How can building owners and managers use occupancy data to optimize office space use and reduce energy consumption and energy-related costs?
Mark Carney, a former central banker from Canada, warns of significant stranded assets in commercial real estate as governments aim for net-zero emissions. He highlights the risk to property owners and lenders, particularly regarding older buildings that may not be able to meet new energy efficiency standards.
Challenges for Property Investors
Investors face declining asset values due to rising interest rates, compounded by urgent demands for energy-efficient investments. Carney points out that beyond fossil fuels, many older buildings may become obsolete as countries implement stricter regulations to reduce greenhouse gas emissions.
Diverse Perspectives from Business Leaders
- Michael O’Leary (CEO, Ryanair): O’Leary argues that there is a growing backlash against net-zero targets in Europe, suggesting that arbitrary deadlines like 2030 or 2050 are unrealistic. He criticizes policies that hinder energy sources such as nuclear power, asserting that the public is frustrated with political approaches to climate action.
- Matt Soffair (Legal & General): Soffair notes that real estate is vulnerable to becoming stranded due to regulatory and physical factors. He emphasizes the importance of proactively managing environmental, social, and governance (ESG) risks, suggesting that assets with strong sustainability credentials can command premium values.
- Eamon Ryan (Minister for Environment): Ryan agrees with Carney on the need for better energy ratings for buildings. He advocates for public investment in retrofitting and the use of district heating solutions, especially for historic buildings that are difficult to retrofit. He outlines plans to allocate funds for climate-related investments.
- Neil Bannon (Bannon Commercial): Bannon believes prime city center locations will continue to thrive, as their value can support necessary upgrades to meet sustainability standards. However, he warns that lower-value areas may struggle to invest similarly, risking financial obsolescence. He suggests that policymakers may need to provide financial support to prevent obsolescence in less desirable locations.
Conclusion
The discussion underscores the complex landscape of commercial real estate amid the transition to net-zero. While there are differing opinions on the future of property assets, the consensus is that proactive measures and investments will be essential to mitigate risks associated with stranded assets.
This modern argument of financial risk on property investments highlights how People Counting is one of the key future technologies that could help revalue assets, since it can bring serious energy savings when connected to Building Management Systems to control Heat, Cooling and Ventilation (HVAC).
