London will need much more “green” office space by 2030 to meet sustainability pledges

Louisa Clarence-Smith writes on The Times website about recent analysis that shows the increasing need for green offices over the next decade.  Is the same true in your country?

 

Demand for green offices will soar to meet carbon targets

London will need much more “green” office space by 2030 to meet sustainability pledges made by businesses that are coming to the end of their leases.

JLL, the property advisory firm, analysed science-based carbon emission reduction targets made by companies with office space in London. It then assessed their lease expiry dates to determine how much green office space was required. It believes that at least 8 million sq ft — equivalent to more than 2,800 tennis courts — is needed.

In the past year there has been a shift in momentum from companies on sustainability as they come under pressure from staff, shareholders and customers. Microsoft and Astrazeneca have declared ambitions to be carbon negative by 2030. Microsoft has also pledged that by 2050 it will have removed all the carbon from the environment that it has emitted since it was founded in 1975.

The number of companies with a central London presence signing up to science-based targets has doubled since December 2018 and now totals 126. These companies occupy about 12 million sq ft of space and leases will expire, or have a break clause, on nearly 4 million sq ft in the next five years. Committing to science-based targets means the targets are in line with the Paris agreement to limit global warning to 1.5C degrees.

Eighteen companies that have signed up to a more ambitious net-zero carbon target have a presence in London, up from 10 six months ago. They occupy about 1.5 million sq ft.

Only 13 office buildings in central London are classified as “outstanding” under Breeam, a sustainability rating scheme used by the industry. These include Bloomberg’s £1 billion headquarters in the City that was built in 2017 with power, lighting, water and ventilation systems that account for significant energy savings.

JLL’s research found that buildings with better sustainability ratings were commanding higher rents. Over three years buildings with a rating of very good or higher have achieved rents that were on average 8 per cent higher than buildings without a rating.

The government introduced energy performance certificates in 2007, which set minimum energy efficiency standards required to legally let a building. From 2023 all existing leased buildings must have a rating of between A and D to be legally let. JLL found that new buildings with A or B energy ratings achieved a rental premium of 10 per cent over comparable offices.

Sophie Walker, of JLL, said: “Clearly the urgency to build and redevelop these offices in central London to support corporate environmental and people goals is only speeding up. The first developers to undertake the task will reap the rewards of high levels of demand and the intrinsic higher performance of their product. Beyond 2030 tougher building regulations will drive a reduction in energy consumption and carbon emissions and mandated sustainability performance will become more defined. This may mean that . . . buildings that don’t comply will underperform, leading to the displacement of tenants and lost rents due to costly retrofits.”

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