What's pushing office landlords to go green?

It is no secret that the world needs to change, and major steps must be taken to create a sustainable future for the planet and achieve carbon neutrality. 

Nowhere is this more essential than in the commercial real estate sector, given that the built environment is responsible for an estimated 47% of global carbon emissions.

Although reaching net zero is absolutely imperative, it is not necessarily the only factor motivating commercial landlords to implement more eco-friendly practices.

To discover which factors are truly driving office landlords to improve the sustainability of their operations, infinitSpace, in partnership with The Instant Group, surveyed 250 commercial landlords with offices in the UK.

So, what did our research show?

Interestingly, it revealed that the most popular reason motivating office landlords to make sustainability improvements is the need to keep pace with competitors, with 41% of respondents citing this as a motivating factor. 

Despite this, a personal or organisational desire to play an active role in reducing climate change was still highly important to landlords, marking the second most common reason (37%). 

Occupancy provided a backdrop to many of the factors for landlords, with 33% citing the retention of existing tenants and 28% the ability to market to new tenants. Of course, this is only logical given that the study revealed that 48% of landlords believe having strong sustainability policies is essential to attracting tenants. 

This belief, in fact, was indeed substantiated; of those with an occupancy of greater than 70% in their office building, there was an uptick (88%) in the number of landlords who had an overall sustainability strategy (56%) or at least individual sustainability policies (32%), according to the survey.

Elsewhere, 33% of landlords listed the need to comply with regulatory demands, such as new energy performance certificate (EPC) rules, as a factor motivating them to invest in sustainability.

One less important factor included lowering overheads (19%), such as energy bills – despite the fact that energy costs have soared in the UK well, as much of Europe, over the past 15 months. 

Here’s the full list of what our research revealed to be the factors motivating landlords to improve the sustainability of their office buildings:

1. To keep pace with competitors (41%)
2. A personal/organisational desire to play an active role in reducing climate change (37%)
3. To improve the retention of existing tenants (33%)
4. To comply with regulatory demands, such as new EPC rules (33%)
5. To act on advice and guidance from asset managers and/or brokers (30%)
6. To enhance marketability to attract new tenants (28%)
7. To lower overheads e.g., reduced energy bills (19%)

While there are clearly many great reasons to make the switch to greener policies, many landlords are daunted by the transition – namely the complexity of implementing policies and the potential upfront cost. 

That’s where flexible workspace providers like infinitSpace come in: with their expertise on hand, flexible workspace can help make a net-zero transformation into a seamless, commercially viable process for office landlords.

Speaking on these findings, our CEO Wybo Wijnbergen said: “Office landlords are clearly finding “green” inspiration from a variety of places. However, it’s notable that the two greatest motivators are market competition and an ethical desire to play a role in reducing climate change, demonstrating the importance of sustainability as both a strategy for commercial success and a moral imperative. 

“Many landlords will also note the connection between sustainability and occupancy. Increasingly, environmentally conscious businesses are led in their decisions by a commitment toward sustainability, including where they work. So, landlords must ensure they have a compelling sustainability strategy – with competition in the market so high, potential tenants will distinguish greenwashing from genuine action. Fortunately, landlords don’t have to face sustainability challenges on their own; workspace operators can help guide net-zero transformation in a way that is commercially viable both over the short and long term.”

Sam Pickering, Executive Director of Sustainability at Incendium (part of the Instant Group) added: “The range of responses illustrates just how broad and influential sustainability has become as a business driver for landlords. These results are compelling as they show landlords are still in a reactive phase of engagement. Responding to competition (41%) and compliance (33%) demonstrate this. What we are seeing through other areas of the industry is a proactive approach to yield the clear business advantages that sustainability can provide. With this shift I expect the figures for tenant attraction (28%) and greater energy efficiency (19%) will increase in prominence. The pace of change in the industry is increasing, and monitoring insights like these will continue to be hugely valuable.”

Are you looking to create a more sustainable, competitive property portfolio? Get in touch with the infinitSpace team today!