is absent from the table at the moment.’

If the real estate industry is to play a role in shaping its future and have any negotiating clout, it has to organise itself, Van Oostrom stresses. At present, it is too fragmented, both at a Dutch and a European level, he says. Germany has a ‘well-functioning’ representative body with its ZIA federation, but it has no connection to what is happening in other European markets. Starting with his home market, the Dutch CEO proposes setting up a central industry platform that would span all sectors, from architects and developers to construction firms and housing corporations. That model could then be applied on a European scale. 

‘If you had a group of 10 people, a bit like a think tank, and an ambassador that can speak to Brussels, that would be a start,’ he suggests. Van Oostrom sees the Urban Land Institute, of which he is a long-standing member, as one forum for kick-starting action. ‘I think it’s important that ULI members raise their hand and say: we know that this is an issue and it’s important to address it. We [Edge] are not the biggest party in Europe, and we’re not the smallest either, but we are at the forefront of sustainability thinking and measures coming up and therefore I have an obligation to raise my hand and say: this is something where we have to organise ourselves better. If we are not visible in the debate, it might hurt us in the long term.’

Corporate push
Momentum for change is also coming from the corporate world, as Van Oostrom is experiencing at first hand. ‘We started to develop sustainable buildings more than 20 years ago. Then, after the Paris Agreement in 2015, I was surprised at how little happened in the years that followed. This year is a complete game changer. Why? Only in the last month we have had two major companies – Microsoft and Amazon – saying they want to be Paris-proof by 2030-40.’

In the same week that the two global heavyweights announced their plans, Van Oostrom says his company received phone calls from their real estate teams. ‘They said: can you help us, we need to upgrade all our buildings and we want to think about how to do that. So, these are very exciting times and the technology is there to do it. We just have to start moving and that is happening now.’ 

In home market the Netherlands, Edge has just delivered a five-storey sustainable office for financial services group ING in Amsterdam. ‘They now want to upgrade every ING workplace around the world,’ says the impassioned entrepreneur. ‘I have never seen such a top-down hard push by the likes of Jeff Bezos [CEO Amazon, ed] and Satya Nadella [CEO Microsoft]. They are saying: wow if you look at the data the world has a real issue – we don’t want to be part of the problem, we want to be part of the solution. So I believe we will see a big push in the bigger professional market for buildings to be carbon-neutral full stop.’

European projects
For the moment, Edge has its work cut out to complete the transformative buildings it is currently developing in Amsterdam, Berlin and London - where construction has yet to start on the South Bank site it acquired last year. ‘Business has never been better,’ says Van Oostrom. ‘There is huge appetite among big investors for core and future-proof buildings – by that I mean smart, IoT-enabled buildings with sensors tracking all sorts of things like energy consumption, CO2 levels, light etc. These kinds of buildings are now popular with institutional investors like pension funds and insurers.’

The company is currently working on three projects in Berlin: Edge East Side Berlin, an office skyscraper with Amazon as the main tenant and German insurer Allianz and Universal Investment as the owners, Edge Suedkreuz Berlin which will be the new headquarters of Swedish energy group Vattenfall, and Edge Grand Central Berlin, next to the city’s main railway station, which Edge is developing as part of the €1 bn Cityhold Office Partnership with investment manager Nuveen Real Estate. In Amsterdam, a 60,000 m2 office redevelopment is under way in the west of the city which has been sold to Korean investor Hana Alternative Asset Management. Also, in the Dutch capital, a 75,000 m2 multi-use development named ‘Valley’ is taking shape which is due to be completed next year. 

London had long been on Edge’s wishlist of locations and the company’s acquisition there last year of a site on St Thomas Street near the Shard marks a major step in exporting the company’s blueprint for a new generation of sustainable and smart buildings to other European cities.

‘What we recognised is that London is a city where most buildings have been built by people working out of a spreadsheet,’ says Van Oostrom. ‘There are a lot of big investors there pushing products and the product has to yield. There’s no room somehow for innovation or anything special so most buildings are pretty straightforward.’

Edge is developing the South Bank project speculatively but plans to bring in a joint venture partner in due course to spread its risk. ‘With Brexit still overshadowing the market and uncertainty about how the year will end, it makes sense to do that,’ says Van Oostrom, adding: ‘Financially we still play by the real estate rules, product-wise we want to be an innovator.’

Despite the surge in global demand for sustainable buildings, the company has no ambitions to become a global player by expanding to the Middle East or Asia. For the moment, Europe is a big enough playing field, not least because building codes and legislation differ so much from market to market. ‘We are currently developing a couple of exciting projects in the US. We’re developing one building in London, we’re looking at a second location there and there’s potential for more,’ he says. ‘But Edge is a European player first and foremost, he stresses.

Differences between markets
Edge’s activities in different markets reveal big variations in the way they operate and are regulated. ‘It makes you think about different models, you see that some countries are behind, while others are trying out new things,’ says Van Oostrom.

