Companies Will Accept Higher Rents for Sustainable Offices

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05 July 2023

Research suggests that UK directors involved in key real estate decisions are willing to pay more to lease offices with sustainable credentials.

Property analytics software firm CIM surveyed 200 UK companies that leased large office spaces. Only 6 per cent were unwilling to pay higher rents for green office space, with the majority, at 41 per cent, stating they would pay between 10 - 14 per cent more.

49 per cent also said a property’s environmental performance and overall sustainability would “very much” influence their choice of office.

It found that while occupancy rates still lag behind pre-pandemic levels, a large majority (72 per cent) of respondents expect their business to move to at least three in-office days a week over the next two years.

39 per cent of respondents were very satisfied with their office space inferring landlords must be more attuned to changing occupier expectations. Almost all respondents (55 per cent) “expected” to see evidence from landlords demonstrating a building’s efforts to reach net-zero. This aligns with other overwhelming priorities highlighted by the report, such as 53 per cent of decision-makers saying reducing day-to-day operational and energy costs would significantly impact their choice of office space. These concerns demonstrate how aligning existing properties with the low-carbon economy will require the corporate real estate sector to identify tools to optimise building performance and increase overall efficiency while lowering both emissions and energy bills.

Cillian Casey, Regional Vice-President, EMEA and US at CIM said: “While our research demonstrates a clear urge from senior decision-makers for the workforce to spend more time in the office, the significant headwinds the market has experienced over the last three years have changed occupier expectations.

“Factors such as the rise of hybrid working and soaring energy costs, for example, are now greatly influencing what decision-makers want from a building. With more emphasis being placed on how companies can attract employees back to the workplace, environmentally friendly offices that improve productivity and well-being are now expected. As well as reducing office power consumption, sustainability is also becoming crucial to hiring and retaining talent in a competitive labour market with 89% of respondents saying Net Zero was part of the employee value proposition.”

“Creating and maintaining more efficient buildings is critical to improving the overall standard of the built environment and meeting shifting market demands,” concludes Casey. “However, while businesses are enthusiastically embracing sustainability, they need technologies that actively improve building performance – especially given the continued volatility in energy pricing”.

To download the full report, visit: https://connect.cim.io/tenant-preferences-in-uk-office-market

Picture: a photograph of two people working in a coworking booth looking at a laptop. Image Credit: Pixabay

Article written by Ella Tansley | Published 05 July 2023

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