Energy performance is key
Energy Performance Certificates (EPCs) for commercial buildings, or asset ratings as they are also known, were introduced in phases in 2008. The intention was to create a market-changing label for buildings, encouraging potential tenants and owners to rent or buy buildings with higher EPC ratings.
The EPC is an indication of the energy efficiency of a building, on a scale of A to G with A being the most efficient. At the time there were questions over just how effective such a policy could be. Would the property market be swayed by a rating like consumers buying fridges or washing machines? With so many other factors affecting the market, including location, fit-out quality and rental costs it did seem a little unlikely.
However, over the past five years the EPC has gained a foothold in the property market and it does seem that these energy ratings are having an influence. Recent developments in legislation are accelerating this effect. From January 2013 it became necessary to show the rating in any advertising material for the property, making the EPC an integral part of any decision by buyers or potential tenants.
Even more significant is the Energy Act of 2011 which states that from 2018 it will not be legal to lease or sell a building with an EPC rating of less than G. This represents about 20% of the UK commercial property market, including some higher specification offices. In a recent publication, property consultants GVA Grimley comments: “Marketability of some properties would become impossible unless they are upgraded in energy efficiency terms.”
Speaking at the recent BCIA National Conference, Debbie Hobbs, sustainability manager of Legal & General Property said that this legislation is shaping attitudes to commercial property.
“We are already seeing that F and G rated buildings are being priced lower than properties with better EPCs. We are planning an upgrade programme for F and G rated buildings in our portfolios. We would consider not buying a property if it is a low E-rating.”
Hobbs also pointed out that far from being uninterested in the energy performance of properties, tenants are also now keen to achieve savings on long term energy costs, driven by the rising cost of energy.
“Liaison with tenants is very important because we can help each other to achieve sustainability,” she commented. This includes offering financial support to tenants who, for example, want to switch to more energy efficient lighting.
So EPCs are now influencing the market in the way they were intended to do. And with this development, the ability to measure, monitor and manager energy use through building controls and building energy management systems (BEMS) is more important than ever.