With reports showing that Britain’s inflation rate has climbed to the highest it has been in 40 years, the UK faces an increasing risk of falling into a recession. As a consequence, landlords and property managers of industrial and commercial buildings face mounting pressure to keep their properties appealing to the market.
The ugly truth is that while the sector might have overcome the disruption that Covid caused, spiralling energy prices are now clouding the sector’s bright new dawn. With a potential recession on the horizon, real estate investors are facing a super-competitive future as they struggle to make their properties more appealing in a quiet market.
So, how can property owners ensure their portfolios remain attractive? A huge, untapped opportunity is through unlocking their properties’ energy flexibility, significantly reducing their usage and subsequent cost.
Although unknown to most property owners, there is a technology that allows commercial and industrial buildings to identify their non-essential electricity usage, aggregate it and ‘sell’ it to National Grid. At times of peak demand, the grid operator will pay firms that agree to temporarily reduce usage.
It is called demand-side response (DSR), and it is being increasingly adopted by a host of forward-thinking offices, hotels and industrial facilities across the UK, enabling them to reduce energy use and gain new revenues, while improving their properties’ BREEAM ratings and subsequent value.
Not all electricity is equal or required constantly for performance, and this principle might well be what separates winners from losers in a potential real estate slowdown in the upcoming months. While many assume that high energy prices will contribute to a sluggish property market, pioneering businesses are using DSR programmes to reduce their baseline energy consumption by as much as 28%.
A recession might (or might not) happen, but one thing is for certain: soaring energy prices will not give property investors a break for the rest of 2022, and buildings that have energy flexibility will become much more attractive than those that have no control over their electricity usage.
Chantel Scheepers is chief executive of climate technology company OakTree Power
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