Real Estate is predicted to consume approximately 40% of global energy annually, accounting for over 20% of international carbon emissions.
Lord Deben, the chair of the Committee on Climate Change, has announced that the property industry “must go net zero carbon”. He warns that buildings will struggle to be let unless they have attractive sustainability credentials. Many high-profile clients, such as Google, will not lease office space unless it has high sustainable assessment ratings, as this could tarnish their brand. They are also willing to pay premium prices for the space, a financial incentive to Landlords to make the necessary refurbishments. This requirement for sustainable space is becoming increasingly common in brands of all status and is sure to only increase over the next few years.
Sustainability applies to all sectors of the property industry; industrial warehousing, commercial office space, residential homes. There are opportunities for properties to be retro-fitted with sustainable features such as energy efficient sensor-based lighting systems or smart thermostats.
Warehouses for example have vast amounts of roof space; this being a prime area for the installation of solar panels
Obviously, there are difficulties that could be encountered when making sustainable changes, including operational disruptions to businesses leasing commercial units as well as legal issues between Landlords and Tenants. However, these are problems that must be overcome as Landlords need to future proof their assets to stay relevant in the industry. It isn’t simply the Government who support an improved sustainability agenda; investors and financers are putting huge pressure on firms and individuals to develop more sustainable portfolios.
Residential property is no different; The Sunday Times shared an article recently discussing the benefits of a home energy audit over an Energy Performance Certificate (EPC) for residential property. Although EPC’s are cheaper and provide the necessary compliance for houses which have recently been built, let or sold, they can be considered a box-ticking exercise in comparison to a thorough independent home energy audit, which makes sustainable custom recommendations.
These home energy audits are typically more expensive, however can lead to considerable long-term savings due to the sustainable improvements it recommends.
Investment into new buildings with sustainable features, as well as redevelopment and refurbishment of existing properties is increasing, with investors wanting to achieve high ratings on sustainability assessments, such as BREEAM, the Building Research Establishment Environmental Assessment Method. Data shows that ratings of ‘excellent’ and ‘outstanding’ have risen, illustrating how investors are already more aware of how high specification and environmentally friendly assets will improve portfolios.