The Dutch are leading the way in terms of sustainability, he remarks. From 2023, owners of commercial buildings will not be allowed to rent them out unless they have an energy label C (on a scale from A to G). News of this new rule has been viewed as revolutionary in Germany, where the government invited Van Oostrom over to explain how such a measure could have been accepted by the industry. ‘I was asked: how could this have been accepted? Aren’t people angry about it?’

The Edge founder believes similar regimes will be put in place in other EU countries as they strive to meet tougher environmental targets. Germany really wants to raise the bar in terms of sustainability but its real estate industry is ‘very protected’ and this can stifle innovation, he believes. Many of its systems, such as the notarial profession, are rooted in age-old traditions and need to be broken open. ‘In Germany all legal contracts still have to be read out loud. With the complicated deals that we do where you have literally thousands of pages that doesn’t really make sense.’

In the UK, an innovative leasing model has been introduced for new offices in London which will also be incorporated into the Edge property. It offers NGOs and fledgling companies  – which are being pushed to the periphery of the city by sharply rising office rents – the chance to stay in city-centre properties at affordable rents. Developers will be required to allocate 10% of a new or redeveloped office building to rents at a ‘social price’.

Learning from each other
Van Oostrom believes there is much to be gained from sharing innovations and best practices between cities. ‘What I find interesting from all of this is that there is a huge lack of information sharing between cities. I think cities are competing on maybe 1% of their activities, like attracting HQs of global organisations, but for the rest they can learn so much from each other. Cities have so many shared problems in terms of mobility, sustainability, social housing etc. One of the biggest challenges going forward is not how to deal with the technical side of things but how to deal with business case issues. So if anything, I would say: municipalities talk to each other!’

As climate issues become more acute and governments plot action, Van Oostrom believes the time has also come to harmonise building codes across Europe. ‘If there is one moment in time that we can change building codes in every city in Europe and make it one level playing field, it would be now. There’s going to be a Green Deal and part of that is harmonising the way buildings are built because it cannot be the case that we are not allowed to use a wooden pole in one city and not another. It’s time for a new benchmark that takes everything – sustainability, worker health, circularity – into account.

‘Let’s get a super-committee of European companies together that figures out a building code that is innovative and open for change and let’s roll it out in the EU. With the retrofitting challenge that lies ahead, we have to do things faster, harmonise things more and be more efficient.’

Human sustainability
Besides environmental sustainability, Edge is also moving the needle in the areas of technology and worker health. The firm has pioneered a cloud-based platform that incorporates multiple sensors tracking various aspects of the office environment, including occupancy, energy use, CO2 levels, light and acoustics. This trademark digital blueprint is applied across all Edge buildings.

Meanwhile, measures taken to optimise worker wellbeing at Edge’s HQ at Edge Olympic Amsterdam have earned the company a WELL V2 Platinum Certification – the first in the world to achieve that level (see box 1).

The growing demand for people-centred buildings has two main drivers, says Van Oostrom: the war for talent and lifestyle changes. ‘Employers are realising that they have to do more to attract and retain talent, particularly in sectors where there are shortages. Another point is that we are dealing with a new generation of workers – millennials – who attach greater importance to health than 20 years ago. It’s also easier to measure that health, be it with wearables or with sensors that track things like how much CO2 there is in a room.’

As digital technology continues to advance, what does the future hold? Van Oostrom believes the time will come when buildings become ‘self-governing’, in the same way as self-driving cars will eventually hit the roads. ‘A building should figure out itself what the optimum way is of heating and cooling itself. We’re getting better at making algorithms that tell a building how to react to weather, light, number of people coming in etc. But that’s sort of old school, cars are already in the next phase of doing that themselves.’

Sustainable, healthy and smart
From the outside, Edge’s HQ building in Amsterdam looks like any other modern office block with its sharp lines and steel-and-glass façade. It is only on entering the building that the look and feel is immediately different. Visitors are sucked into a hive of activity, in an environment resembling a cross between a coworking office, conference centre and hotel. Each floor of the five-storey building has a different vibe: the ground floor is devoted to studios, meeting rooms and shared workspaces, with a central, open stairway sweeping up to the upper floors.

Wood and other recycled materials feature abundantly and there are splashes of green everywhere – real plants selected specifically for their CO2-absorbing and O2-producing properties. Unseen by the visitor, some 15,000 sensors embedded in a ‘smart ceiling’ monitor everything from energy use, lighting and humidity to CO2 output and occupancy levels. Biophilic soundscaping ensures noise is kept to comfortable levels.

Delivered in 2018, Edge Olympic Amsterdam is the company’s prototype for a new generation of ultra sustainable, smart and healthy workplaces. Located near The Edge, the firm’s other awarding-winning showpiece, Edge Olympic comprises over 11,000 m2 of office and ancillary accommodation and 100 underground, electrified car parking spaces. The building, a redevelopment of a former post office, holds a BREAAM Excellent sustainability rating and a Platinum WELL Core & Shell Certification – the first in The Netherlands, whilst Edge’s HQ on the fourth floor has a Platinum WELL Certification through the WELL v2 – a world first.

