Thought of the Week
How energy efficient is our city centre office stock?
January 31, 2024 2 Minute Read
Although the Government has yet to confirm it will raise the MEES for commercial property to ‘Energy Performance Certificate’ B by 2030, the market tends to see tighter regulations as inevitable. With this in mind, the market is viewing anything below EPC B as likely to need upgrading at some point in the future. But, this is going to be a hard ask – of the 180,000 or so offices across England Wales with a current EPC, only 10% are B or above. Still, our major regional cities have a higher share of A and B rated commercial buildings; Leeds and Manchester have the highest share of “energy efficient” buildings, at 38% and 39% respectively. In contrast, Oxford and Liverpool have under 20% of offices with an EPC of A or B.
We estimate there is c72 million sq ft of energy inefficient office space in our regional city centres. Using proprietary CBRE retrofit cost data, we estimate the investment required to upgrade this space to EPC A or B is in the region of £2 billion.
While the capital required to upgrade energy efficiency is significant, higher energy efficiency has been shown to correlate with stronger investment performance. And of course, the financial benefits in terms of rental uplift of this investment, may be greatest in markets where energy efficient stock is rarest, like Oxford and Liverpool.
Share of energy efficient offices (city centre stock) and required investment for upgrading inefficient stock
Source: CBRE Research, Department for Levelling Up, Housing and Communities
