As temperatures soar across England and Wales, many office buildings are going to become unusable. This, I believe, should be seen as a powerful warning for real estate investors.
The climate emergency has huge, long-term implications for the real estate market. The UK’s buildings and offices aren’t designed for temperatures in the high 30°Cs, let alone the 40°Cs.
A stiflingly hot office is not a pleasant or productive place to be. When there is such competition to get employees back into the workplace, uncomfortable offices will become devalued.
All of this will bring into question their overall value. Workplaces that can cost-effectively cope with a heatwave will be valued more highly than those that are effectively forced to shut down.
Investors could be looking to invest in real estate assets that are easy and cheap to keep cool – for people, for perishable goods and for IT.
I feel rather sorry for building managers, who are likely to be under a lot of pressure to keep offices cool in the face of expensive energy bills. Not all of them will have the tools to do this. Does the office have the capacity to keep cool without costing the earth? Can the building manager see how the building is working and how much energy this is using? And still hit their emissions targets?
We have to wake up and see this as a final warning for the real estate industry, and the wider business community. Climate change is here and is playing havoc. If heatwaves become a permanent fixture, cooling our buildings could cost more and more and create more emissions. Those emissions contribute to climate change, so it could lock us into a vicious cycle that undermines the value of assets.
We are rapidly moving into a very different world, where climate change is a part of our everyday lives. New software uses scientific data to produce forward-looking models of these climate risks. It’s time for the real estate market to wake up and realise it faces substantial financial risks from climate change.
Chris Bennett, managing director, EVORA Global, a sustainability services company