Enigin Update - Office Space Needs to Undergo Energy Efficiency Upgrade
INTERNATIONAL real estate firm Savills estimate that over 700 million sq ft of UK commercial floor space may need to undergo an energy efficiency overhaul by 2018.
Savills reveal this estimate in their latest Opportunities In Green report. They also highlight that according to the UK’s Department of Energy & Climate Change (DECC), 62 percent of non domestic properties are rented and of this figure 18 percent have a rating below grade ‘E’, which is a concern with proposed legislation requiring buildings to upgrade rented properties to an EPC rating of grade ‘E’ or above,
Michael Pillow, director of Savills building consultancy, comments: “If the legislation goes through, leasing of a sub grade E standard property will become unlawful from April 2018. Although upfront payment issues to enable energy consumers to improve their property are considered within the Government’s proposals under The Green Deal financing framework, in practice there are many issues still to be resolved such as recovering charges incurred during void periods or in multi tenanted properties which could raise concerns and needs close examination.”
Savills does however state that going beyond basic levels of refurbishment can reduce void periods in a property as firms are increasingly showing a preference for greener buildings. This may not directly translate into a higher rental premium but Savills suggests it will improve the long term investment value of a building.
Marie Hickey of Savills research team says: “Its the avoidance of the ‘brown’ discount rather than the hunt for the ‘green’ premium that will drive investors/landlords to improve the efficiency of their portfolio.
“The UK market has not yet seen a clear hike in values when comparing higher ranking green office properties to that of lower grades. However, if we look to US and German markets we are seeing evidence of clear demand shifts towards green office product with a recent report suggesting demand has tripled in the five core German markets.”
According to Savills latest green office bulletin covering the German market, both leasing and investment market demand for “green” office space has risen significantly over recent years. The annual take-up of “green” office space in the top five German markets (Berlin, Düsseldorf, Frankfurt, Hamburg and Munich) has tripled from approximately 50,000 sq m on average between 2005 and 2008 to 150,000 sq m in 2009/2010.
With €1.1 billion generated from sustainable office buildings on the German investment market in 2010 the transaction volume was more than four times higher than in 2007 (approx. €0.2 billion) according to Savills researchers, and the share of this turnover in the total office investment volume rose from approx. 1 percent to about 14 percent during this time. The international real estate advisor suggests that both trends highlight that sustainable offices are no longer a niche product but will become market standard.
Jon Hutt, director of Corporate Real Estate at Savills, says: ”With the ever increasing costs of energy, early action to introduce green and energy saving enhancements is likely to give properties some advantage over more obsolete stock making them more attractive to occupiers and possibly enhancing rent and value. Review, analysis and delivery well before 2018 will be key.”
Enigin Distributors have ideal array of energy efficiency upgrades for existing buildings and office spaces - from intelligent energy saving solutions through to the full EnergyMaps system from Enigin - saving on costs, reducing emissions and providing real-time control of a facilities energy use.
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