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The vast majority of commercial tenants aim to have 100 per cent certified green portfolios by 2030, and it’s perhaps the biggest factor shaping their space needs right now.
According to research from JLL, across the Asia-Pacific region, 87 per cent occupiers of commercial real estate have said their portfolios must be 100 per cent green within the next six years. That’s a huge leap, given that just 4 per cent of occupiers can currently claim that level of sustainability.
With work spaces accounting for a large source of many businesses’ carbon emissions, they’ll be looking to real estate providers to enable their ESG commitments.
JLL flags that as a problem, citing a “mismatch between supply and demand” that the firm predicts will drive strong competition for low-carbon office spaces in the years leading up to 2030.
Currently, for every 5-square-feet of demand, only 2-square-feet of low-carbon space is in development from now until 2028.
According to Kamya Miglani, JLL’s head of ESG research, green-certified buildings have quickly shifted from a welcome benefit to a minimum criterion for businesses signing leases.
“In addition, we are seeing more and more companies adopt sustainability strategies such as energy audits, sustainable fit-outs and green leases to achieve sustainable workplaces,” Miglani said.
For asset owners looking to retrofit buildings to compete in this space, Miglani urges forward-thinking to be up-to-date with practices that may not be the norm now, but soon could be.
“In the future, we expect occupiers to raise the benchmark and start demanding building performance and sustainability data over and above green building certifications to make sure that assets are aligned to their net-zero carbon goals,” she said.
Occupiers are aware, however, that the carbon footprint of their workspace needs are not entirely controlled by real estate providers. An increasing area of focus is growing on fit-out resources – not only of the materials themselves, but the footprint associated with their production and transit, or “Scope 3” emissions.
JLL reported that 65 per cent of occupiers surveyed for its recent research reported office fit-out as one of their greatest sustainability challenges for a number of reasons.
The average office sees changes made to its interior at least 20 times in its life cycle, with the cost of fit-out accounting for about one-third of emissions associated with an office space.
According to Miglani, greater collaboration across the teams responsible for procuring space and outfitting an office would go a long way to making office spaces more sustainable.
“Breaking established silos is key to transitioning towards zero waste in the design phase through to procurement and strip-out, to support the reduction of emissions associated with waste and material use,” Miglani said.
Elke Kornalijnslijper, head of sustainability consulting for JLL’s Asia-Pacific operations, went further, noting that close working relationships across every aspect of a building’s life cycle will be integral to reducing their environmental cost in the years to come.
“Across Asia-Pacific, there is going to be strong competition for sustainable assets. Occupiers need to navigate this reality through robust planning across their real estate value chain, resulting in stronger collaborations with stakeholders like landlords, investors, technology partners and city administrations,” she said.
“As companies move beyond making commitments to implementation, we’ll increasingly see a mindset shift from ‘how much will a green portfolio cost my business’ to ‘how much will not investing in making my portfolio green cost my business,’” Kornalijnslijper added.
ABOUT THE AUTHOR
Juliet Helmke
Based in Sydney, Juliet Helmke has a broad range of reporting and editorial experience across the areas of business, technology, entertainment and the arts. She was formerly Senior Editor at The New York Observer.
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