Development Model for Commercial Office Real Estate in Thailand’s Green Market
BY PEERATI UPATISING
Thesis Advisor: Andrea Chegut, Postdoctoral Research Associate, Center for Real Estate
In recent years, global interest in the effects of climate change have increased dramatically. Private industries are becoming aware of the needs to address environmental impacts of development. Thailand’s commercial real estate industry has been under little pressure despite being responsible for over 40% of all the energy consumption in Thailand. The real estate industry is in a distinct position to address the issue of energy consumption and the barriers to green building adoption.
As part of the corporations’ marketing strategy, green certification is a branding approach that limits the environmental impact of real estate development. By conforming to the LEED criteria, the green certified building introduces a new office product and building management paradigm to mainstream commercial real estate development. However, the barriers to green buildings continue to exist, including the ability to deliver green projects within appropriate cost expectations. Modifications must be made to traditional project management practices for project managers to deliver green construction projects. The objective of this paper is to recommend specific modifications to traditional building practices in Thailand with the goal of optimizing the delivery of cost-efficient green office buildings. Through the analysis of five LEED certified offices, this thesis explores the innovation sources, delivery methods, contractual forms, and risk allocation in implementing of Grade A green office buildings.
The thesis finds that the private sector plays a crucial role in advancing green development practices. Project success motivates the government to encourage innovation through regulation and training. The projects that illustrate the most innovative method comprise of small and multi-disciplinary development team structures with a heavyweight project manager. An examination of the implementation process of green certified office buildings reveals that much of the anticipated risks related to innovation’s stage of green adoption is related to educational gaps in the industry. Specific provisions which include incentive and penalty systems designed for constant adjustments help to mitigate risks and regulate relationship between developers and consultants. In implementing green construction practices, design phase could also incorporate environmental analysis by an in-house team with energy and sustainability backgrounds who inspire collaboration of generalists and a specialized workforce.