The global commercial real estate industry is facing increasing pressure to reduce carbon emissions and improve sustainability in buildings. To meet these demands, a new type of investment vehicle has emerged: real estate transition funds. These funds aim to transform energy-inefficient properties into more sustainable spaces.
In the article “Can Real Estate Transition Funds Improve Older Buildings?” by JLL, the effectiveness of these monetary vehicles is examined with an expert perspective. The positive aspects of transition funds are highlighted, including their ability to raise capital and meet investor demand for environmentally-friendly investments.
One major advantage is that there is a growing need for retrofits in older buildings due to tenant demand for sustainable space. Additionally, office vacancies provide an opportunity for redevelopment projects that align with sustainability goals.
However, there are challenges in getting these funds up and running effectively. This includes a lack of expertise and development partners as well as navigating complex regulations across multiple jurisdictions.
Despite these obstacles, it’s clear that transition funds have an important role to play in upgrading existing assets towards improved performance and creating value for building owners while meeting tenant demands. With 80% of current office buildings expected still be operational by 2050, there will be plenty opportunities for investors looking to make significant returns while contributing towards a more sustainable future.
