In a previous article we wrote about how the “Demand For a Sustainable London Office Refurbishment Surge Following Property Boom” towards the end of 2022. Over the period from October 2022 to March 2023, as reported in the Summer 2023 Deloitte London Office Crane Survey the highest number of London office refurbishments and new builds were recorded since records first began in 2005. The Summer survey reported 37 new schemes covering 3.2 million sq. ft., up by almost 80% when compared to the Winter survey.
The Deloitte survey showed that demand was shifting to higher quality office space forcing building owners to improve their existing office stock to stand out from the crowd and meet the needs of renters who were demanding office space which was more discerning, flexible, sustainable and promoted health and well-being.
Margaret Doyle, chief insights officer for financial services and real estate at Deloitte said “Tenants’ shift toward quality over quantity has led to desire for attractive, sustainable, well-kitted out space, close to transport hubs and amenities. We expect that the need to bring offices up to scratch – especially in terms of energy efficiency – will drive London’s development for the rest of the decade.”
This drive towards higher quality office space was being propelled by the low numbers of high specification, sustainable offices in central London and the need to meet the UK governments’ Minimum Energy Efficiency Standards (MEES) and bring older buildings up to the acceptable energy efficiency levels minimum of an Energy Performance Certificate (EPC) B rating requirement by 2030. In 2022 only around 20% of central London office space met the standards of an A and B on the EPC rating scale. 80% of London office buildings fell into C to G ratings. 20 million square feet of London’s office stock had a rating of F or G. In March 2023 Savills looked at the latest UK EPC register data and found that 745m sq. ft or 77% of the UK’s office stock of office stock was EPC rated below B, which does not meet the proposed MEES regulations.
Paul Jayson, The UK Head of Real Estate Sector for DLA Piper was quoted as saying “Desirable amenities and environmentally friendly, well-located buildings are now in high demand. Owners of less popular commercial real estate may consider upgrading their properties to a higher technological specification and with flexible workspace designs, as well as ensuring compliance with the new minimum energy efficiency standards (MEES) and other sustainability benchmarks.”
The Demand For Sustainable London Offices Continues
It’s clear that the demand for sustainable London office space is continuing according to the findings by property analytics software firm CIM whose report “Tenant Preferences in the UK Office Market” found that companies are willing to pay higher rents for sustainable office space.
The report details the results of a survey of 200 UK directors and other senior staff who are involved in deciding what type of office space their companies require real. The survey found that “while [office] occupancy rates still lag behind pre-pandemic levels, a large majority 72% of respondents expect their business to move to at least three in-office days a week over the next two years.” The report also found that only 39% of those who took part in the survey were satisfied with their office space. Highlighting a divide between those looking for office space and landlords responsible for office space.
The CIM report went onto show that of those surveyed the majority are looking for sustainable office space. 41% of respondents stated they would be happy to pay between 10-14% more for green office space. 49% said “a property’s environmental performance and overall sustainability would ‘very much’ influence their choice of office.” 55% said they “expected” to see proof that landlords were making efforts to ensure their building and office space reached net zero with 53% stating that they wanted to reduce their day-to-day operational and energy costs and this would also significantly impact their choice of office space. 89% considered net zero as an increasingly important part of employee acquisition and retention. Only 6% said they would be unwilling to pay more.
Regional Vice-President EMEA and US of CIM, Cillian Casey stated “While our research demonstrates a clear urge from senior decision-makers for the workforce to spend more time in the office, the significant headwinds the market has experienced over the last three years have changed occupier expectations. Factors such as the rise of hybrid working and soaring energy costs, for example, are now greatly influencing what decision-makers want from a building. With more emphasis being placed on how companies can attract employees back to the workplace, environmentally friendly offices that improve productivity and wellbeing are now expected. As well as reducing office power consumption, sustainability is also becoming crucial to hiring and retaining talent in a competitive labour market with 89 per cent of respondents saying net zero was part of the employee value proposition.” He added that “Creating and maintaining more efficient buildings is critical to improving the overall standard of the built environment and meeting shifting market demands. However, while businesses are enthusiastically embracing sustainability, they need technologies that actively improve building performance – especially given the continued volatility in energy pricing.”
These findings are also backed up by Coldwell Banker Richard Ellis (CBRE), a commercial real estate services and investment firm whose UK 2023 mid-year market outlook forecasts that sustainability will become ever more important In 2023, and “the focus on sustainability issues will intensify” as elevated energy prices would “create strong incentives to improve energy efficiency…and sustained high gas prices will make onsite renewable energy sources more attractive.” They go onto say that “Occupiers that may not have prioritised sustainability in the past will demand improved energy efficiency to keep bills down as prices remain high.”
Green Credentials
CNBC’s “Green’ offices in London are over 25% more expensive. But a modern workforce now expects it” article highlights the fact that many companies want to move to office space with “green credentials” from organisations such as BREEAM and LEED. Given the lack of “sustainable” office space the competition for offices is driving up the cost. Companies are willing to pay for London office space that meets green standards even though green offices in are 25% more expensive.
