In a recent article, JLL experts Guy Grainger and Paulina Torres discuss the increasing demand for high-quality, low-carbon workspace among corporate occupiers. However, this demand is expected to exceed supply by 75% in major U.S. markets by 2030. According to the authors, this translates into a projected shortage of 57 million square feet of low carbon office space in the coming years.
Grainger and Torres highlight that there is a growing preference for energy-efficient, electrified and clean energy-powered spaces due to their resilience against changing regulations, ability to meet short-term sustainability targets and appeal to employees. They caution that the availability of such spaces varies from city to city based on industry presence, corporate space needs and existing stock levels.
For instance, Washington D.C., with its large number of government agencies with strict sustainability goals has a higher imbalance compared to other cities like Chicago which faces constraints in development pipeline as well as inefficient existing stock coupled with limited access clean energy sources. New York City stands out due its dominance by finance firms which have ambitious sustainability targets resulting in higher requirements for low-carbon buildings; however current projections show only about one-third (8.1 million square feet) being delivered between now until 2030 despite an estimated future demand of over double (23.3 million square feet).
The authors note that many corporates are reevaluating their office footprint while considering factors such as hybrid working arrangements , collaborative workspaces , amenities along side sustainable practices . In particular decarbonizing real estate operations or leasing low-carbon properties offer easier solutions compared tackling Scope III emissions across supply chains according JLL estimates three quarters new lease requirements top hundred occupiers will require carbon commitments between next seven years .
Moreover they point out how adopting green building standards can lead more efficient operations terms costs benefits owners who retrofit develop buildings mind enjoy financial advantages through increased rents cheaper debt attracting retaining quality tenants but increasing regulation costs combined with tenant migration demand could reduce net operating income. Grainger and Torres suggest that the supply-demand gap presents an opportunity for owners and tenants to collaborate on reducing building emissions, sharing both the costs and benefits in doing so.
The article originally appeared on Connect CRE website.
