Benefits of decarbonising office and industrial assets
JLL has reviewed several net zero carbon audits for office and industrial assets across the UK to better understand their potential decarbonisation journey.
- Kimberly Markiewicz
Like many countries across the globe, the UK has set a legally binding target to be net zero by 2050. The real estate industry needs to be at the forefront of this transition, as the built environment accounts for roughly 39% of carbon dioxide (CO2) emissions globally - and close to 80% in some cities, such as London.
Emissions from the built environment come from operational and embodied carbon. Operational carbon is the building’s energy consumption; embodied carbon is that tied up in the sourcing, transportation, construction, maintenance, and disposal of building materials. Due to the high level of embodied carbon in new developments, the best way for the real estate industry to reduce its carbon footprint is through retrofitting existing building stock rather than knocking down and rebuilding.
Across the UK, various frameworks and initiatives have been put forward to set energy use intensity (EUI, measured in kWh/m²/annum) targets for different asset classes to help investors and landlords begin to decarbonise their assets.
JLL has reviewed several examples of net zero carbon audits for office and industrial assets across the UK to better understand their potential decarbonisation journey.
Decarbonising the office
The energy use intensity (EUI) of an average new office building is 160 kWh/m²/ annum, according to the London Energy Transformation Initiative (LETI). To reach our net zero targets, we need to achieve an EUI of just 55KWh/m² per annum, a reduction of over 60% on current levels. Whilst this target is for new builds, it is a good benchmark for existing stock too (for which there are currently no separate targets).
In conducting several net zero carbon audits of existing office buildings, JLL found that this target, whilst challenging, is possible to achieve. In one audit for a Central London office built in the mid-2000s, extending to around 8,700m², with a modelled EUI of just over 200 kWh/m²/annum. By following net zero carbon interventions such as HVAC electrification and updating to LED lighting, it is possible to achieve an EUI of between 55 and 60 kWh/m²/annum, a reduction of nearly 75%.
Net zero warehouses
Industrial assets end uses are much more varied than those for offices, and as such no formal target EUIs have been set. But that doesn’t mean great energy savings cannot be achieved. In auditing a late 1970s distribution warehouse in the South East, with a floor area of roughly 2,800m², current energy use intensity was estimated at 160 kWh/m²/annum. We estimate that a full net zero carbon refurbishment could cut EUI by nearly 80%.
Across all the net zero carbon audits we reviewed, regardless of the age or size of the asset, a net zero retrofit resulted in a significant reduction of EUI. Achieving these reductions is not without its challenges. Older buildings are less flexible and less easily adapted, and NZC refurbishments require a higher level of investment than a typical retrofit.
However, the savings can be significant. Utility bills are significantly lower – which is especially beneficial at present given the energy crisis the UK faces; demand for net zero buildings is accelerating as corporates increasingly sign up to Net Zero and Science-based Targets (SBTis) and need to occupy spaces that reflect these commitments; and the cost of inaction is growing. Regulations that restrict leasing buildings with low energy efficiency credentials are tightening, increasing the risk of value destruction.
Over the next few decades, the UK economy will need to decarbonise and the built environment will play a large role in this journey. Investors who seize the opportunity to get their assets in line ahead of increased regulations are likely to see the financial benefits sooner than those who wait and fall behind.
To find out more about the potential decarbonisation journey for office and industrials assets in the UK, download JLL’s Routes to Net Zero Carbon Buildings report.
1Decarbonizing Cities and Real Estate, JLL 2022
2 2020 LETI (London Energy Transformation Initiative) Climate Emergency Design Guide