NB Real Estate Limited - General - UK
Date: 21 Apr 2008
The UK commercial property market is likely to follow the example of the US in applying a premium value to energy efficient property says Jonathan Lovejoy, of NB Environment, part of NB Real Estate Limited.
A recent US study found that commercial properties that achieved the US ENERGY STAR rating sold for 27% more per sq ft than buildings that failed to achieve the rating. These energy efficient buildings also achieved rents 8.5% higher than less efficient buildings. Occupancy rates of the energy efficient buildings were 92% compared to the average of 87% for the less energy efficient buildings.
NB Environment explains that the new regime phasing in Energy Performance Certificates (EPCs) for commercial property in the UK that started on April 6 will soon have a noticeable impact on property pricing.
By October 1 this year all sales and lettings of commercial properties over 1,000 sq m or 10,000 sq ft will have to be accompanied by the new certification regime. Public sector occupiers will also have to start displaying their building's energy rating in a public area.
Explains Jonathan Lovejoy, Director of NB Environment: "Although the UK property market views the EPC with some scepticism, these certificates are going to influence a large number of corporate and public sector occupiers."
"Consumer facing companies and the public sector now work very hard at improving their green credentials. They will not want to jeopardise those credentials by occupying a poorly rated building. What these occupiers do is going to have a ripple effect across the whole sales and lettings market."
Jonathan Lovejoy says that a broader spectrum of occupiers will also want to ensure that new space they occupy gets a high energy efficiency rating.
"When professional services companies such as law firms and accountancy firms take new space they use it as an opportunity to impress all of their existing employees. They will want to be able to tell their employees that their new headquarters meets the high energy efficiency standards.
"The US experience suggests that they will be willing to pay for that privilege."
"Customers and staff are increasingly confident about asking organisations very pointed questions about their environmental impact. EPCs do provide a clear rating system that everyone can understand so they will be a focus of attention."
NB Environment also says that those marketing properties in the UK with the best EPC ratings will soon start taking full advantage of how this can differentiate their property.
Adds Jonathan Lovejoy: "Property agents would be missing a trick if you didn't make it pretty central to their sales pitch."
NB Environment says that the size of the premium that the US commercial property market applies to "green buildings" is particularly noteworthy as it is generally considered that US corporate occupiers are much less concerned about their impact on climate change than their UK or European counterparts.
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