Sustainability legislation causes irreversible changes to European office buildings as real estate industry adapts at different speeds
As sustainability races up the agenda, staying in the game means prioritising sustainable real estate. With 83% of clients positioning sustainability as a top priority for office real estate, investors must act now to future-proof their assets.
From almost nowhere a decade ago, sustainability is now a key consideration for office real estate. Whilst environmental change, cost control and ethical business practices are all part of the equation, legislation is the real game-changer forcing European occupiers and investors to adapt their office buildings. Whilst the European Union requires all new buildings to be nearly zero energy by 2020, there is a growing divergence across different buildings and countries. This gap is widening and will increase over the next decade between those leading the way towards sustainable real estate and those falling behind.
Sustainability was once seen as a soft issue on the periphery of business strategy but this has now changed. We now have case studies where sustainable changes to buildings have improved employee productivity. Owners and developers of office stock will need to take rapid action to protect the value of their buildings and prevent them from becoming obsolete. A sustainable building will quite quickly become a prerequisite for prime property. Consequently, we expect the pricing gap to widen between sustainable and non-sustainable assets over the next few years.
Occupiers will also need to remain watchful of sustainability when evaluating their real estate requirements. Whilst older, less sustainable buildings may offer lower rental costs, any savings are likely to be offset by higher operational costs given the trend towards rising energy prices.
Employers cannot neglect the increasing 'social' aspect of sustainable real estate. Over the next ten years we expect productivity, employee satisfaction and sustainability to become intrinsically linked. We expect business managers to place greater emphasis on the social value of sustainable real estate.
To help occupier and investor clients manage the sustainability agenda, we have developed practical tips. These are: