As a general movement continues to grow toward environmental consideration and concern around climate change. Property company JLL speaks about some of the changes in the property sector and where this is heading. We are seeing momentum toward change and many businesses and stakeholders are thinking forward and committing to strong climate targets, including Walker Wayland NSW Sydney committing to carbon neutral status.
However according to JJL, for the property sector the challenges relate to acting on these intentions and there are some issues preventing integration of these ideas.
“The upgrades required for office buildings are expensive. Tenants are still largely unwilling to pay for additional costs to get to get to very high NABERS ratings by way of rental uplifts, though lower outgoings could mathematically lead to a higher net rent.
Occupiers are still more conscious of building features that relate to flexibility, amenity, staff wellbeing and cost efficiencies than environmental factors by themselves.”
NABERS Energy Rating is an example of one of the measures used to rank or scale the energy efficiency in the sector. The NABERS rating measures the efficiency of an office building by comparing the energy consumption of a building against a set of benchmarks that have been developed using actual data to provide a rating.
Ultimately in years to come, there is the possibility that environmental reporting or minimum standards may become mandated by regulatory authorities. This may result in large future expenditure to update existing buildings and properties or leave many obsolete.
Another consideration in this current climate is the pandemic shift to working from home and flexible workspaces which has continued into this post pandemic phase. According to JLL,
“Office market vacancy is expected to remain elevated in most markets for much of the decade. Office occupiers have choice and as tenants reassess workplace needs post pandemic flight to quality is an ongoing theme.”
Furthermore, Sustainability Rating is likely to become increasingly relevant in tenant requirement metrics. The opportunity sits with the largely institutional owners of assets that are already highly rated, which will be able to secure larger corporates with published sustainability targets, with higher occupancy, higher retention, and less downtime across portfolios.
Sustainability rating, environmental impact and more environmentally conscious factors are and will continue to be a growing consideration for many businesses in their choices of office buildings.
This article is part of The WWNSW Environmental Awareness Series where we will be sharing articles and resources from trusted sources to help increase awareness within our sector and clients.
JLL Research Australian Cities Accelerating built-form sustainability