Energy-efficient Office Towers

Energy-efficient Office Towers Command Higher Rents

GLOBAL – A new research by Jones Lang LaSalle (JLL) showed that certified energy-efficient office properties, particularly those that generate substantial savings for tenants, are registering higher office rents, reported GlobeSt on Friday (1 December, SGT).

The real estate consultancy said such office buildings command rents that are up to 4.2 percent higher.

JLL explained that occupiers are now looking for workspace with excellent environmental performance indicators, like energy efficiency, in addition to other eco-friendly credentials. This is in response to firms targeting to achieve net-zero in the not-so far future.

In fact, the property consultancy highlighted that in some office markets in Europe, like Paris and London, rents of low-carbon prime offices have hit historic highs in 2023, despite an overall drop in office rental activity.

Meanwhile, the rental premiums of energy-efficient office buildings in the United States as compared to non eco-friendly buildings vary depending on availability.

For instance, in San Francisco, green office towers command a premium of 5 percent, while those in Phoenix, Arizona are 11 percent more expensive. It can be noted that 49 percent of the Grade A office stock in Arizona are LEED-certified, while it’s 77 percent for San Francisco.

JLL said Seattle could be the best-performing office sector in this regard after it saw solid construction activity, high levels of property electrification, and having an energy grid that’s among the cleanest in the US.

Other large office markets, such as Chicago, face steeper issues, due to its constrained development pipeline, limited supply of energy-efficient office buildings, and insufficient clean energy supply on the grid.

Furthermore, JLL said that office tenants are facing a distinct challenge in regards to identifying energy-efficient workspaces.

“The most popular certifications today are typically design and construction based, and buildings’ emissions and energy use are only one component of these certifications,” added the real estate consultancy.

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