Two years ago, Gensler’s report, Faulty Towers, anticipated the introduction of Energy Performance Certificates and pondered their impact. Now the ticking is becoming harder to ignore.
From April, commercial buildings 10,000 sq m or larger have had to be rated for their energy efficiency. By October this will extend to all commercial buildings. By then a certificate showing the operating efficiency will also be required.
Gensler recently surveyed 100 property professionals, half of whom were developers and half holders of large portfolios. Fewer than half (44 per cent) of property directors thought energy efficiency would have a negative impact on the value of poorly rated commercial property. Property developers, on the other hand, could see things coming; 75 per cent saw a negative impact for these buildings.
Most respondents were more concerned about cost-control than the environment, and would prefer to have efficient buildings than iconic ones.
The UK office market is suffering its most troubled period since the late 80s downturn. Property shares are underperforming and rents and capital returns are slipping. Construction levels remain buoyant whilst demand for space falls.
It was less than ideal timing for the Chancellor to burden the property sector with empty rates bills. Occupiers and investors have to face the consequences of hanging on to hard-to-let secondary property.
Harder to escape scrutiny
Since our Faulty Towers report more and more businesses have developed CSR policies. None, however, can claim to be green when their Energy Performance Certificate says that they are not. Increased shareholder activism and the move to greater supply chain transparency make it harder for any organisation to escape scrutiny.
Saving money, not the environment, is the main motivator for managers. Just as the Government is tightening the noose on inefficient buildings, market forces are pushing in the same direction.
As the economy slows and oil prices rise employers will have to cut staff or other costs. None of this bodes well for poor performing secondary buildings.
Hugh Mulcahey is director of consulting at Gensler