As each year passes, there is more and more media coverage in relation to climate change and global warming. It increasingly becoming more important in every aspect of peoples lives and how businesses operate.
Last month, the UK experienced record-breaking temperatures followed by record rainfall, then during the same month, HSBC announced new ‘green’ financing options for those keen to reduce their environmental impact. Last week hotel chains announced that they were to ban plastic toiletries, and in March it was announced that from 2025 gas boilers will be banned in new homes.
Sustainable development in real estate
When it comes to the real estate sector, most environmental progress is prompted by legislation that directly regulates what can and cannot be built. For some time, developers have embraced sustainable developments. Planning permission often stipulates that developments must be ‘green’ and many retailers, including M&S, now stipulate that all of their leases have ‘green’ clauses which enable landlords and tenants to better manage their environmental performance.
According to the World Economic Forum, “Environmental Sustainability Principles for the Real Estate Industry” the real estate sector consumes annually over 40% of global energy per annum, that buildings originate 20% of global greenhouse gas emission and use 40% of raw materials. Landlords operate in a heavily competitive market and many tenants are beginning to demand more energy-efficient buildings.
The energy sector is now moving away from fossil fuels and sustainable resources, including solar and wind, are changing where we consume our energy from. In addition to this, the way that we consume our energy is shifting. For example, in 2019 electric vehicle sales should reach three million and by 2040 it is expected that electric vehicles will reach 30% of the world’s passenger vehicles.
Future shifts
Many market leaders in the real estate sector have embraced this energy transition and are making decisions in order to predict and understand future shifts. This includes SEGRO’s Navigation Park, a carbon-neutral industrial scheme that utilises solar panels in order to profit from the energy created through power purchase agreements. Organisations who are beginning to understand these energy shifts are making smart decisions in order to make their properties not only more attractive to tenants and future proof but also more profitable.
It is relatively commonplace for developers and those working within real estate to consider battery solutions and electric charging stations for electric vehicles. An example of this includes developers adapting their plans in order to take into account the installation of electric vehicle charging points not only to satisfy specific tenants but also those who may require them in the future and ensuring that their electricity infrastructures are capable of supporting future demands.
Many real estate professionals may not consider energy and real estate as intertwined. However, as sustainable investments and developments are becoming more and more appealing to tenants and investors alike, new challenges and opportunities are arising providing profound implications for both owners and occupiers.
How Nelsons can help
For further information on sustainable development in real estate or to comment on this article, please contact a member of our expert Commercial Property team in Derby, Leicester or Nottingham on 0800 024 1976 or via our online form.