Office landlords are going green to beat competition 

The need to keep pace with competitors is the primary factor motivating office landlords to make sustainability improvements, finds new research from infinitSpace, the creator of white-label, tech-enabled, flexible workspaces, and The Instant Group, a global marketplace for flexible workspace solutions.

The survey of 250 commercial landlords with offices in the UK found that 30 per cent of office landlords have a sustainability strategy in place, while a further 42 per cent have individual sustainability policies in place, but no overarching strategy.

The most popular reason for landlords to improve sustainability is to keep pace with their competition, with 41 per cent of respondents citing this as a motivating factor.

A personal or organisational desire to play an active role in reducing climate change was the second most common factor (37 per cent).

Occupancy provided a backdrop to many of the factors, with 33 per cent citing the retention of existing tenants and 28 per cent the ability to market to new tenants.

infinitSpace and The Instant Group’s study revealed that 48 per cent of landlords believe having strong sustainability policies is essential to attracting tenants. Indeed, 88% per cent of landlords with office occupancy levels of more than 70 per cent have either an overarching sustainability strategy in place (56 per cent) or individual policies (32 per cent) in place.

Elsewhere, 33 per cent of landlords listed the need to comply with regulatory demands, such as new energy performance certificate (EPC) rules, as a factor motivating them to invest in sustainability.

Just one in five (19 per cent) make sustainability improvements to lower overheads, such as energy bills. This comes despite the fact that energy costs have soared in the UK well as much of Europe over the past 15 months.

Below is the full list of factors that motivates landlords to improve the sustainability of their office buildings:

1. To keep pace with competitors (41 per cent)
2. A personal/organisational desire to play an active role in reducing climate change (37 per cent)
3. To improve the retention of existing tenants (33 per cent)
4. To comply with regulatory demands, such as new EPC rules (33 per cent)
5. To act on advice and guidance from asset managers and/or brokers (30 per cent)
6. To enhance marketability to attract new tenants (28 per cent)
7. To lower overheads e.g., reduced energy bills (19 per cent)

Wybo Wijnbergen, CEO of infinitSpace, said: “Office landlords are clearly finding “green” inspiration from a variety of places. However, it’s notable that the two greatest motivators are market competition and an ethical desire to play a role in reducing climate change, demonstrating the importance of sustainability as both a strategy for commercial success and a moral imperative. 

“Many landlords will also note the connection between sustainability and occupancy. Increasingly, environmentally conscious businesses are led in their decisions by a commitment toward sustainability, including where they work. So, landlords must ensure they have a compelling sustainability strategy – with competition in the market so high, potential tenants will smell greenwashing from genuine action. Fortunately, landlords don’t have to face sustainability challenges on their own; workspace operators can help guide net-zero transformation in a way that is commercially viable both over the short and long term.”

Sam Pickering, Executive Director of Sustainability at Incendium (part of the Instant Group) added: “The range of responses illustrates just how broad and influential sustainability has become as a business driver for landlords. These results are compelling as they show landlords are still in a reactive phase of engagement. Responding to competition (41 per cent) and compliance (33 per cent) demonstrate this. What we are seeing through other areas of the industry is a proactive approach to yield the clear business advantages that sustainability can provide. With this shift I expect the figures for tenant attraction (28 per cent) and greater energy efficiency (19 per cent) will increase in prominence. The pace of change in the industry is increasing, and monitoring insights like these will continue to be hugely valuable.”