Demand For Green Office Bldgs May Outpace Supply Soon
ASIA PACIFIC – A new study by Jones Lang LaSalle (JLL) showed that demand for commercial properties in the region that qualifies for sustainability standards could surpass supply in about 3 years, with 85 percent of office tenants expected to ink a green lease by then, according to a report from The Business Times that was updated on Thursday afternoon (6 October, SGT).
As of June 2022, 42 percent of the 340 corporate sustainability professionals in Asia Pacific had signed a green lease, but an additional 43 percent indicated that they plan to enter into such agreement come 2025, either as a new lease or part of a tenancy renewal.
The findings of the survey complement JLL’s Global Chief Sustainability Officer Richard Batten’s view that commercial property owners are not chasing sustainability titles for the sake of the awards but for the sake of property values.
He noted that new building standards, particularly those pertaining to energy efficiency, are being introduced due to government regulations, and rising expectations among staff, as well as market demand from investors and tenants.
“If standards become mandatory in Asia Pacific, as they are beginning to become in Europe and the US, landlords and particularly building owners will be owning more highly accredited buildings purely to protect value from an energy efficiency basis,” explained Batten.
Not only is there an increasing global adoption of green ratings like LEED, GRESB, and BREEAM becoming, he also said that accredited commercial properties are becoming the “accepted buildings,” while non-accredited ones are seeing steep discounts, in addition to being more difficult to lease and dispose.
Notably, a green lease is an agreement between a tenant and a landlord that sets out environmental goals on how a building is to be enhanced, overseen, or occupied sustainably. Examples of clauses in prevailing green leases include sharing of data on water and energy usage, as well as garbage disposal. It also includes joint commitment to renewable energy, along with energy-efficient fit-outs like sensors and lighting.
While some green leases lay out financial penalties if a party violates the agreements, some stipulations mostly state specific targets, or set out environmental action plans sans any penalties for not achieving them.
Still, cost savings arising from energy efficiency is the top consideration for complying with sustainability targets, with 67 percent surveyed companies in Asia Pacific saying so, as occupants often end up reducing operating expenses if they meet green targets.
