The Leading News & Information Service For The Facilities, Workplace & Built Environment Community

Friday, 3 April

Research Says Sustainable Buildings Will Bring Investors Tangible Financial Benefits

Research Says Sustainable Buildings Will Bring Investors Tangible Financial Benefits

The latest research from professional services firm JLL suggests that investing in sustainable offices in central London will return “tangible financial benefits”.

The report also looks to future returns from delivery of net-zero carbon buildings.

A combination of higher rents and stronger leasing velocity are two key benefits identified in the paper. The impact of sustainability on value also demonstrated the growing occupier demand for sustainable offices in central London that will need to be met in the next decade.

 

UK investors at pivotal moment in delivering sustainable buildings

 

JLL has looked forward to the next wave of office development and the strong impetus for it to deliver net-zero carbon buildings. On this basis, JLL has calculated that the next wave of office development and major refurbishment will need to accommodate at least 8.0 m sq ft of highly sustainable demand from occupiers across central London by 2030.

This demand assessment for central London office stock is based on the space currently occupied by companies which have signed up to science-based targets (12m sq. ft.) who have lease events before 2030, clearly demonstrating the increasing demand and need for highly sustainable buildings within central London

The research also identified demand from companies signing up to net-zero carbon commitments, who currently occupy over 1.5m sq. ft. of space across central London.

JLL analysed leasing activity for New Grade A office buildings in central London and found that those with a BREEAM rating of very good or higher achieved higher rents than those without a rating and that the average rental premium over non-rated buildings over the last three years was around 8%. 

The analysis also showed that New Grade A buildings with an A or B EPC rating achieved a rental premium of 10% over comparable offices with lower ratings over the same period.

“The first developers to undertake the task will reap the rewards of high levels of demand and the intrinsic higher performance of their product. This opportunity to provide sustainability as a point of differentiation and to appeal to forward-thinking occupiers will really play out over the next decade.”

–Sophie Walker

UK Head of Sustainability, JLL

Payback for investors who target higher BREEAM ratings

 

The research further demonstrated that payback for investors who target higher BREEAM ratings is rewarded with higher occupancy rates throughout the cycle. JLL analysed the leasing velocity of 120 central London development schemes completed between 2013 and 2017 and found that those that have an outstanding/excellent rating tended to show a higher pace of leasing and have lower vacancy rates – of 7% compared to 20% for those rated very good – 24 months after completion.

Sophie Walker, UK Head of Sustainability at JLL, commented:

“Clearly the urgency to build and redevelop these offices in central London to support corporate environmental and people goals is only speeding up. The first developers to undertake the task will reap the rewards of high levels of demand and the intrinsic higher performance of their product. This opportunity to provide sustainability as a point of differentiation and to appeal to forward-thinking occupiers will really play out over the next decade.

“Beyond 2030, tougher building regulations will drive a reduction in energy consumption and carbon emissions and mandated sustainability performance will become more defined – this may mean that the premium associated with it will disappear and buildings that don’t comply will underperform, leading to the displacement of tenants and lost rents due to costly retrofits.”

The full report can be accessed here

Picture: The latest research from professional services firm JLL suggests that investing in sustainable offices in central London will return “tangible financial benefits”.

Article written by Ella Tansley

Share



Related Articles

Sir Robert McAlpine - Taking The Path To Net Zero

Building and civil engineering company, Sir Robert McAlpine, has set a path to achieving net zero carbon emissions within the next five years. The commitment came as...

 Read Full Article
Sky's Limit – 2030 Plan Because The World Can't Wait

Tuesday 4 February 2020 saw Sky, the global media company, announced plans to go net-zero carbon by 2030 – a full 20 years sooner than the British...

 Read Full Article
Sky Falling In At Elstree

Sky plans to invest in building a new 32-acre, state-of-the-art TV and film studio at Elstree - with the site being a leader in the media giant's drive to go...

 Read Full Article
Net-Zero 2040 – What Exactly Are Sainsbury's Doing?

Following news of Sainsbury’s £1 billion commitment to become net-zero by 2040, programmes will be implemented across the Sainsbury’s business...

 Read Full Article
Retain, Reuse - Refurbishment Hits The Green Spot

Simon Swietochowski of Arup Architecture, looks at how 1 Triton Square could be a gamechanger for building reuse – showing that refurbishments can be exciting,...

 Read Full Article
Students Jump And Get To What's Real

Jump’s university programmes have set a record-breaking 238,000 positive actions for sustainability and wellbeing in the last academic year. Jump is a supplier...

 Read Full Article
Future Commerce Announces Sustainability Initiative

An initiative that covers partnerships, offsetting carbon emissions, relocating all technology to Google Cloud and employing a fully remote workforce has been announced...

 Read Full Article
Energy - Spending To Accumulate

More than half of global organisations plan to increase energy efficiency spending in the next 12 months according to the Johnson Controls' 2018 Energy Efficiency...

 Read Full Article
Co-working Direct To The High Street

Maybe Mike Ashley has a different plan for House of Fraser. JLL in America has predicted that co-working in retail properties will grow 25 per cent per year, for the next...

 Read Full Article
New York Cleaning Staff Urged To Use Paid Leave If Exposed To Coronavirus

According to an internal document leaked to The Guardian newspaper, cleaning staff at WeWork offices in New York are being asked to use annual or sick leave if they are...

 Read Full Article