Net Zero Carbon Offices
Like so much in the world of sustainability, ‘net zero carbon’ makes a lovely slogan but a fiendishly complicated target.
Net zero carbon, zero carbon and carbon-neutral – they all mean slightly different things. Then comes the really tricky problem of deciding what carbon you count – and net of what?
Whilst there is growing demand from occupiers, the developers of new buildings (and landlords of existing buildings) are more cautious – going dark green comes with risks.
What they would like to see is a value-adjustment in the way the market views low carbon buildings. That means higher rents and improved investment values. Today that uplift is not easy to spot on a spreadsheet.
Research by Green Street Advisors showed that green buildings attracted tenants more quickly than their less-green peers, but not by a lot (under 1% improvement in occupancy rates, rising the greener your portfolio got). However, Green Street said it found no evidence that green offices command premium rents.
The big win was on heating, lighting and hydration costs, which could be sharply down.
Unfortunately, because heating, lighting and hydration are relatively small items in a new building’s capital costs, the overall effect was muted. It shaved just 3% off the capital costs – and most of that was enjoyed by the tenant rather than the landlord. And so long as its tenants – not developers or landlords – who benefit from cost savings, but not from higher rents, going dark green is always going to be a really big ask.
Even so, most observers expect more net zero carbon development in anticipation of a premium price, and under political pressure.
This trend is increasingly visible in Birmingham, where the city’s new clean air zone and proposals for a workplace parking levy are part of a package of measures intended to green the city centre.
‘We are currently working with a number of clients to navigate what net zero carbon buildings mean for their portfolios as it starts to become part of the mix of requirements, as awareness rises and new initiatives to tackle pollution in the cities come into force,’ JLL’s Birmingham office agency Director, Jonathan Carmalt, says.