Edge Olympic also boasts one of the highest circularity scores on the Madaster Platform, where buildings’ construction materials are logged in digital passports. The two-storey structure topping the building is completely Cradle-to-Cradle (C2C) certified and can be demounted for future use, while the marble façade of the former 1990s building has been recycled into a new floor.

To enhance the wellbeing of employees, the building features work and relaxation spaces of all shapes and forms. Physical activity is stimulated via an in-house gym and company bikes, and all the available food is organic and responsibly sourced. A smartphone app links occupants to a cloud-based digital infrastructure, giving them full control over their environment and allowing them to easily adjust workplace conditions, such as temperature and lighting.

The fourth floor, where Edge’s HQ is based, is the company’s ‘living laboratory’. Here, new innovations such 3D printing, acoustics, and robotics are tested. By analysing the data collected by the myriad of sensors, energy and other systems can be continuously optimised. All the workspaces feature sit-stand tables and employees are entitled to bi-weekly massage sessions and free, annual health checks. HR policies and employee benefits include stress-reduction programmes and limited availability times for employees, during which they are discouraged to answer the phone.

Outside, on the roof of the floor below, a drone landing platform is ready to take the first drone deliveries, while two beehives have been installed which provide Edge users with over 40 kg of honey per year.

The ‘Steve Jobs of sustainability’
Edge founder and CEO Coen van Oostrom has been active in real estate since his student days and started OVG Real Estate in 1997 at the age of 27. Over the years, he has built the company into one of Europe’s largest commercial property (re)developers.  

Galvanised by a meeting with former US vice-president Al Gore and his climate change documentary ‘An Inconvenient Truth’, Van Oostrom became convinced of the green potential of untapped technologies, making it the company’s mission to deliver new standards of tech-driven responsible urban office development.

This mission gained worldwide attention in 2016 when the firm’s Amsterdam-based development The Edge was rated the world’s most sustainable office building.

In 2018, Van Oostrom rebranded OVG Real Estate into Edge, aimed at developing a new generation of tech-enabled office buildings centred on environmental sustainability and the health and wellbeing of its users.  Developments such as Edge Olympic in Amsterdam and Unilever New Jersey have earned the highest possible certifications in BREEAM, DGNB and WELL.

Van Oostrom draws inspiration from global leaders by participating in networks such as the World Economic Forum and Urban Land Institute. He has also delivered speeches at global conferences such as NOAH, The Next Web, Financial Times Live and New York Smart Cities.

To quote former US president Clinton after he received a special honourable mention in New York: ‘He is the Steve Jobs of sustainability’ and ‘I urge you to talk to this man, he is the first person I ever knew who physically showed me a building that proved that this could be a big path to a shared future’.

 

Developer and operator
Edge was launched in 2018, in a rebranding of OVG Real Estate, with the aim of developing tech-enabled office buildings that tap into the growing demand for healthy, sustainable and smart workplaces. Its approach is based on four pillars: wellbeing, sustainability, design and technology. ‘We live in an age of innovation and transformation, but the real estate industry is largely stuck in the past,’ Van Oostrom said at the time.

In a break with the past under OVG, Edge not only develops buildings, but also remains involved in their long-term operation once they have been sold. Properties are built speculatively for multiple tenants and Edge retains a master lease, subletting the remaining space. Edge has developed over 1 million m2 to date, spread over 80 projects across a dozen cities in the Netherlands, Germany and the US. More than 10 projects are currently in the pipeline, including Edge’s first development in London.

Shortly after its launch, Edge formed a €1 bn joint venture with Nuveen Real Estate (formerly known as TH Real Estate) to acquire prime Edge office assets for its Cityhold Office Partnership (CHOP), which invests in core and value-add assets on behalf of TIAA and CBRE Global Investment Partners. The Nuveen-Edge JV currently covers two buildings:  Edge Olympic Amsterdam and Edge Grand Central Berlin.

Keeping access to valuable data
In the process of developing a sustainable and smart office blueprint, Edge also conceived an innovative lease model, enabling it to maintain access to valuable data from its buildings. In the case of Edge Olympic, for example, the company sold the building to Nuveen Real Estate but retained a master lease for the entire property for the next 10 years.

The lease structure has two major benefits: because Edge is responsible for subletting the rest of the building and charges slightly higher rents (‘tenants are willing to pay a little more for our buildings’), the company shares in the financial upside.

The second benefit is access to data. Says Van Oostrom: ‘It’s not that we want to sell the data or anything, it’s more that we want to have a deep understanding of what’s going on. Are people happy in the building, is sick leave going down, is there a difference between energy consumption estimates and real life operation of the building – all this kind of information is very valuable.’

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