Whilst we all get use to working from home a new report was published by JLL last month on the UK office market. It concluded that sustainable offices have been found to deliver to investors both higher rents and higher occupancy rates. This, together with an accelerating demand from occupiers for sustainable office space, provides ample opportunity for UK investors.
The research, published in March by JLL, found that new central London offices with higher BREEAM or EPC ratings received higher rents than offices with no rating. The value of such sustainable buildings to investors is also demonstrated by JLL's finding that offices with higher BREEAM ratings achieved higher occupancy rates.
Pre-Covid-19, major businesses were gearing up to fulfill their own net zero commitments. Sky's recent announcement of its aim to achieve net zero by 2030 (twenty years ahead of the UK's legal commitment) is one such example. JLL has assessed, on the basis of other such companies with both sustainability commitments and lease events prior to 2030, that this demand will see the need for at least 8 million square feet of highly sustainable buildings in central London by 2030.
Developers are already aware of the opportunity and value at play in this market – the £40 million Tower Bridge Court being just one recent example of developments which have been designed specifically to achieve high BREEAM ratings.
Adjusting the impact of real estate could prove the key to achieving net zero - with estimates pinning around 30% of the UK's carbon emissions on the operation of buildings. As the emissions and energy consumption of all businesses come under increasing scrutiny, JLL's findings now provide developers and investors with an essential business case, as well as environmental, to contribute to the UK's offering of sustainable buildings.
Covid-19 will certainly slow the pace of new sustainable developments but the industry is following the lead of occupiers in their quest for sustainable new offices.
The impact of sustainability on value also demonstrated the growing occupier demand for sustainable offices in central London that will need to be met in the next decade