This insight is backed up by Jones Lang LaSalle (JLL) a global real estate services company who carried out a Future of Work Survey in 2022 who found that even though green office space was more expensive “74% of the companies surveyed, represented by 1,095 senior corporate real estate decision makers across 13 countries, “are likely to pay a premium for green credentials,” with 56% planning to do so by 2025.” 80% of companies surveyed also said their employees “will increasingly expect the workplace to have a positive impact on the environment” while 75% said the same about a positive impact on society.
There are a number of reasons why companies are willing to spend more on green office space including reducing the cost of energy bills, especially important during a period where gas and electric prices are high to trying to ensure employee satisfaction in the workplace. This is especially true as companies face a labour market shortage and need to hold onto current staff and be able to recruit new staff. Understandably companies are keen to keep the staff they’ve got and be in a position to show off their green credentials when it comes to recruiting new staff.
The Office of National Statistics Labour market overview, UK: October 2022 found that the unemployment rate was 3.5% in October, the lowest it’s been since 1974, rising to 3.7% in December.
According to the British Chambers of Commerce BCC Head of People Policy, Jane Gratton there is a “critical shortage of skills and labour that is damaging firms and holding back growth. Once again, the data shows the number of job vacancies remains at record highs, adding to inflationary pressures.” She went onto say “We need to remove barriers to work, by offering flexible workplaces, rapid re-training opportunities and better access to childcare and public transport. And, crucially, we need to invest more in the training and upskilling of everyone in the workplace so that we are ready to grasp new opportunities for growth.”
Delivering A Sustainable London Office Refurbishment
For any office that doesn’t meet the current MEE standard there is an opportunity to refurbish to bring the space up to requirements and to ensure it becomes an inviting office space that any business would want to occupy.
The dictionary definition of sustainability is “the avoidance of the depletion of natural resources in order to maintain an ecological balance “the pursuit of global environmental sustainability.” Sustainability comes down to how well your building or office space is performing when it comes to energy efficiency, and how eco-friendly your business and its processes are. So how can you go about making your office space sustainable? Below we outline some of the many ways an office refurbishment can tackle sustainability within your workspace:
- Once you’ve defined your sustainability objectives e.g. you may just want your office to be “greener” or you may want to reach the RICS SKA rating which comprises more than a hundred ‘good practice’ measures covering energy and CO2 emissions, waste, water, materials, pollution, wellbeing and transport” your next step is to refurbish your office space with sustainability in mind.
- When refurbishing an office space, it’s important to look at the existing fixtures, fittings and furniture and review what can be reused in the new refurbishment, what can be recycled and what can be repaired e.g., wooden reception desks, panelling and shelving can be given a new lease of life by using paint or vinyl. Upholstered furniture can be reupholstered if the existing fabric is worn or no longer matches the office branding. Carpet tiles that no longer fit the office look could be recycled through the original manufacturer.
- It’s also important to consider the new products you’ll use in your refurbishment. Using products with good sustainability credentials can provide a good foundation on which to build the sustainability of your office e.g., wood products which have the Forest Stewardship Council (FSC) credential, or the Programme for the Endorsement of Forest Certification (PEFC) demonstrate how they have been sustainably sourced and maintained. Utilising natural materials like stone and wood in office furniture, flooring, doors and counter tops etc. can have a major impact on your office’s sustainability as they tend to be more durable so will last longer and won’t need to be replaced as quickly. Some accreditations specify that volatile organic compound (VOC) emitting materials which can be found in some carpets, wood preservatives and paints should be avoided as they can impact indoor air quality.
- Use only recycled paper and where possible print less by moving to digital only copies of your documents to cut down on the amount of paper you use within your business.
- Consider incorporating plants into the office. Not only are plants sustainable but they help to bring the outside inside which bring a host of benefits including improving health and wellbeing through stress reduction, reducing absence leave, increasing productivity and improving air quality by reducing the amount of carbon dioxide in the air.
- Look to make your office space more energy efficient by utilising natural light in your office layout. This helps to reduce the amount of artificial light that’s then required throughout your office thereby reducing your energy consumption. Wherever artificial light is required use low energy LED lighting systems which are more energy efficient. Incorporate sustainable and smart technology to help decrease energy consumption including the use of smart sensors which can control and monitor light usage and smart meters which can be used to track and control heating, ventilation and air conditioning settings to ensure that the system uses the minimum energy to achieve the maximum performance.
To find out more go to: How To Design A Kent or London Sustainable Office Refurbishment and How JBH Deliver Sustainable Office Refurbishments and Fit Outs.
JBH Refurbishments, Experts In Office Design and Refurbishment
JBH Refurbishments have over 30+ years experience in office design and office refurbishment and fit outs. We can advise on all aspects of your Kent or London office refurbishment. We understand what’s required to design a sustainable office space and carry out a refurbishment to the highest standards. We can provide the right expertise for your project. Contact us via our contact form or by calling us on 0333 207 0339 today for a free on-site consultation.
