Commercial property assets, such as office, retail, and industrial spaces, are seeing far less capital growth if they are energy inefficient, says the latest CBRE Sustainability Index report. What implications does this have for building managers and owners? Along with a financial loss, employees increasingly want to work in sustainable, healthy buildings. The standards for keeping and retaining talent are becoming tougher.
Efficiency in office buildings
UK office buildings are still seeing a significant gap between energy-efficient and inefficient locations. According to the report, the performance gap between efficient and inefficient assets in the office sector is the widest its ever been in the history of the index for value rental fund.
Jennet Siebrits, CBRE’s Head of UK Research, said, “The Offices results reflect a deceleration in value declines compared to the previous year, suggesting price discovery is starting to occur in both the efficient and inefficient groups. Heavily discounted inefficient offices may be starting to attract value-add investors aiming to carry out brown to green conversions.”
Brown to green conversions refer to retrofitting older, less efficient buildings to meet modern energy efficiency standards, often involving significant upgrades to insulation, heating, cooling, and lighting systems.
About the Sustainability Index
The Sustainability Index tracks the capital value growth, rental value growth, and total returns of assets categorised as either efficient or inefficient based on Energy Performance Certificates (EPCs). Assets with EPCs that are predominantly A or B are categorised as efficient, and assets with EPCs that are predominantly C or lower are categorised as inefficient. As of Q2 2024, the index was based on more than 1,200 assets valued regularly by CBRE, with a total capital value of £24.4 billion.
As sustainability becomes more critical to asset value and performance, building owners and investors should focus on improving energy efficiency through retrofits and embracing ‘brown to green’ strategies. Ignoring these trends could result in long-term devaluation of their properties.
Content Team
Work in Mind is a content platform designed to give a voice to thinkers, businesses, journalists and regulatory bodies in the field of healthy buildings.
