Avison Young: The Industrial Green Revolution
Avison Young have recently published a report on how the industrial commercial property sector will be combatting ESG:
The government’s 2050 net zero goals mean commercial property owners are under pressure to improve their buildings sustainability.
By 2023 an EPC grade E will be required on all non- domestic properties, which will impact 10% of industrial properties. This will rise to a grade B or above in 2030, unless exempt, which will impact 90% of industrial properties.
Landlords and owners are responsible for ensuring their buildings meet the MEES requirements. Temporary exemptions are included in the legislation, but it is likely landlords will be obliged to take advantage of lease events to ensure changes are enacted as soon as possible.
Efficiency improvements can result in higher valuations resulting in a rise in business rates payable which is currently acting as a barrier to investment in decarbonising stock. It is expected the government will make it increasingly difficult for landlords who may attempt to gain rolling five-year exemptions based on technicalities.
There is an additional exemption for retrofitting improvements that will take longer than seven years to recoup the initial cost of the work through estimated savings in energy bills. Although this is intended to make the sustainable transition more equitable, owners remain responsible for financing the retrofitting works needed, even if they do not occupy the building themselves. As this exemption will affect a large proportion of non-domestic property it is expected that the government will amend or dissolve it in the future.
The government is also introducing operational energy performance standards which measure a building’s actual energy performance annually and allows for a much more accurate and up-to-date assessment. This introduction will be for buildings over 1,000 sq m in England and Wales. Initially it will be applied to offices, but industrial buildings are high up the priority list.
You can read Avison Young’s Building Zero report for a full analysis here and contact them to discuss how they can guide you through the industrial green revolution.
