Companies willing to pay more for greener offices

New research from property analytics software firm, CIM, has found that companies are willing to pay higher rents for more sustainable corporate office space following the rise of hybrid working.

CIM’s latest report Tenant Preferences in the UK Office Market, surveyed 200 UK directors and senior personnel involved in key real estate decisions from companies that were large tenants of office space. It found that while occupancy rates still lag behind pre-pandemic levels, a large majority (72 per cent) of respondents expect their business to move to at least three in-office days a week over the next two years.

According to the report, only 39 per cent of respondents were very satisfied with their office space inferring landlords must be more attuned to changing occupier expectations. Of those surveyed for CIM’s research, only six per cent were unwilling to pay higher rents for a green office space, with the majority, at 41 per cent, stating they would pay between 10-14 per cent more. Forty-nine per cent also said a property’s environmental performance and overall sustainability would ‘very much’ influence their choice of office.

Cillian Casey, Regional Vice-President EMEA and US at CIM, said of the findings: “While our research demonstrates a clear urge from senior decision-makers for the workforce to spend more time in the office, the significant headwinds the market has experienced over the last three years have changed occupier expectations.

“Factors such as the rise of hybrid working and soaring energy costs, for example, are now greatly influencing what decision-makers want from a building. With more emphasis being placed on how companies can attract employees back to the workplace, environmentally friendly offices that improve productivity and wellbeing are now expected. As well as reducing office power consumption, sustainability is also becoming crucial to hiring and retaining talent in a competitive labour market with 89 per cent of respondents saying net zero was part of the employee value proposition.”

Almost all respondents (55 per cent) ‘expected’ to see evidence from landlords demonstrating a building’s efforts to reach net zero. This aligns with other overwhelming priorities highlighted by the report, such as 53 per cent of decision-makers saying reducing day-to-day operational and energy costs would significantly impact their choice of office space. These concerns demonstrate how aligning existing properties with the low-carbon economy will require the corporate real estate sector to identify tools to optimise building performance and increase overall efficiency, while lowering both emissions and energy bills.

Casey added: “Creating and maintaining more efficient buildings is critical to improving the overall standard of the built environment and meeting shifting market demands. However, while businesses are enthusiastically embracing sustainability, they need technologies that actively improve building performance – especially given the continued volatility in energy pricing.”