Research - Sustainability and Offices in 2020 - October 2011

There has been considerable change in the office real estate sector over the last 10 years. The future is difficult to predict but the worst position one can take is not to even try. Jones Lang LaSalle's Offices 2020 research aims to go beyond the existing forecasts and to establish new insights into the office market between now and 2020. As part of this endeavour, we have polled a selection of industry experts in Europe on the key future issues perceived as most pertinent to them today. The programme will consider the top issues facing office real estate investors, developers and occupiers across Europe, the Middle East and Africa. Offices 2020 explores the shape of offices to come and covers issues and challenges including sustainability, location, asset management, technology, fit-out and finance.

In this summary, we are providing you with the key findings that concern the sustainability issue in the offices context. Based on a preliminary survey by Jones Lang LaSalle, 83% of real estate professionals think sustainability is currently the most pressing issue facing office real estate and will be for the next 10 years. From almost nowhere a decade ago, this subject has raced to the top of our worry list. In seeking to understand sustainability and its impact on the offices sector, we have identified five significant drivers. For the most part these are interconnected, self-reinforcing and require continual vigilance as they evolve and spearhead the developments in office real estate.

The key drivers of sustainability

• Environmental Change - This needs little commentary these days. Acid rain, holes in the ozone layer, global warming, damage to ecosystem services, climate change, resource depletion, air water and ground pollution, deforestation, wasteful practices – the list is long and compelling.
• Legislation - Governments have responded, slowly at first, and subsequently with a torrent of environmental legislation. From Kyoto, Copenhagen to Cancun, the issues have been discussed at the very highest political level and policy decisions taken at supra-governmental, regional, national and local levels. Two key obligations are:
  • by 2020 all new buildings need to be 'nearly zero energy'
  • by 2050 emissions from all buildings need to be as 'near to zero' as possible
• Ethical Business - many corporations have radically revised their view of what they do and how they do it. Ethical concerns have spread well beyond ecological issues, of course, to include things like child labour, workers salaries in the developing world, and health and safety issues in the Middle East. In short, the business of business is no longer business, but profits, social and environmental – the triple bottom line.
• Cost Control - Finance Directors have been quick to understand that the sustainability agenda is yet another way to squeeze costs inside the business. Whether cynical or enlightened, the fact is that being 'green' is now business common sense.
• Management Levers - Sustainability is such a powerful force in our society that its influence on employees' comfort and motivations has not been lost on HR and business managers. Overall, employees seem more satisfied to work in sustainable buildings and, in an age where finding and keeping talent and commitment is a regular HR nightmare, offices have an increasing role to play.

These sustainability drivers will ensure that the 'green agenda' will continue to grow and grow over the decade. Many new trends linked to sustainability will emerge and continue to change the landscape. Each trend poses new management challenges and new risks but also new opportunities. Here is just a selection of some of the trends we can foresee:

• Stricter legislation - every new piece of legislation at a European or national level will have the power to surprise on the downside, leading to investor frustration
• While the vast majority of buildings remain 'non-green', a trend towards 'light' refurbishment programmes will give many more buildings a boost towards eventual conformity with legislation
• Green leases – or at a minimum Memorandums of Understanding
• Continual technological innovation
• Green city governance
• Occupiers will become far more educated about their sustainability requirements and be more imposing
• Occupiers will be likely to push the boundaries further with a demand for second-hand furniture and non-toxic cleaning products

The list of trends is long and exhaustive. One of the things we can ascertain is that a 'sustainable building' will quite quickly come to mean a 'quality building'. Given the forceful, accelerating drivers and the emerging trends, it is clear that organisations would be wise to keep up with the pace of change. On the other side, there are very few inhibitors to this dynamic, if any. Those who succeed will recognise sustainability as a force for rapid change that stirs up much in the industry and which offers opportunity rather than constraint.

Click here for more Offices 2020 research.