Build It And They Will Come
There is a strong financial rationale for building new grade-A office buildings with very high sustainability credentials right now. Data from Gerald Eve released last month revealed that a majority of Q4 office leasings in London were for grade-A space, with secondary and tertiary assets finding it much harder to secure tenants.
And JLL data released last month found that the London buildings with the best sustainability certifications had a 6% rent premium and 8% sales premium over less-green assets.
“I don’t think occupiers will reassess the quantity of space they need, but they will reassess the quality,” Patrizia’s Phil Irons said. “I think there will be a strong rebound in leasing levels, as companies that have been waiting to act start to take decisions. But that will be concentrated in the best, most sustainable buildings.”
The sustainability rationale is less cut and dried: New buildings emit a lot of carbon through the construction process, so even if they are very sustainable when built, there is debate about whether they ever save more carbon in their operation than they emit in their construction.
But get a new building right today, and tenants are willing to pay top rents. Good for you, but good for the planet?
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