The commercial property market is competitive, particularly in London and the South, and it’s becoming even harder to get high-quality tenants willing to commit to long-term leases. Prime locations are no longer enough.
Brands are increasingly prioritising sustainability in their workspace, recognising not only the environmental impact but also the connection to employee well-being, brand image, and costs. Could a lack of sustainable office design in your portfolio be holding you back?
Do commercial tenants care about sustainable office design?
Due to the high cost of upgrading commercial space, it’s crucial to ensure that it provides a financial benefit. But, do commercial tenants really care about sustainability when choosing an office space?
The short answer is yes – A growing number of London occupiers now prioritize sustainable office design and green buildings are playing an increasingly important role in their strategic plans.
A recent CIM survey of senior decision makers at some of the UK’s largest organisations revealed the following statistics:
- 53% of people surveyed said reducing day-to-day operational and energy costs would significantly impact their decision on new office space.
- 55% “expected” to see evidence from landlords demonstrating a building’s efforts to reach Net Zero.
- A whopping 94% of decision-makers said they would pay more for a greener office space.
From these results, we see that not only is green office space important, but sustainability efforts are also becoming an expectation that commercial landlords in London must meet. Plus, changing UK compliance and regulations around EPC ratings means certain energy criteria must now be met by business owners. Since April 2023, the minimum energy efficiency standard (MEES) has increased to an ‘E’ rating.
Understanding the increasing demand for sustainability in offices
So, why are people taking such an interest in sustainable office design now?
2023 office trends are reflective of coming out of the pandemic. Hybrid working is on the rise and there is an increasing awareness of how the office affects employee well-being and plays into ESG policies. These elements combined have fuelled a growing discontent amongst tenants and a move to reflecting on their workspaces and the decision to move or improve .
While companies are already redesigning their work environment, they’re taking the opportunity to actively consider sustainable office design to support the business goals, including:
- Addressing their corporate and social responsibility (CSR)
- Reduced operation fees with energy-efficient buildings
- Supporting efforts to reach Net Zero
- Boosting employee well-being
- Improving staff retention rate
- Attracting new employees
If renting, this means businesses are likely to start reviewing better, greener office space to achieve their goals or else start demanding a lot more from landlords. So, get on top of these trends now to avoid pain later!
Attract better tenants with sustainable office design
A sustainable ethos is now very attractive to potential new employees. A recent survey by IBM’s Institute for Business Value (IBV) highlights this, stating 67% of respondents were more likely to apply for roles in environmentally sustainable companies. What you might find even more surprising is that roughly one in three of those surveyed who changed jobs in the last year say they accepted a lower salary to work for organisations focusing on sustainability (averaging a 27% pay cut).
Ensuring the growth and enhanced retention rates of your tenants can significantly bolster your security as a landlord, particularly when coupled with longer lease agreements. By providing a sustainable office space that aligns with all their needs and expectations, tenants are not only more likely to stay but may also be willing to pay a premium for the added value and eco-friendly features.
Let’s look at what potential tenants are looking to achieve with sustainable offices:
1. Improve tenant health and well-being
Employers are more clued up to the importance of how health and well-being are improved when their London office design focuses on sustainable practices. It provides staff members with a better work environment, supporting productivity and morale. Learn more about the relationship between office design and productivity here.
2. Meet Corporate Social Responsibility goals
Businesses have a growing corporate social responsibility, with more awareness and pressure from stakeholders to hit certain environmental targets. 75% of the CIM survey participants consider renting sustainable offices a key factor towards reaching their Net Zero plans.
At AXIS House, we can support landlords to plan successful sustainable offices, following stringent protocols as outlined to obtain BREEAM certificates and a successful SKA rating. These industry-leading standards form the backbone of our environmental strategy, playing an important role towards creating a greener future.
3. Build a more positive brand reputation
Most consumers care about making greener decisions for the good of society. Choosing sustainable office design provides a good brand image to people both internally and externally – including stakeholders, customers, and employees.
4. Attract the next generation of eco-conscious talent
A survey released in January 2023 by KPMG showed that respondents from Millennials to Gen-Z all consider sustainability important. Of those surveyed, 20% have actually turned down a job because the company’s environmental policies were not in line with their values, but that was an even higher percentage (33%) in those aged 18-24 years old.
Landlords need to stay ahead of the curve in attracting companies with younger workforces, so offering more sustainable office design is a strategic move. Providing eco-friendly workspaces not only helps tenants meet their internal objectives but also showcases their dedication to environmental responsibility and climate commitment.
5. Increase long-term property value and reduce operational costs
As a commercial landlord, increasing long-term property value requires commitment. There is fierce competition when it comes to London office design.
Grade A office space has increased in popularity by almost 11 times the standard rate of annual growth. Considered alongside commercial leasing volumes having declined in 2023, a 24% reduction compared to the equivalent period in 2022, its never been more important to ensure your office portfolio is up to scratch.
If your building has undertaken a modern, sustainable refurbishment, it’s going to be more attractive when you decide to sell or seek further investment opportunities. Plus, you will have lower operational and maintenance costs thanks to sustainable office designs.
6. Improve energy efficiency
Choosing sustainability no longer means accepting below par performance, your office will consume less energy, equalling lower monthly bills. That’s a win-win in today’s world with ever-increasing energy fees.
7. Manage waste more responsibly
Unlike many traditional spaces, your London office design can be planned to reduce waste materials at source, including:
- Integrated waste management systems (such as composting and sorting areas)
- Adding smart technology to track waste consumption and support reduction
8. Comply with regulations
Leasing a sustainable office helps tenants comply with regulations and incentives that may be available in their region.
Green materials and buildings often come with more readily available environmental data. Manufacturers and suppliers typically provide detailed information about the sourcing, production processes, and environmental impacts. This transparency allows tenants to make more informed choices based on factors such as carbon footprint, energy consumption, and overall ecological impact.
Certification programs, such as those from organizations like the Forest Stewardship Council (FSC) for wood products or Cradle to Cradle (C2C) for various materials, contribute to the availability of environmental data. These certifications require adherence to specific sustainability criteria, and will have clear guidance on recycling, take-back and re-use at end of life
Looking for a contractor to bring your sustainable office design ideas to life?
Opting for sustainable materials and energy sources not only appeals to tenants who prioritize sustainability but also translates to substantial cost savings in maintenance. This strategic choice ensures that your London office design remains both environmentally conscious and financially efficient, making it a smart decision for landlords seeking to maximise their investments.
AXIS House is committed to going beyond aesthetics. We transform spaces with creativity and innovation, and a strong focus on environmental responsibility, prioritising the use of eco-friendly materials and implementation of energy-efficient solutions as standard. If you value a greener, more sustainable future, our expertise in BREAM and SKA ratings will ensure you achieve a validated sustainability rating for your fitout scheme, and stand out from the crowd