Embracing the Future: Redefining Office Space for Sustainability and Wellbeing

Posted by Colliers on 16th October 2023 -

In the ever-evolving landscape of commercial real estate, tenants are no longer content with conventional office spaces. 

 

They now seek properties that boast robust sustainability strategies and environmental, social, and governance (ESG) credentials. These credentials take many forms; from legitimate commitments and evidenced pathways to certifications that meet certain criteria. The market is highly saturated with mentions of ESG and sustainability, making it difficult to tell what is meaningful and what is greenwash. Overall, this movement highlights the importance of a genuine commitment to the environment and society; making them a cornerstone of modern office spaces. 

Prioritising environmental excellence

At the core of the ESG movement lies an unwavering dedication to environmental stewardship. This includes the circular economy, biodiversity and the hot topic of Net Zero Carbon. Forward-thinking tenants now emphasise Net Zero Carbon commitments for office spaces, driving demand for Net Zero Carbon-aligned buildings with operational strategies aligned to their Science-Based Targets. This goes beyond the current focus on minimum energy efficiency standards (MEES) regulations, extending beyond EPCs to meet meaningful market demands.

Illustrating this, is the IM Properties’/Wrenbridge Nova building in Oxford, and Landsec & Peel's MediaCity in Manchester. The Forge in London. Nova, a mid-tech research and development facility, aims for BREEAM Outstanding and an A+ EPC rating, and designed to generate more energy than it consumes. As with all buildings, the ongoing challenge lies in operational effectiveness aligning with Net Zero energy use intensity (EUI) targets, which will soon be published for R&D facilities. As a new office development, where EUI targets have been published, this approach has been implemented at MediaCity(pictured), where a strong emphasis is placed on employee well-being and sustainability through an innovative strategy. Home to an array of businesses including BBC, ITV, Kellogg's, and The University Salford, it has achieved Net Zero Carbon status for six prominent buildings: White, Blue, and Orange, Tomorrow, the Studios, and the Garage - the highest cluster of third party verified Net Zero Carbon buildings in the UK based on their operational carbon emissions.

Elevating social sustainability: a people-centric approach

With the overwhelming “new thing” being Net Zero, and all the work it requires, the social elements have been at risk of being under-resourced in recent years. The pandemic has since shifted some focus back towards people, normalising flexible work, valuing well-being, and acknowledging social impacts of the climate crisis. 

Engagement with the wider community and nearby buildings is increasingly the norm to take meaningful social action. Linking action to asset value is integral to traditional estate agency; pleasant spaces in desirable areas yield better rents, happier tenants, and sustained asset value. 

Within the buildings themselves, tenants have historically placed greater importance on the social and well-being aspects of their spaces than on environmental credentials.  Many offices aren’t fully equipped to cater to the priorities of employees as we now understand them. To remedy this, adopting a collaborative and consultative approach to caring for people can significantly enhance productivity, in a manner that holds more significance for profits than energy savings. This stands as an effective catalyst for driving ESG changes.  

Meeting the needs of a modern workforce

Given that many industries are grappling with the challenge of attracting and retaining top talent, the provision of amenities is recognised as a key factor in creating an engaging and appealing office environment. Tenants actively search for properties that offer accessible nearby green and blue spaces, dining options, inviting breakout areas, as well as on-site fitness and well being facilities. Property selection now revolves around spaces that are conducive to collaboration and considers how people collaborate in an office setting compared to remote work scenarios.

MediaCity's commitment was apparent from the outset, when it achieved the UK's first BREEAM Communities standard in 2011, highlighting energy efficiency and recycling. This commitment extends to new projects, with a focus on achieving top BREEAM scores while giving priority to employee well-being. These buildings provide Grade A space, high-tech meeting rooms, break-out spaces, abundant natural light, and excellent local and national travel connections. In addition to hosting a variety of sports activities and events, the public spaces also feature a range of restaurants, cafes, bars, and leisure facilities, including open water swimming sessions in the adjacent docks. This initiative creates a future-ready environment that benefits individuals, the economy, and the environment, aligning with Greater Manchester's sustainability goals.

The future of ESG-driven commercial real estate

Preserving and enhancing the sustainability of a place has led to the resurgence of green leases and green clauses. While not new, these are now seen as key to securing the future of a financially viable real estate market. It is essential to all stakeholders that we improve data collection, management, and sharing between tenants, landlords, and investors; fostering enhanced collaboration and a deeper understanding of a property’s current and future sustainability performance. Setting robust targets against the incredibly stretching goals we must all achieve relies on this. 

Offices designed and operated sustainably are standing out in an increasingly competitive market. With both investors and tenants increasingly prioritising environmental and social sustainability to a greater extent, landlords and operators must learn, adapt, and improve to remain viable. We expect that secondary, environmentally poor offices will continue to experience increasingly low tenant demand, significant void periods, and subsequently will become draining on cashflows. The new normal is environmentally positive, net zero buildings for both new builds and existing stock, that have been designed to meet the needs of the modern occupier.

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