CA/99/18 Orig.: en , 23.11.2018

SUBJECT: Future EPO building projects – Orientation paper

SUBMITTED BY: President of the European Office

ADDRESSEES: Administrative Council (for opinion)

SUMMARY

This document describes the status of the EPO premises and the related building activities to be further elaborated on in the coming months for a more detailed proposal to the Administrative Council in June 2019. By then the different possible scenarios and their pros and cons will have been evaluated for further decision-making, and initial time schedules and cost estimates for the preferred scenarios will be presented.

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TABLE OF CONTENTS

Subject Page

I. STRATEGIC/OPERATIONAL 1 II. RECOMMENDATION 1 III. MAJORITY NEEDED 1 IV. CONTEXT 1 V. ARGUMENTS 3 A. MUNICH 3 B. 6 C. 8 D. 8 VI. FINANCIAL IMPLICATIONS 10 VII. DOCUMENTS CITED 10 VIII. RECOMMENDATION FOR PUBLICATION 10

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I. STRATEGIC/OPERATIONAL

1. Strategic

II. RECOMMENDATION

2. The Council is requested to give an opinion on this orientation paper.

III. MAJORITY NEEDED

3. N.A.

IV. CONTEXT

4. The President presented the overall strategy for building management and a status review of the EPO premises in his last activities report (CA/88/18). It is stated there that the EPO's building strategy is to deliver a modern working environment along with efficient and effective space management and to preserve the value of the EPO's assets. The Office's main goals for its buildings and the layout of workplaces are:

 Transparent, flexible and modern workplaces to foster collaboration

 Similar working conditions for all EPO staff at all sites

 Working conditions that improve staff well-being

 Maintenance to preserve asset value

 Increased sustainability and, in particular, reduction in carbon dioxide footprint

 Compliance with changing legal requirements to continuously ensure safety and security.

5. As the newest building, New Main best reflects the policy of providing a state-of- the-art working environment. As for the EPO's other buildings, it should be noted that they deviate to different degrees from current requirements for a modern working environment. Moving through these buildings with their closed doors, one has the impression that they are almost empty as there is no visual connection to the working area. Communication is not really fostered by this architecture either.

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6. Moreover, the current level of wear of the older buildings requires major investments, in some cases owing to legal requirements, such as fire safety and protection against asbestos. The EPO annually assesses the different elements of its buildings using epiqr, a process for a standardised assessment of buildings developed in the 1990s by several research institutes, including the Fraunhofer Institute for Building Physics, with funding from the European Union. Each building is composed of approx. 500 elements which are categorised according to their importance from low (e.g. landscaping) to high (e.g. security-related installations) and then in one of four categories ranging from A (as good as new) to D (in critical condition).

7. The assessment of all elements results in a figure representing the level of wear, expressed as a percentage of an ideal state. To preserve the value of the EPO's assets this percentage should not permanently fall under a level of 70%. Should the percentage reach or even fall under this level, maintenance and renovation activities will have to be performed.

8. The following graphic gives an overview of the buildings and the level of wear:

Age Gross Level Fire Energy Harmful Space Transparent Sum floor of safety substances working area wear environment Years m2 % kWh/a m2 Office Yes/no m2 / WP MUC Isar 38 91 346 73 184 23 No/possible P1-6 28 165 235 77 79 21 No/possible P7 13 44 686 85 87 22 No/possible P8 11 66 259 87 66 19 No/possible Haar rented partially TH New 0 87 276 new – 15 yes Main Hinge 17 44 598 79 159 – n/a Shell 35 79 109 76 187 19 No/possible Others Berlin rented No/not possible Vienna 46 11 420 77 111 22 No/ possible Brussel rented

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9. All investments in the buildings at the different sites will increase the value of the property and thus contribute to an increase in the EPO's capital assets. The table below presents the valuation of the different buildings owned by the EPO by its insurance companies according to the state-of-the-art standards:

Location Building value Mio € Munich, total 779 462 Isar 213 877 BT 1-6 361 579 BT 7 91 803 BT 8 112.203 The Hague, total 455 105 Hinge – EPO I 66 662 Shell – EPO III 137 303 Garage 18 140 New Main 233 000 Vienna (part-ownership) 18 791 EPO total: 1 253 358

10. Finally, the estimation of the future needs will have to take into consideration the increasing share of staff members in teleworking (almost 2000 employees in October 2018).

