Green Offices' Rise Over Next Two Decades
The demand for sustainable workplaces is growing, despite the fact that the number of new office development projects in England fell from 434 to 367 between 2021 and 2022, according to research by the international law firm RPC.
Experts in the industry foresee a continuous rise in the popularity of "green offices," characterised by energy efficiency and reduced carbon emissions. This trend aligns with the government's ambitious target of achieving net zero by 2050.
Furthermore, the shortage of green office spaces in the UK has amplified this demand. In London alone, less than 15% of the 109,770 offices are certified as green, leaving approximately 93,305 offices awaiting renovation or redevelopment to meet sustainability standards.
Across the UK, a staggering 87% of office stock possesses an Energy Performance Certificate (EPC) rating of 'C' or below. Additionally, over one billion square feet of UK office space falls below the 'B' rating, which is proposed as the minimum standard by 2030.
In comparison to other major international cities like New York and San Francisco, London significantly lags, with only 40% of offices classified as green, falling short of the average of 22% among the 20 global cities surveyed.
According to Jon Ely, Partner in the Real Estate and Construction team at RPC, the scarcity of green office spaces presents a favourable opportunity for developers and the wider sector, particularly amidst rising interest rates and inflation.
Ely stated, "For some time, the office market has witnessed two different dynamics, with green office spaces demonstrating stronger capital value, rental rates, and demand compared to the rest of the market. Despite the slowdown in new developments, there is a high demand for green office spaces, especially from larger organisations that have obligations in Environmental, Social, and Governance (ESG) policies to meet the 2050 net zero target. Given London's lag behind other major global cities, we anticipate a robust pipeline of new developments in the next two decades."
Source: Reynolds Porter Chamberlain
