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In an increasingly climate-conscious world where sustainability is becoming an everyday essential, new research suggests many major Asia-Pacific cities face a chronic undersupply of sustainable workspaces.
According to JLL, a major supply-demand divide for net zero carbon ready workplaces is increasingly likely in the near future. This shortfall comes as corporate net zero carbon (NZC) targets loom large on the horizon.
Kamya Miglani, head of ESG research, Asia Pacific at JLL, explained: “Leasing office space in green-certified office buildings is becoming a non-negotiable for occupiers.”
However, despite increasing tenant sustainability demands, she revealed: “Currently there is very little correlation between these certifications and a building’s energy performance.”
Ms Miglani added: “Even buildings with platinum grade green certifications may not be NZC-ready, partly because current regulations are not stringent enough to demand NZC-ready assets.”
The real estate consulting firm’s Sustainable Offices City Index, which evaluated 20 cities in the APAC region on four themes – green stock, physical risk to buildings, city competitiveness, and city administrations proactiveness with NZC targets – indicated the region’s stark sustainable office building undersupply.
NSW capital, Sydney, leads the way with an 84 per cent undersupply of NZC-ready office space by 2027. According to JLL, the city’s current green building standards are not adequate to achieve an NZC-built environment, with an NZC building described as being all-electric, highly rated, energy-efficient and powered by renewable energy.
Hong Kong (68 per cent) and Mumbai (62 per cent) boast the next highest undersupply, according to JLL, with Singapore (56 per cent), Delhi (44 per cent) and Melbourne (43 per cent) rounding out the top six.
Even if “demand for high-quality, low-carbon workplaces will inevitably grow when lease expiries approach”, Ms Miglani warned “occupiers risk being stuck with limited options if they fail to plan ahead and re-evaluate the sustainability credentials of their current premises”.
JLL’s analysis dictates the region needs to accelerate its rate of retrofitting to meet future regulations in order to meet increased demand for sustainable workplaces. According to the firm, over half a billion square feet of Grade A office space in the region was constructed prior to 2011, meaning the retrofitting potential is substantial.
“Only a handful of office buildings in Asia Pacific match the criteria of a zero-carbon building today,” Ms Miglani said.
“The involvement of governments, coupled with corporate demand and action, will fuel the momentum and ensure a steady pipeline of NZC-ready office stock in the future,” she added.
In some cities, governments have already played a crucial role in addressing the NZC-ready office space supply-demand divide, including in Australia where the federal government moved to incorporate an energy performance measure within its National Australian Built Environment Rating System.
Similarly, last year the Singapore government offered subsidies to building owners to lower upfront capital costs for energy-efficient retrofits, depending on the level of energy standards attained.
JLL’s research concluded that redeveloping or upgrading assets to be NZC-ready is the most efficient solution to bridge the current supply-demand gap, with investors and owners encouraged to begin incremental upgrades now.
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