Perspectives 2019

Net zero real estate forecast The built environment accounts for roughly 40% of the UK’s carbon footprint. The Climate Change Act 2008 developed legislation to encourage efficiency across the sector, however these were framed around an 80% reduction target by 2050. The introduction of a net zero or 100% reduction target to 2050 will see a significant shift in how emissions are considered within the sector. Changes in real estate will be wide- ranging; key trends we may expect to see in the short term include: 1. Emissions management will be non-negotiable between landlords and occupiers The past five years has seen energy and resource management come to the fore in negotiations between landlords and occupiers, largely driven through legislation in the UK such as the Minimum Energy Efficiency Standards (MEES) and the Carbon Reduction Commitment (CRC) – as well as voluntary disclosure mechanisms such as the Global Real Estate Sustainability Benchmark (GRESB) and the Carbon Disclosure Project (CDP). As businesses adopt net zero targets including their direct energy use and indirect impacts (e.g. tenants using energy in landlord owned buildings), there will be a focusing of attention on how the building is being managed, what building services and lighting systems are installed on site, and how energy is being sourced. Both occupiers and landlords will integrate non-financial sustainability factors into their leasing and development financial decision making. 2. Wider real estate trends will integrate with net-zero targets Cushman & Wakefield’s research team has highlighted the rise of an increasingly ‘coeverything’ world. As our working, retail & living spaces become experience hubs with multiple on-site providers and users, responsibility for their environmental impact becomes a broader matrix with more interested parties. Both landlords and occupiers of co-spaces will be differentiated on their integration of net-zero strategies to implement low & zero carbon solutions. Alongside this, as both wellbeing and net-zero strategies evolve, they will become more aligned, both focused on the occupant experience of a building, with both becoming a norm expectation to varying degrees across geographies and property types. 3. Distributed energy systems National Grid statistics show that the UK’s energy mix from low carbon sources increased from 22.3 per cent in 2009 to 47.9 per cent in the first half of 2019. The increasing challenge is for all areas of the country and all property uses to be supplied with decarbonised energy consistently and at the same time. With the coming inquiry into recent National Grid power outages, we can expect this to remain a headline issue. On-site renewable technology solutions, such as solar PV will also rapidly accelerate over the next ten years as energy infrastructure requirements continue to expand and businesses target on-site projects as part of their net-zero objectives: the government are supporting development of this through funding as part of the UK’s Industrial Strategy. Climate change is an issue that is demanding attention – hence the net zero targets CUSHMAN & WAKEFIELD 13 FEATURES