Green office demand to fuel construction sector
Demand for sustainable workplaces will keep the construction sector buoyant as the number of new office development projects fell, according to research by international law firm RPC.
This is despite construction projects in England falling by 15% between 2021 and 2022, from 434 to 367.
There is currently a significant shortfall in ‘green office’ stock in the UK, which are energy-efficient and feature reduced carbon emissions, at a time when government are targeting achieving net zero by 2050.
Jon Ely, partner in the real estate and construction team at RPC, says the shortage of green offices could prove a boom for developers and the wider sector following a period of rising interest rates and inflation.
He said: “For some time the office market has been working at two speeds, with the capital value of green office space, their rents and demand performing far better than the rest of the market.
“Despite the slowdown in new developments there is high demand for green office space, especially from larger organisations who will have ESG obligations to meet the 2050 net zero target.
“London is behind the curve compared to other major global cities, so we expect to see a healthy pipeline of new developments over the next two decades.”
In London less than 15% of the 109,770 offices are certified as green, meaning that around 93,305 offices in the capital are awaiting renovation or redevelopment to become more sustainable.
Across the UK, 87% of office stock has an EPC rating of ‘C’ or below, and over one billion sq ft of UK office space is below the ‘B’ rating, which is the proposed minimum standard by 2030.
London pales in comparison to other major international cities, such as New York and San Francisco, where 40% of offices are classed as green and is far below the average of 22% according to a recent study of 20 global cities.