Sustainability in commercial property is often discussed in terms of reporting, ratings and targets. For investors, the more important question is often how sustainability affects the fundamentals of their investment - income, operating and financing costs, future expenditure, resilience and ultimately, long-term value.

At Oyster, that connection is central to how we approach sustainability. It shapes how we manage both assets and investor capital, from day-to-day operating decisions through to financing and capital planning, with a focus on keeping assets performing and competitive over the life of an investment. 

Our latest Sustainability Report sets out the progress made over FY26. Here, we look beyond the results themselves to how they contribute to the value of your investment. 

Supporting asset performance through greater efficiency 

Lower operating costs and more disciplined capital expenditure can support the income and returns delivered to investors. 

Achieving both starts with understanding how a building is actually performing – where resources are being used efficiently, where they are not and where improvements can be made. 

Data and active management help turn that into action. Across our portfolio, smart metering allows us to identify inefficiencies and underperforming systems, target improvements and determine where investment will make a meaningful difference. 

This data also supports independent ratings such as NABERSNZ and Green Star. These provide external verification of performance and a recognised benchmark for investors, tenants, lenders and prospective buyers making investment, leasing, financing and purchasing decisions. 

Driving tenant demand and leasing income 

Strong tenant demand is critical to investment performance – it supports occupancy, rental income, investor distributions and ultimately valuation. Sustainability is now firmly part of the equation. 

Tenants increasingly have their own sustainability targets, reporting obligations and procurement requirements, making the environmental performance of the buildings they occupy an important consideration. 

For some occupiers, those requirements are now explicit. Government agencies entering or renewing office leases are expected to achieve a minimum 4-Star NABERSNZ rating, with new government buildings required to reach 5 Stars. 

Beyond these formal requirements, the sustainability performance of a building can also contribute to healthier, more comfortable and efficient workplaces, with better amenity - increasingly important factors for businesses competing for and retaining people. 

Market data also points to the leasing benefits. JLL’s analysis of certified office buildings across Auckland, Wellington and Christchurch found rental premiums increased with certification level. Buildings with the highest Green Star and NABERSNZ ratings achieved a 6.7% rental premium and recorded the highest occupancy and lowest vacancy rates. 

Reducing the cost of debt 

Debt is one of the most significant costs in commercial property, making the cost of borrowing an important factor in investor returns. Sustainability can create a direct opportunity to reduce that cost. 

Where a building meets an agreed sustainability performance standard, banks can provide more favourable lending terms. The financial benefit is clear and measurable: a lower lending margin reduces interest expense and increases the income available for distribution to investors. 

Managing future risk and capital requirements 

Commercial property is a long-term investment -  investors need confidence that future risks, capital requirements and an asset’s ongoing relevance are being considered as part of long-term asset strategy. 

Sustainability plays an important role in that. Climate exposure, changing regulation and environmental standards, and evolving occupier expectations can all affect how a building performs, remains competitive and what investment it may require in the future. 

Identifying these risks early allows them to be factored into asset and investment planning rather than addressed reactively. It provides more time and flexibility to respond, whether through operational changes, planned upgrades or capital investment, and reduces the risk of unexpected costs or disruption later. 

Protecting value at divestment 

Ultimately, sustainability credentials can contribute to what an asset is worth when it is divested - and therefore the capital returned to investors when their investment is realised.  

Operating efficiency, tenant demand and future capital requirements can all shape how an asset is viewed and valued by prospective buyers. 

While many factors influence the sale price of a commercial property, including prevailing market conditions, market evidence does point to a sustainability premium. JLL’s analysis of New Zealand office buildings found sales premiums ranging from 3.7% for 4 Star Green Star buildings to 7.5% at 6 Star, rising to 9.8% for buildings with the highest Green Star and NABERSNZ ratings. 

The valuation profession also recognises sustainability factors. International Valuation Standards require relevant ESG factors to be considered where they are material, reflecting the potential for sustainability-related risks, costs and opportunities to influence an asset’s value. 

Sustainability is part of the investment equation, not an add-on 

Investors approach sustainability with different priorities, shaped by their investment objectives, mandates, risk considerations and broader values.  

Whatever the motivation, sustainability is no longer just an investor preference. It forms a key part of an investment’s financial equation, influencing how an asset performs, competes, is financed and ultimately valued. 

Understanding that performance is therefore fundamental to assessing the investment itself - its quality, risks and long-term prospects. 

Oyster's FY26 Sustainability Report provides a detailed overview of our sustainability strategy, progress and key initiatives. Read it here.