We’re excited to kick off a brand-new article series on our blog! In our Property Innovation Mastermind Stories with Spaceflow, we’ll be documenting the innovative ideas, novel approaches, and strategy wins of some of the industry’s biggest players, by conducting exclusive interviews with leaders at these firms. Our hope is to give our readers an inside look into the ideas, practices, tools, and lessons that commercial real estate luminaries such as Cluj Business Campus and HIH Real Estate are using to drive their own business success.
For our first edition, we’re focusing on Iulius, a leading Romanian mixed-use developer with a portfolio that currently comprises more than 300,000 square metres of retail premises, which attracts more than 68 million shoppers per year, and over 152,000 sqm of office premises in 13 green buildings. We spoke to Marius Persenea, Iulius’s Chief Operating Officer, about how the firm is approaching ESG innovation in their context as mixed-use field leaders.
“Green considerations have been important for us at least since 2010,” Marius said. “In 2010 there was no pressure at all in terms of sustainability, it was more of a nice thing to have for your project and was mostly used for advertising or marketing.”
Over the coming years, Iulius became more focused on embracing sustainability fully. Every property in the company’s portfolio was certified with LEED or EDGE, two of the major certification programs. Then, the ESG bomb dropped in 2021, Marius said, following the global response to COVID-19 and new EU legislation such as the European Green Deal.
Marius explained that while at first glance ESG compliance might look like an economic burden, it “brings huge benefits long term. Nowadays, it is increasingly easy to see how the benefits of ESG are worth the costs. Everyone is coming to understand the good part of this change in the general business perspective. We got out of the educational stage of sustainability into the real life implementation phase. It’s a time where we can realise the benefits of our last decade of work.”
That decade of work manifested in a variety of different ways. So what exactly is the company doing to make their properties sustainable today and future-proofed for tomorrow?
“There is a huge list of sustainability factors we consider from waste management and other things everyone has heard in the market,” Marius said. “We are also looking at a program to implement green energy, which is becoming more important as global energy prices continue to rise.”
Iulius’s preference when it comes to green energy is to equip their buildings with solar panels. Solar power generation is an option worth considering for some real estate firms, in particular against a backdrop of geopolitical turmoil and uncertain (yet certainly rising) energy prices. According to 2018 research from the American Solar Energy Industry Association, costs for installed solar systems have been falling by around 10 percent annually since 2001.
Another priority for Iulius is responding to the proliferation of electric vehicles. Marius explained that “We have prepared infrastructure for electric cars but of course we need more. While it still remains a question what will be the pace of vehicle electrification, turning combustion engine sales into electric motor sales will continue.” In fact, the turning point occurred in December 2021, when 176,000 electric cars were sold compared to 160,000 diesel vehicles across western Europe. The need for additional charging infrastructure is pronounced. According to data from consulting firm Roland Berger, funding for electric vehicle charging startups grew by more than 150 percent in 2020 alone.
Another noteworthy tactic Iulius has used is implementing green leases at properties within its portfolio. Green leases serve to align the benefits and costs of sustainability projects between landlord and tenant. “We tried at first to advise our stakeholders that it is good to take care of our environment,” Marius said. “But in the last couple years things changed and we no longer advise these approaches. Now they need to do it. Tenants need to agree in their lease agreements. They are usually aware on their own. They are often obliged to comply and we are as well.”
Finally, Marius advised carefully thinking through the tech and manpower needs that sustainable innovations require, in order to maximise efficiency. “Thinking about waste management,” Marius said, “First you have to sort the materials into different bins which is not that tricky. But then you have to weigh it. Is a human doing that or can you use sensors? And how do you transmit this information to a data hub online? This is the dream scenario, to be able to have a BMS (Building Management System) and be able to manage and receive all this information in one place without involving tens or hundreds of people to manage, over and over again, the same materials.”
For their part, Iulius has been very proactive with the IT requirements of their property business. With their own BMS platform introduced a decade ago and a longstanding IT team in-house. That proficiency allowed them to develop a loyalty card system for the tens of thousands of client employees working in properties across Iulius’s portfolio.
Marius said he was proud of his firm’s decision to specialise in mixed-use property and integrate hectares of urban gardens into its developments, which has been met with widespread success. Alongside ESG innovation, he is also tracking the development of this property type. “Office will still be office, retail will still be retail, but the way they intertwine between themselves will be different,” he added. In the future, he expects to see the design of these centres increasingly intermesh office and retail with other uses like recreation spaces and museums, demonstrating even more emphasis on leisure and green space and keeping people in the centres even after the office workers have headed out for the night. Commercial real estate may have been through a rough couple years recently, but more green space delivered more sustainably is a wonderful thing to look forward to indeed.