‘Retrofit race’ needed to prevent office stock undermining regions’ net zero commitments
Six of the UK’s key regional economic centres risk not achieving their net zero targets
Six of the UK’s key regional economic centres risk not achieving their net zero targets, unless significant action is taken to upgrade and improve their commercial real estate in the next 10 years, according to new analysis by JLL.
A new report, Sustainability and Value in the Regions, concludes that 90% of the office stock in England and Wales’ largest regional office markets is at risk of not meeting the UK government’s target for all non-domestic properties to have an EPC B rating by 2030. These findings come at a time when three of the cities analysed – Birmingham, Bristol and Cardiff – have committed to achieving net zero status by 2030. Leeds and Manchester, both aim to be net zero by 2038.
With no completed office development across the eight UK regional centres – including Edinburgh and Glasgow - having yet achieved the UK Green Building Council’s embodied and operational net zero carbon standard, the research also finds that just 16% (20 million sq ft) of existing regional office stock is rated BREEAM Good to Outstanding.
The findings point to the need for a significant programme of refurbishment and retrofitting, delivered over the next decade, to support the green agendas of local authorities as well as occupiers. The research identified that the office footprint of regional firms with science-based sustainability targets has more than tripled in the past three years to almost 4.5 million sq ft.
JLL estimate that the UK’s rate of repurposing commercial stock needs to hit 5% annually in order to help the country hit its 2050 carbon neutrality goal, which would be more than double the levels of redevelopment seen in the last decade.
Jeff Pearey, head of Regional office agency at JLL, said: “As well as the net zero deadlines set by local authorities, we’re seeing a conscious shift in mindset among occupiers which, will ultimately lead to improving achievable rents and increasing the speed at which investors and developers are able to lease sustainable properties. Equally, investors are driving the agenda, with two thirds prioritising the sustainability of the portfolio more so than they have done in the past 12 months. 2030 is, in reality, just one property cycle away, so it’s critical that office stock keeps up with these ambitions and that some of the UK’s most important cities aren’t held back by low-performing assets.”
Elaine Rossall, head of UK offices research at JLL, said: “As COP26 has only served to reinforce, the next 10 years are imperative to the future of the planet. The built environment accounts for around 40% of all carbon emissions, but is even higher in many cities, meaning our cities and commercial centres must change or risk undermining any regional efforts – now set in stone in the carbon frameworks of most major cities – to achieve net zero status in the 2030s. This research indicates just how far short of those targets some regional office markets will be if, in addition to ongoing investment in new low carbon stock, the vast majority of existing offices aren’t improved via refurbishment or retrofit.”
The research analysed the commercial property markets of Thames Valley, Bristol, Cardiff, Birmingham, Manchester, Leeds, Glasgow and Edinburgh. EPC analysis excluded Scottish cities.
JLL (NYSE: JLL) is a leading professional services firm that specializes in real estate and investment management. JLL shapes the future of real estate for a better world by using the most advanced technology to create rewarding opportunities, amazing spaces and sustainable real estate solutions for our clients, our people and our communities. JLL is a Fortune 500 company with annual revenue of $16.6 billion in 2020, operations in over 80 countries and a global workforce of more than 92,000 as of June 30, 2021. JLL is the brand name, and a registered trademark, of Jones Lang LaSalle Incorporated. For further information, visit jll.com.