V. ARGUMENTS

A. MUNICH

11. The EPO has property at two locations in Munich. The first building, the Isar building, was inaugurated in 1980; following rapid growth of the Office and the resulting need for more space a second location was then established with the purchase of the first buildings (BT 1 to 6) of the PschorrHöfe in the late 1980s. This second location was further extended to include BT 7 to 8. In the older buildings (Isar and PschorrHöfe BT 1 to 6), age-related investments are necessary to ensure the continued proper and safe functioning of the buildings. In addition to this and following current practice in the office building sector, investments in a modern and transparent working environment in the office area and in reducing the energy consumption are being considered (all buildings).

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12. The Isar building, designed by renowned architects Gerkan, Marg und Partner (gmp), Hamburg, represents the highest technical standard for office buildings in the late 1970s. The approximately 900 workplaces are situated in two interconnected ten-storey high-rise buildings, complete with a generous conference area on the first floor and social areas in the basement.

13. During the period 2008-2011, the Office needed to conduct some works, mainly for the removal of asbestos, the reconstruction of internal building elements (ceilings, floors, lighting) made necessary by the asbestos removal work, and the replacement of technical installations, particularly in the ventilation and power supply systems and, to a lesser extent, the effluent, conveyance and central control systems. In 2016-2017, some measures to enhance the level of security of the buildings were implemented. In 2017-2018, the five elevators dating from the end of the 70s needed to be replaced.

14. The building itself did not go into any deep renovation exercise. Its current level of wear is 73%, reflecting the fact that, in addition to insulation of the flat roof constructions on the top and first floors (incl. gardens), several technical installations have still to be replaced. The energy consumption is far above average, mainly driven by the air conditioning of the entire building, an outdated facade with limited insulation and no sun protection on the outer side, as is standard nowadays. The working environment is characterised mainly by single offices (about 23 m2) and non-transparent separation walls between the offices and has not been changed since the inauguration of the building.

15. PschorrHöfe BT 1 to 6 were designed by architect Professor Ackermann, Munich, and handed over phase by phase, starting in 1990 and ending with BT 6 in 1999. Based on the latest technical developments at the time, cooling ceilings instead of air conditioning were for the first time installed as standard in most offices to optimise the energy consumption. There have been no major investments since the inauguration of the buildings.

16. The level of wear is 77% and, after almost 30 years of use, parts of the construction and the installations, e.g. fresh water infrastructure, structural beams in the garage and the elevators, need to be replaced or renovated. An up-to-date fire safety concept is being worked on and will trigger investments in construction and technical installations. The work environment is characterised by single (21 m2) and double offices with non-transparent separation walls.

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17. The design of the first BT (1-6) was kept for BT 7 to ensure design continuity throughout all building parts and underline that BT 7 belonged with the existing buildings. BT 7 was built from 2003 to 2005 and is characterised by a huge entrance hall, offering the possibility of exhibitions and staff meetings. The level of wear is 85%, reflecting the building's short life so far. The energy consumption is comparable with other buildings of this standard and age but could be optimised by minor investments such as LED lighting. The working environment with an average space per workplace of 22 m2 is comparable to that in the other phases.

18. BT 8, the newest building in the PschorrHöfe complex, was constructed from 2005 to 2007. It is characterised by an individual design differing from that of BT 1 to 7 and houses, among other things, a large sports hall for the activities of the Amicale clubs and a third canteen at this location. The workspaces are single offices (19 m2). The level of wear is 87% as the building has been in use for only 11 years. The energy consumption is comparable with other buildings of this standard and age but could be optimised by minor investments such as LED lighting. The working environment is comparable to that in the other phases.

