Dec

Can you afford for your buildings to fall behind on environmental standards?

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The commercial property industry is at a crossroads.

Industry experts are reporting sluggish growth and technology along with Covid-19 is having a huge impact on the way business is being done.

The Covid pandemic is just the latest in a long list of changes impacting on the industry, from the death of the high street, and extreme weather events, to the way tenant’s needs for physical space are changing due to the increased use of technology, and greater environment consciousness.

Extreme weather events have been occurring on an increasingly regular basis and many thousands of commercial buildings are built in floor areas. The Covid-19 pandemic is still an ongoing and serious concern for public health in the spaces where people live, work, and play.

Adapting and transforming

Transforming how buildings are constructed, configured internally and operated is going to be a key theme needed to address these crises. Owners are looking for opportunities to create better buildings, whether that means adapting operational practices or deciding how and where to invest in systems upgrades.

There is a growing commitment to measuring environmental, social, and governance (ESG) impacts. That is transitioning to resilient, low-carbon practices, improving public health, and better support for business, customers and communities in the UK commercial real estate sector.

A new report “A sustainable future for commercial real estate” has just been launched by Deepki, a leading European ESG data intelligence and consulting firm. The report shows that one-third of UK institutional commercial real estate investors and property professionals think that the ESG credentials of property assets will be an important factor in the investment decision-making process. 57% regard this as quite important, just 5% said they were neutral and 5% only said they weren’t important.

Growing importance of ESG

The majority of respondents in the Deepki study think that ESG building credentials will only grow in importance for to investors in UK commercial property over the next 12 months with 81% stating that it will become even more important in three years’ time. It underlines how critical is the commitment to addressing climate change and tackling the necessary steps to adapt buildings both for Covid-19 and to achieve Net Zero within the projected timescales.

Impact of the Covid-19 pandemic on ESG

Covid-19 has only served to accelerate the need for property owners and industry professionals to focus on ESG in commercial real estate. But many see the increased incidence of vacant commercial buildings as an opportunity to address ESG performance in them. It’s an ideal opportunity to do something about it, to carry our refurbishments that will not only address the new requirements needed for Covid, but also the environmental issues as well.

Key responses:

60% say	There have been more commercial buildings that have been empty during the crisis, making it easier for owners/landlords to review the ESG credentials of their property
56%	There has been a greater focus on ESG in general, with all investments and asset classes
43%	There has been less activity in the commercial real estate sector e.g., in terms of marketing to tenants, and this has provided more time for owners to focus on the ESG credentials of their properties
31%	Tenants have started to demand better standards in this area
9%	We are increasingly having to provide more ESG data on our buildings when we are marketing them

Deepki Report

Deepki is a consultancy recently launched in the UK and offers a fully populated ESG data intelligence platform to help commercial real estate investors, owners and managers improve the ESG performance of their real estate assets, and in the process enhance their value.

Katie Whipp, Head of Deepki UK, says:

“Commercial real estate investors need to future-proof their investments, and strong ESG indicators are a key part of this, representing a trend which is set to continue. The Covid pandemic has also changed the focus on ESG in the sector in different ways, from owners having more time to review empty buildings, to a greater demand from tenants for higher standards.”

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