Only 22% of offices in the world's major cities are 'green'

Only 22% of offices in the world's major cities are 'green'

Decarbonisation targets are becoming a priority for companies and this is generating strong competition for energy-efficient or 'green' workspace in major cities around the world. According to the Green Office Deficit Index, compiled by real estate consultancy Savills and analysing 20 cities globally, 'green' offices represent on average 22% of the total stock in each market, ranging from less than 15% in Los Angeles and London, to more than 40% in Warsaw, San Francisco and New York.

The most challenged cities are Los Angeles, Paris, Frankfurt and Seoul. Los Angeles, with 95% of its stock built before 2010 and only 13% certified sustainable, will leave tenants with very few energy-efficient building options due to extremely low new development activity. Meanwhile, Spain's leading office markets, Madrid and Barcelona, with 26% and 16% of certified stock, are in the top ten cities with the lowest deficit of green offices, although 85% of the stock was built before 2010 and will need to be reviewed in this regard.

Paula Ordóñez, Director of ESG Solutions and Corporate Sustainability at Savills Spain, explains that "after COP27 it is confirmed that the real estate sector plays a key role in meeting the decarbonisation targets set for 2030. The sector contributes almost 40% of global CO2 emissions. In Europe the targets were already ambitious, so companies will have to continue with their decarbonisation strategies for existing assets and the construction of new sustainable buildings to avoid being left out of the market".

Energy efficiency regulations have been introduced gradually and at different speeds in the 20 cities that Savills includes in its index. Taking 2010 as a benchmark year, more than 70% of the total office stock in these cities was built before that date, corresponding to some 580 million square metres of space in need of almost immediate attention.

Savills experts point out that the growing demand for energy-efficient office space is driven by rising energy prices, decarbonisation targets at both the country and corporate levels, and the war for talent. The desire to work in a sustainable environment is a priority for the next generation that should not be underestimated: to remain competitive, companies will need to ensure the sustainability of their workspaces. A more detailed analysis by the international real estate consultancy points out that there is not enough new supply in the pipeline to meet the expected demand for "green" offices.

Developers, acutely aware of this demand, as well as the rents in certified buildings, have risen to the challenge. According to Savills, the delivery of new or refurbished office space in the 20 cities in the index in 2024 will be 22% higher than the annual average of the past five years.

However, a number of projects are on hold due to rising energy costs and supply chain disruptions. The pace of new construction is also likely to slow down in the future due to the growing trend of reducing carbon emissions in construction. This, in turn, will increase pressure on owners to improve the sustainable credentials of their buildings through retrofitting.

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