For Landlords, the Time to Improve Energy Efficiency is Now

Tuesday, April 4 , 2023

Recent research by The Instant Group and the Urban Land Institute revealed less than 2% of asset owners feel they have the required capital expenditure to respond to ESG-related requirements. What changes can landlords make to forge these needed improvements in energy efficiency?

More than three years after the onset of COVID-19, the property sector is still largely in flux, though there is strong acknowledgement of the value of the physical office.

As occupiers and landlords continue to debate the long-term effects of the pandemic on office utilization, one of the biggest challenges stems from concern about carbon emissions and energy efficiency.

Shockingly, less than 2% of asset owners feel they have the required capital expenditure (CAPEX) to respond to ESG-related requirements from occupiers and legislators. This indicates two points: Firstly, that occupiers want sustainable solutions to their workplace. Secondly, not enough is being done to make this happen.

This is one of the key findings from a new report on the future of the office by the Instant Group and the Urban Land Institute (ULI). The report surveyed 285 office occupiers, landlords, and third-party advisers across North America, Europe, Asia Pacific, the Middle East, and South America, and also incorporated interviews with industry experts.

Asset owners need to close the gap in sustainability investment and regulatory and occupier demand or risk being left behind.  Without action their offices won’t appeal to occupiers, as over half (54%) indicated in the survey that ESG would have a “major” or “critical” impact on their office strategies moving forward.

“Landlords have a small window of opportunity to bridge the gap to their client’s demands.  Space alone isn’t sufficient in today’s market where more complete solutions are required.  Sustainability can be a magic bullet for innovators here by mitigating risk from a compliance and regulatory perspective, as well as generating brand and asset value through delivering what occupiers are actually asking for.” said Mike Bascombe, Associate Director at Incendium Consulting, part of The Instant Group.

Making buildings use less energy and emit less carbon is the first lever of change in evolving an asset into a more sustainable form. This is clearly being recognized by the industry. 72% of occupiers said that energy efficiency was the most important factor in their ESG strategy. An even greater percentage of landlords (75%) picked energy efficiency as the most important factor to be addressed out of a range of sustainability factors.

But from a logistical standpoint, what changes can landlords make to forge these needed improvements in energy efficiency?

This, in addition to other factors driving workplace strategy, is explored in more detail in the report.

Downloaded the full report here.

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