Companies prepared to pay more for sustainable offices

06 Jul 2023

UK directors are willing to pay more to lease offices with sustainable credentials, according to new research from property analytics software firm CIM.

The survey of 200 UK companies that leased large office spaces found that only 6% were unwilling to pay higher rents for green office space, with the majority (41%) stating they would pay 10-14% more.

Forty-nine per cent also said a property’s environmental performance and overall sustainability would “very much” influence their choice of office.

It found that while occupancy rates still lag behind pre-pandemic levels, a large majority (72%) of respondents expect their business to move to at least three in-office days a week over the next two years.

Thirty-nine per cent of respondents were very satisfied with their office space, inferring landlords must be more attuned to changing occupier expectations. Almost all respondents (55%) “expected” to see evidence from landlords demonstrating a building’s efforts to reach net-zero. This aligns with other overwhelming priorities highlighted by the report, such as 53% of decision-makers saying reducing day-to-day operational and energy costs would significantly impact their choice of office space. These concerns demonstrate how aligning existing properties with the low-carbon economy will require the corporate real estate sector to identify tools to optimise building performance and increase overall efficiency while lowering both emissions and energy bills.

Cillian Casey, Regional Vice-President, EMEA and US at CIM said:

“While our research demonstrates a clear urge from senior decision-makers for the workforce to spend more time in the office, the significant headwinds the market has experienced over the last three years have changed occupier expectations. Factors such as the rise of hybrid working and soaring energy costs, for example, are now greatly influencing what decision-makers want from a building. With more emphasis being placed on how companies can attract employees back to the workplace, environmentally friendly offices that improve productivity and well-being are now expected. As well as reducing office power consumption, sustainability is also becoming crucial to hiring and retaining talent in a competitive labour market with 89% of respondents saying Net Zero was part of the employee value proposition.

“Creating and maintaining more efficient buildings is critical to improving the overall standard of the built environment and meeting shifting market demands. However, while businesses are enthusiastically embracing sustainability, they need technologies that actively improve building performance – especially given the continued volatility in energy pricing”.

Download the full report here.

Earlier this year, we reported that the need to keep pace with competitors is the primary factor motivating office landlords to make sustainability improvements. That’s according to research by infinitSpace, the creator of white-label, tech-enabled, flexible workspaces, and The Instant Group.

The full list of factors that motivate landlords to improve the sustainability of their office buildings are:

To keep pace with competitors (41%).
A personal/organisational desire to play an active role in reducing climate change (37%).
To improve the retention of existing tenants (33%).
To comply with regulatory demands, such as new EPC rules (33%).
To act on advice and guidance from asset managers and/or brokers (30%).
To enhance marketability to attract new tenants (28%).
To lower overheads e.g., reduced energy bills (19%).

Read the full story here.