More than £60bn will have to be spent to drag the UK’s offices up to new environmental standards, according to analysis by Savills.
The requirements will add to the pressure on landlords of older buildings who are already grappling with the shift to hybrid working.
By 2025, every commercial building in the UK will require an energy performance certificate, which rates its energy efficiency from grade A to G. New minimum energy efficiency standards, currently before parliament, will require buildings to have a minimum rating of C by 2027 and B by 2030. Those that do not will become illegal to let out in most cases.
Large property owners are in a position to absorb the cost of that work, but smaller landlords in cities with lower average rents will struggle, running the risk that the value of their buildings will enter a downward spiral.
“The challenge is your secondary town where the rent is, at best, £20 per sq ft. How do you justify spending £80 per sq ft [to make a building meet new standards]?” said Mat Oakley, head of commercial property research at Savills.
With 85% of offices in UK cities currently rated below B, it also represents a substantial hurdle for landlords to clear.