19. All in all, it can be concluded that the older buildings in Munich (Isar and PschorrHöfe BT 1 to 6) require investments to improve the level of wear and preserve the value of the EPO's assets, while also ensuring the proper and safe functioning of the buildings in the long term. Following current practice in the office building sector, the Office will consider investing in a modern and transparent working environment in the office and conference areas of all its buildings. Investments will also focus on reducing energy consumption to guarantee environmental certification, e.g. EMAS.

20. The Office is currently defining the precise project scope for each building, based on the above evaluation and with the intention of combining the restructuring work needed to create a modern working environment through the necessary age-related measures.

21. The Administrative Council will be informed about the project scope for each building in June 2019, together with a time schedule and a cost estimate.

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B. THE HAGUE

22. New Main is fully operational, all moves having been completed in October 2018. The works will continue until 2020, with the demolition of the old Main building and the landscaping of the site with a large pond completing the architects' vision.

23. EPO III (Shell building), located on the eastern part of the EPO site, was built from 1978 to 1983, based on a design by LIAG Architects, The Hague. The building and its grounds were purchased in two steps in 1994 and 1998. The building houses approximately 1 500 workplaces, a conference centre with an auditorium accommodating about 800 participants and the EPO's primary data centre, which will be outsourced in the years to come. The concrete-panel facade has aluminium windows. The building is fully air-conditioned.

24. The level of wear is 76%, deteriorating from 80% just in the past three years. There has been no major refurbishment of the building in its entirety. There have been some investments, for example in the air-conditioning installations and the dry-construction structures in the office areas. But the poor thermal insulation of the outer skin limits the return on investment in terms of energy performance and indoor comfort.

25. Many parts of the building are at the end of their lifespan after 35 years of use and the facade is outdated. The building and its facade also contain asbestos, which was a standard material at the time of construction. Although contained as per regulation and safe, local legislation on the presence and removal of asbestos is becoming more and more stringent over time.

26. Following the updating of Dutch fire regulations, the building has to catch up with fire safety standards in all respects, although it does comply with emergency evacuation regulations. Irrespective of the future of the building, urgent investments in the fire compartments and fire detection measures are planned to keep the building in line with all legal requirements. Thus, major investments in fire safety and age-related aspects are in any case necessary to ensure the continued proper and safe functioning of the building.

27. The energy consumption of the building is extremely high, mainly driven by the air conditioning and the outdated facade with limited insulation. New energy performance certificate regulations in the require that office buildings achieve an energy label of C or better from 2023 onwards and then an A label by 2030. EPO III has an energy label of D, which is not sufficient and will have to be improved on in the short term. This will need to be considered in any scenario.

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28. The working environment does not match the New Main standard and the Office's policy of providing all staff with similar working conditions, as it is rather traditional, consisting mainly of single offices (19m2) with closed separation walls. It would be possible to implement a more transparent and modern working environment and to reduce the m2 per workplace.

29. However, due to the layout of the building, it cannot be altered completely to facilitate bringing the internal space into line with that of the New Main building. The general layout makes it confusing and time consuming to find one's way and move around both within and outside the building. This also leads to less efficiency in terms of facility management activities (e.g. cleaning) and general servicing (lifts, toilet facilities, etc.).

30. The Office has identified four representative basic scenarios that could address the accommodation issue for The Hague. These four basic scenarios are currently being worked on in more detail to allow for comparison in terms of investment, operation costs, collateral costs, etc. and their respective advantages and disadvantages.

31. Basically, the four scenarios are:

 complete renovation of the existing Shell building

 replacement of the existing Shell building by a new building erected in its place

 replacement of the existing Shell building by a new building erected next to it, after which the old building is demolished

 rent/lease of other office building(s) and abandonment/demolition of the existing Shell building.

32. The outcome of the scenario assessment, including time and cost implications, will be presented to the Administrative Council in June 2019.

