On 22 April, #WorldEarthDay once again did the rounds on social media, with many businesses keen to showcase their efforts to combat the climate crisis.
The ever-increasing number of companies pledging to tackle climate change, along with an increased focus on sustainability and ESG decision-making and the shift to hybrid working, is driving the trend for green buildings – and presenting a huge opportunity to those in the corporate real estate sector.
With demand at an all-time high, a building’s sustainability credentials will impact investor interest, valuation and rental income, and properties must evolve to meet the changing expectations of occupiers, owners and investors and support the transition to a low carbon economy.
For owners and investors, this shift could have a silver lining. Retention of existing buildings is a major consideration in planning, as whole life carbon is assessed.
There are also a number of financial incentives for retrofitting. It is usually more cost effective to retrofit a building than it is to demolish and reconstruct it.
Other quick wins include real-time visibility of energy consumption, green roofs, water efficiency, upgraded building systems, new technologies and the repair or replacement of areas that are in poor condition.
These benefits can make a property more attractive to an occupier, further helping to justify the investment.
The upcoming change in EPC ratings will also support the move to green buildings; although developers should be aware that just meeting those requirements may not be enough.
With occupiers expecting more, there needs to be a balance between the investment in going above and beyond the minimum EPC rating and the benefit of attracting a wider pool of tenants, better terms and higher rents.
This cost-benefit analysis requires collaboration between the owner and the occupier, in order to create spaces that are fit for purpose and future-proofed.
There are many factors driving the move to embed sustainability in the real estate sector, but only through collaboration between legislators, developers, landlords and tenants can we support the move to green buildings.
Alexandra Holsgrove Jones is senior knowledge lawyer in the real estate group at TLT
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