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One-in-ten office spaces in London may fall foul of impending upgrades to energy efficiency standards in England and Wales. Property agents Colliers believe that 20,000,000 sq. ft of prime grade London commercial space will fall below the new standards, which are due to commence from 1st April 2023.
The new standards will make it illegal for commercial property landlords to lease office space with energy performance certificates (EPCs) rated less than E. It is forecast that 10% of London’s office space currently have EPC ratings of F and G, which will fall below the new minimum energy efficiency standards (MEES).
In fact, around two-thirds of London’s prime grade commercial property has an EPC rating between D and G. All of which means that significant investments will need to be made into London workspace if proposed legislation comes to fruition. These proposals would permit only properties with EPC ratings of A and B to be leased from 2030 onwards, as part of the UK government’s commitment to creating urban areas with net zero carbon emissions.
Since the government consulted on the potential for new legislation on A and B-rated business space from 2030, concerns have been raised over the cost of upgrading premises to avoid them becoming white elephants with little value to their landlords.
Mike Prew, analyst at Jefferies, described the upgrade costs for London’s “gas guzzler” F and G-rated properties alone as being extremely prohibitive.
Prew anticipates the decarbonisation of inefficient commercial space in London will hit leading developers like Land Securities and British Land hard. He estimates that both developers will have to invest around 4% of their net asset values in bringing their portfolios up to scratch by 2030.
Tom Wildash of Colliers believes energy efficiency refurbishments could be almost as expensive as building a new energy efficient property outright. Refurbishments could come in at £200 per sq. ft, versus £300 per sq. ft for a new build.
“If you are sitting on a building that’s below an E rating and you want to get to a B rating, that’s a substantial bit of refurbishment,” said Wildash.
“There will be a lot of people who haven’t been prepared and don’t have the appetite or experience to do it.”
At Pall Mall Estates, we own and manage over 4,000,000 sq. ft of prime grade commercial space. Some of which is located within the Greater London area. We are a commercial property landlord, as opposed to a property agent. Subsequently, we are committed to investing in the efficiency and value of our nationwide portfolio of prime grade business space – including those in the capital.
For more than three decades, Pall Mall Estates has developed a proud reputation for its customer focused culture – built around giving our commercial tenants value for money. Our business benefits from a strong financial base, which enables us to invest in futureproofing the energy efficiency and amenities of our low-cost, high-value properties.
With tenants ranging from small, owner-managed businesses through to multi-national blue-chip organisations, we’re passionate about delivering value for money for tenants of all shapes and sizes, each of whom is as important as the last.
If you’re seeking feature-laden business space in Greater London, take some time to explore our available commercial properties in the capital. For more detailed information on an available unit, or to arrange a viewing, call us today on 020 8108 7295 or drop us a line using our online enquiry form.