The mission to reach net zero carbon is the most top of mind factor for commercial real estate decision makers in 2023, according to a recent global JLL client survey. The number of clients who have listed sustainability as their highest priority on JLL’s survey has grown year-over-year. The combination of upcoming deadlines and increased legislation and regulation has instilled a sense of urgency among CRE investors and occupiers, according to Guy Grainger, Global Head of Sustainability Services & ESG at JLL.
“As pressure from shareholders, employees and wider society grows, this decade is no longer about targets but about taking action to cut harmful emissions,” Grainger said. “Net zero buildings are now achieving record rents as occupiers increasingly look for spaces that reflect their sustainability commitments, so the economic case is established.”
Additionally, CRE investors have expressed concerns about liquidity, building devaluation, access to finance and “falling behind the curve,” Grainger said. Retrofitting CRE buildings could be a pivotal next step as real estate emissions have reached an all-time high.
“Achieving decarbonization goals quickly and in a financially prudent way are the main objectives for companies in 2023 and beyond,” Grainger said. “Companies now need to move from making commitments to showcasing their implementation.”
Proptech’s role in improve CRE sustainability
Many of JLL’s survey respondents noted that they felt technology can be key to reaching net zero carbon. Almost 3,000 respondents said tech has become a vital need for them.
“More questions than ever are being asked about tech solutions that can support companies and improve efficiency,” said Stephanie Hyde, JLL chief executive for the UK. “That cuts across all areas of commercial real estate. But there’s certainly a deeper acknowledgement of tech as an enabling force to meet ESG and net zero carbon goals.”
For this to happen, data collection and monitoring will have to improve, as well as assessing, benchmarking, and reporting on real estate assets’ environmental, social and governance (ESG) credentials.
“Demand is rising for tech and data solutions that switch the modus operandi from reactive to proactive,” Hyde said.
Technology’s success in one sector of CRE could lead it being used elsewhere, according to JLL. For example, if automating or digitizing tasks, processes and reporting leads to more efficiency, less risk and better decision making, it’s possible occupiers will view tech solutions as a way to optimize employees’ work habits. Clients will also be willing to incorporate new tools.
“How spaces are designed, used and managed is now being informed by people’s needs,” Hyde said. “It’s clear that creating the best workplace experience for employees throughout their working day is becoming a key theme for occupiers as new ways of working emerge. All the issues our survey raised are ultimately interlinked. There’s no getting away from the fact that sustainability objectives align with cost-saving efforts, which, in turn, are connected to the pivotal role tech tools can play on both those fronts.
“Equally, with more companies voicing concerns for their people, there’s a direct link between a greener, healthier, and more efficiently managed building and a happier workforce. And being on the front foot will be critical.”