For Dutch office-builder OVG the move to energy efficiency is paying off. The environmental theme is key to the World Economic Forum this year
Conrad van Oostrom, a Dutch entrepreneur who built his startup into the Netherlands' most successful real estate development company, had his light bulb moment when he was invited to a breakfast on climate change with former U.S. Vice-President and environmental guru Al Gore in Amsterdam in the summer of 2006.
The future is green, decided van Oostrom, chief executive and founder of OVG, a 10-year-old Rotterdam company specializing in office buildings, with 2007 revenues of $651 million. The host of the breakfast, Peter Bakker, chief executive officer of global express delivery giant TNT (TNT.AS), came to the same conclusion.
Bakker decided to replace six of the company's office buildings in the Netherlands—including TNT's headquarters—with new energy-conserving buildings representing 70,000 square meters (more than 750,000 square feet) of new office space. After going out to competitive bid, in December TNT announced it had awarded the contract to OVG. One reason: OVG is harnessing technology to convert its green designs into real buildings more quickly.
Agreeing on Green Issues
OVG is expanding into Britain, Germany, and France. And van Oostrom, now 38, will be moderating a session at the World Economic Forum on Jan. 24 on how to fix the world's infrastructure. He argues that retrofitting the world's buildings to be carbon neutral is crucial, especially in an era of economic uncertainty. Indeed, green may be the savior of commercial real estate—a way of making it more recession-proof. "Big buildings in the center of major cities like London can be retrofitted," he says. "But older buildings outside the center, I don't see any future for that kind of building."
No doubt green is a central theme in Davos this year, where more than 2,500 participants from 88 countries are meeting to discuss key global issues. Some 20 sessions —many of them private—are dedicated to environmental issues. On Jan. 24, more than 40 leaders of global tech companies, including Microsoft (MSFT) co-founder Bill Gates, Cisco Systems (CSCO) CEO John Chambers, Intel (INTC) Chairman Craig Barrett, and Michael Dell, founder and recently-reinstated CEO of Dell (DELL), are meeting to try to agree on a more coordinated approach by the technology sector to tackle green issues.
"Evolution is not a response," cautions Simon Mulcahy, head of information technology industries at the World Economic Forum. "Big behavioral changes need to happen now and technology is a fundamental game-changer." The Forum sees its role as helping tech leaders become part of the global discussion on environmental issues at a high level, such as arranging meetings among the G-8 and G-20 countries, Mulcahy says.
Van Oostrom also sees technology playing a key role in the green movement. His company is using computer programs to automate the process of making each part of a building optimally green, generating 30% in savings on construction costs and helping OVG build new office buildings faster then competitors, he says.
Tech is one of three key differentiators that has helped OVG leapfrog ahead of the big, traditional real estate development companies in the Netherlands, van Oostrom contends. The other two are based on innovations in the real estate development business model. Rather than securing land and then going to look for customers, OVG approaches big companies and proposes to help them rethink their entire real estate portfolio. And, remarkably, it promises to pay big financial penalties if the energy savings it promises aren't realized.
Improving the Environment City by City
By some estimates, cities emit three-quarters of the world's greenhouse gases, and buildings account for between 50% and 80% of that. Architects and their clients the world over are scurrying to win eco-friendly certification (BusinessWeek.com, 9/11/06)
For OVG, the move to green is paying off. The company says it is now in discussions with the economic development boards of the cities of London, Berlin, and Paris—all of which are eager to improve their environments—about securing land for new, green office buildings. And, says van Oostrom, he is confident OVG will seal some major contracts with big companies in those markets in the months to come.