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Sustainability is one of the most fundamental challenges currently facing the real estate sector. No longer an optional extra, but a key component in real estate developments and investments. With the built environment responsible for 39% of global carbon emissions, the industry realises it must transform to meet the UK’s 2050 net zero carbon target.
Leading by example: Government policies have traditionally been slow to evolve in this area. Whilst that may be changing, more recently stakeholder behaviour has been influencing change regardless of policy. Investors, developers and occupiers are increasingly focused on developing, managing and operating their estates sustainably and are also now taking an interest in the environmental performance of their supply chain. To be effective, an organisation’s ESG strategy will need to ensure consideration of ESG factors and their materiality at corporate, portfolio and asset/development level.
Improved environmental performance: With more industry players committing to ambitious net zero carbon targets, organisations looking to reduce their emissions will find many opportunities to improve their property’s environmental performance, such as switching to green energy supplies, adopting green building practices, taking advantage of PropTech and smart building solutions to maximise efficiencies and retrofitting rather than rebuilding. Owners and managers may also benefit from new analytics tools which measure sustainability performance across their portfolios.
Collaboration is key and everyone will benefit – we will only achieve our net zero targets by working together and we must capitalise on the growing appetite for change. Collection and monitoring of data will be fundamental to provide baselines against which future performance can be measured and landlords and tenants will need to work together to share data to improve energy performance. Retrofitting existing buildings will be essential to meet the increasing market demand for sustainable space.
Occupier demands for sustainable property are also a key driver in the market and employee health and wellbeing is one area where they do want to compromise. A healthy building supports physical, physiological and social health and wellbeing and owners will find improved ESG credentials enhance an asset’s value.
Climate resilience is an increasing concern for owners and investors, particularly when seeking insurance and/or financing and the risks of future obsolescence and consequent detrimental effect on asset value are being keenly felt. By taking a long term view, those in the real estate sector can assess the risks to an asset of extreme weather events due to climate change and can take action at an earlier stage. The financial risks of ignoring sustainability and climate resilience are too costly to overlook, whether that is investors, occupiers and buyers looking elsewhere or finding an asset can no longer be insured or financed. It's encouraging to see the industry taking the lead and pushing forward with innovations and initiatives aimed at future proofing assets. We must continue to see a transition from rhetoric into action in order to meet net zero targets.
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Our buildings and communities are being redefined and repurposed. Working with clients from across the real estate sector gives us a viewpoint on the new trends evolving. On our map we look at the important changes affecting the real estate industry today and in future and offer insight on the challenges and opportunities for our sector across a range of assets and key themes. Please click on the links in the map to discover more.