Three-quarters of London office space coming to market is energy-inefficient
At least three-quarters of office stock coming to the market in London in the next four years is energy-inefficient and will cost £370m to retrofit, according to research from CBRE.
The agency estimates that of 15.9m sq ft of office stock coming to the market by the end of 2027, 11.9m sq ft has an EPC rating lower than C. The figure could be higher, but only 80% of the total has EPC data available.
CBRE said the £370m of capital expenditure for upgrading the stock could be offset by more resilient capital values within three years.
At least three-quarters of office stock coming to the market in London in the next four years is energy-inefficient and will cost £370m to retrofit, according to research from CBRE.
The agency estimates that of 15.9m sq ft of office stock coming to the market by the end of 2027, 11.9m sq ft has an EPC rating lower than C. The figure could be higher, but only 80% of the total has EPC data available.
CBRE said the £370m of capital expenditure for upgrading the stock could be offset by more resilient capital values within three years.
Sam Carson, head of sustainability valuation and advisory services at CBRE UK, said: “Even though building upgrades may not immediately pay for themselves in terms of operational savings, it’s likely that, on average, the renewed occupier and investor interest they bring will result in a stronger investment performance that quickly outweighs upgrade costs.”
Toby Radcliffe, sustainability research lead, added that improving the energy efficiency of central London stock will help address the supply and demand imbalance for high-quality space.
“The growing importance of energy efficiency and sustainability credentials to occupiers, investors and lenders is adding to the imbalance, with demand targeting a limited pool of high-quality, more sustainable office space,” he said.
“Offices that undertake the upgrade work to bring energy efficiency up to a high standard could benefit from the flight to quality that is sustaining demand for the best offices in London.”
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