33. Investments in the existing Hinge building as the site's social area will be limited to age-related work and partial renovation or adaptation of the canteen facilities to cater for the increased numbers eating there following the moves of all staff formerly housed in the rented buildings Le Croisé and Rijsvoort.

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C. BERLIN

34. This historic building dating back to 1905 was first occupied by the Imperial German . Today, the EPO is the main tenant of the building, together with the German Patent and Trade Mark Office. The German authorities have initiated a renovation of the building. The Administrative Council approved the EPO's involvement with a financial contribution of EUR 6m in spring 2014.

35. Due to an extension of the project scope, the schedule was adapted; the completion dates are now 2023 for the parts occupied by the EPO and 2026 for the last phase (east section of the building).

36. A status report on the project will be presented to the Administrative Council as part of the Building Roadmap in June 2019.

D. VIENNA

37. The EPO's Vienna site is located in the heart of city in the immediate vicinity of the embassy district, historic buildings and the botanic gardens. The buildings of the premises were constructed in 1972; the part owned by the EPO was purchased in 1999.

38. Today the property comprises a part known as the "Mitteltrakt", the main building and the "Gartenhaus", a smaller, detached building on the rear side, which is let to Vienna University. The "Mitteltrakt" currently houses 120 workplaces. The level of wear is 77%, reflecting the fact that the building has been in use for 46 years with no major investment in that time. Work has been limited to the rebuilding of the foyer, the entrance and the modernisation of the canteen.

39. Indeed, in terms of structural and technical standards, the original foyer on the west side of the building was far from meeting the requirements for a representative and professional reception facility for visitors to the Vienna sub- office. In 2014 alteration work began for the new foyer in Vienna. The entrance area was moved to the south facade, and a spacious forecourt was set up, connecting to the access route via the Botanical Gardens.

40. The Office was granted a contractually guaranteed right of access for special occasions and for emergency vehicles, until October 2033. Building work was completed on schedule in August 2015 with the completion of the grounds, and in early 2017 a new steel gate was installed between the properties as part of the physical security campaign. The whole project was completed with building costs amounting to EUR 1.725m.

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41. However, major deficiencies in the precast concrete elements of the facade are being monitored by external experts, who recommend repairing the facade or replacing it. In addition the facade contains hazardous materials, such as asbestos. Many other elements of the building, such as windows, blinds, separation walls, suspended ceilings, parapets and floor cover, to name just the most important ones, are at the end of or beyond their lifespan. Major maintenance measures to guarantee the proper and safe functioning of the building are thus overdue.

42. The energy consumption of the building is very high and above that of comparable buildings of this standard. The working conditions are not in line with those at the other locations (e.g. no cooling system in place).The working environment is rather traditional, consisting largely of individual offices (25 m2 per workplace) with non-transparent separation walls.

43. The Office has identified four representative basic scenarios that could address the accommodation issue in Vienna. These four basic scenarios are currently being worked on in more detail to allow for comparison in terms of investment, operation costs, collateral cost, etc. and their respective advantages and disadvantages.

44. Basically, the four scenarios are.

 complete renovation of the main building, including an optimised structuring of the building to create free space which could accommodate additional EPO functions or be let out to third parties

 replacement of the existing main building by a new one on the existing property

 a new building in the vicinity of the existing property/in another central district of Vienna and sale of the existing property

 rent/lease of other office building(s) and sale of the existing property.

45. The outcome of the scenario assessment, including time and cost implications, will be presented to the Administrative Council in June 2019.

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VI. FINANCIAL IMPLICATIONS

46. For the scenario studies, external experts have been commissioned at a cost of approx. EUR 340 000.

47. Estimates of expenditure on buildings (expenditure group 410) and how they could be implemented within the planned budget envelope will be presented to the Budget and Finance Committee in May 2019 and the Administrative Council in June 2019.

VII. DOCUMENTS CITED

48. CA/88/18

VIII. RECOMMENDATION FOR PUBLICATION

49. Yes.

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