The commercial real estate industry must accelerate its decarbonisation drive with or without government intervention – or risk missing out on sustainable finance streams, the RICS has warned.
Phil Clark, chair of the RICS commercial property forum, said the next decade will be “unprecedented for the built environment”, highlighting a raft of challenges the industry will face simultaneously, including climate change and shifting demand that could lead to stranded assets in town and city centres.
Writing in the institution’s first “real estate impact report”, Clark said: “The drivers of change are bigger and more fundamental than many of us have witnessed in our lifetime and imposing themselves faster than the commercial property trends of recent history. All those involved with the built environment will need to work together to adapt to that change for the benefit of our ultimate customer, the people of the UK.”
The report said companies need to take the initiative on making carbon assessment and management a core part of their business practices. It also recommends making commitments to efficient energy management to reduce operational emissions from buildings.
The study, which includes feedback from roundtables with members and industry leaders, also urged the industry to coordinate with other sectors that stand to benefit from regional economic development to boost social value, as well as investment in digital technology to improve business services and asset performance and flexibility.
Those efforts would sit alongside long-term policies from the government that support the sector. Recommendations including a new framework that bolsters investment into the regions, with particular focus on patient investors willing to fund long-term development with social value creation.
Additionally, researchers recommend embedding commercial property’s contributions and social value into the levelling up agenda by providing financial support for renovating assets and upskilling the construction workforce.
A stronger link between business rates and ESG performance was also proposed, as well as reviewing EPC ratings as methodology for commercial buildings.
The report estimated that the sector contributes £66.3bn to the UK. For every £1 spent on the sector, 90p can be gained elsewhere, according to the findings.
Clark said that the UK’s levelling up of its economy “cannot happen without a commercial real estate sector that meets the requirements of what our customers require from the built environment in the future”.
“Our customers are not just those that occupy the built environment,” he said. “We need to look through the lens of society to recognise how the commercial real estate sector impacts everyone, directly, [for example,] how we use places of employment, trade or leisure, and indirectly through the impact of their emissions on our climate.”
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