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26 JULY 2023
Nathalie Hakim, Investment Director
Last year a YouGov poll found that the majority of Brits want to live in a home built between 50 and 100 years ago, with only 17% wanting to live in a home built in the last 10 years.
Whilst the survey didn’t ask what kind of office people would like to work in, the flight to quality has shown occupiers have a strong preference for new buildings, partly driven by a perception that they have better environmental credentials.
Whilst new commercial buildings will perform well from an operational carbon perspective, we can’t overlook the embodied carbon involved in the construction and demolition of commercial buildings.
With 10% of all global emissions coming from construction and materials and the Committee on Climate Change stating that the rate of carbon emissions reduction needs to increase fourfold for the UK to meet its 2030 commitments, we must make a conscious effort to reduce the construction of new commercial buildings where retrofit is possible.
As we have seen with our Holbein Gardens project, a 1980s office building that has been comprehensively retrofitted to a net zero standard, refurbished buildings can attract significant occupier interest and can deliver both environmentally and commercially.
The UK’s 2030 carbon reduction target is not just a milestone on a path to 2050, it is a hugely important moment. Reducing carbon in this decade is essential if we are to avoid dangerous environmental tipping points such as rises in sea level.
As we move closer to 2030, occupiers will become increasingly conscious of their environmental impact, both from their own activities and their wider impacts.
Many are already on this journey but for those there are not, the regulatory pressure is only going to increase. At COP26, the Government announced plans for listed companies and big asset managers to publish a plan for achieving net zero by 2050. Analysis by EY recently found that whilst 80% of FTSE 100 companies have published plans, only 5% would be deemed credible by the Transition Plan Taskforce, the body responsible for implementing the policy.
The strategy behind our growing regional office portfolio is driven by the expectation of significant changes in occupier demand. We are acquiring buildings where we see potential to improve their environmental performance and amenities addressing operational and embodied carbon, whilst creating the best quality office space.
What offices represent to occupiers is changing, they are not just places to work. They represent the values of the company, the image and brand of the business and people who use them. Employees now hold their employers to account when it comes to environmental and social commitments and make employment choices based upon this. The office therefore has a key role in talent attraction and retention – and good ones genuinely add value to businesses, especially those that provide amenity and space that helps personal wellbeing.
We’re investing £35m to do just this, taking the lessons we learnt retrofitting and upgrading our London portfolio and applying them to our 500,000 sq. ft regional offices.
Our goal is a minimum 4.5* NABERS rating for all buildings, located in the top UK regional cities, incorporating technologies such as Demand Logic to continually enhance energy efficiency, drive cost efficiencies and guide occupier behaviour.
An emphasis on retrofitting and refurbishing is a big cultural shift for an industry attracted to the new and shiny, and there’s certainly a role for policymakers to ensure a balance between carrots and sticks to signpost developers and occupiers to get there, but as the country’s passion for older homes demonstrates, new isn’t always best.
Refurbishment drive will create best in class office stock by improving environmental performance and on-site amenities, offering occupiers low operational and embodied carbon workspaces.