Editor: With offices now requiring a minimum ‘E’ energy efficiency rating, it is estimated that around 8% of all commercial stock is now unlettable, equating to around 10,000 commercial spaces in London. 

However, the conversation around the required retrofit of these buildings has so far ignored the needs of flexible office assets.

This fundamental change in the office market will be driven by the top of the ‘office food chain’: the lenders. But in today’s economic climate, investors are tightening purse strings and focusing on assets that provide consistent, guaranteed returns on investment. These lenders could view flexible assets as carriers of additional risk, due to shorter leases and tenant turnover; key outcomes of the flexibility that is offered to occupiers.

For flex models to succeed, lenders need to focus on green investment. Traditional debt financing will need to be replaced by green-loan agreements contingent on the provision of ESG targets, including carbon neutrality, improved energy efficiency, wastewater management and social value factors.

If lenders tie debt finance to these targets, they are anticipating the eventual needs and demands of potential occupiers and their staff. Designing flex spaces that align with these demands will promote increased engagement from occupiers and perhaps longer commitments.

Landlords’ ability to pass these ESG commitments on to occupiers is also vital and ultimately it is the end user who will – and should – benefit. Finally, as lease lengths increase, greener flex office spaces will experience decreased risk and should provide comparable security to traditional office assets.

The role of businesses in society cannot be overlooked, particularly in a world where the relationship between employer and employee is becoming more ‘remote’. There is no doubt the built environment has a major role to play in how we address global challenges including global warming and social inequality, and flex assets can play their part.

Martin Devine, head of flexible workspace, Avison Young