The Ultimate Guide to Sustainable Real Estate in the UK

Sustainable development is becoming increasingly important in the UK Real Estate Market. As developers and investors seek to reduce their environmental impact, there has been a drive to meet the demands of tenants and consumers for greener buildings.

This is all the more surprising as the UK’s economic growth has been impacted by Brexit, the Covid-19 pandemic and inflation. All of which has had knock-on effects on the commercial real estate market. Despite economic uncertainty, sustainability continues to influence a wider shift to sustainable commercial real estate.

In this article, we will cover:

• Increasing Demand for Sustainable Real Estate in the UK
• The Cost of Sustainable Real Estate in the UK
• Technology Utilised to Improve Sustainable Real Estate across the UK
• Examples of Sustainable Buildings Across the UK
• Sustainable Real Estate Trends
• Leaders in UK Sustainable Real Estate

The Increasing Demand for Sustainable Real Estate in the UK

There is growing demand for more sustainable buildings and green spaces. This is leading to greater pressure on developers to incorporate sustainable features into their projects, which can increase costs.

Facilitate Magazine highlights how around 65% of contributors note that occupier demand for green/sustainable buildings has risen over the past 12 months. One key issue is the high level of energy consumption associated with commercial buildings. The high level of energy consumption associated with commercial buildings is a key issue.

The UK Green Building Council points out that operational emissions, from energy needed to heat, cool, and power buildings, account for 19% of the UK’s carbon footprint. Retrofitting older buildings with sustainable technology and energy-efficient measures can be expensive and challenging.

There is also a lack of standardization in sustainability reporting and measurement in the commercial real estate sector, which makes it difficult to compare and benchmark performance across buildings.

Additionally, there is a risk that sustainability efforts may be deprioritized in the face of economic pressures or short-term profit motives.

Despite added cost, leaders across the market know that if they don’t change they will be left behind. To stay competitive and to ensure your portfolio is optimised ethically, sweeping changes are needed. So keep in mind that sustainability is as much a route to relevance as it is efficiency.

The Cost of Sustainable Real Estate in the UK

The cost of construction and property maintenance has increased in recent years, driven in part by higher material and labor costs. This can make it more difficult for developers to generate returns on their investments.

Planning regulations in the UK can be complex and time-consuming, which can slow down development projects and increase costs. The UK’s departure from the European Union also has led to a shortage of skilled workers in some areas of the commercial real estate industry. This can make it more difficult to complete development projects and maintain properties.

Sustainable practices can often be more expensive for commercial real estate in the UK for several reasons. Many sustainable technologies and materials have higher upfront costs than their conventional counterparts. For example, energy-efficient building materials, such as low-E windows or green roofs, can be more expensive to purchase and install than traditional materials.

What is driving these high sustainability costs?

Retrofitting existing buildings to meet sustainability standards can be costly, as it often requires significant upgrades to the building’s infrastructure and systems. This can include upgrading heating, ventilation, and air conditioning systems, installing insulation, and upgrading lighting systems.

Achieving certification for sustainable buildings, such as BREEAM or LEED, can be expensive, requiring significant documentation and verification processes. Additionally, there may be additional costs associated with complying with local and national regulations and standards.

While sustainable buildings are becoming increasingly popular, there may still be a lack of demand for sustainable commercial real estate, which can make it more difficult for developers to justify the higher costs associated with sustainable practices.

In general, sustainable building materials can be more expensive than traditional materials. The prices of sustainable materials can vary depending on factors such as availability, demand, and production costs.

That being said, the cost of solar panels in the UK has decreased significantly from 1990 to 2020. In 1990, the cost of solar panels was approximately £20 per watt. However, by 2020, the cost had decreased to around £0.11 per watt.

Just take a look at this graph from IEA of approximate pricing drops in solar. This decrease in cost is due to advancements in technology, improved manufacturing processes, and increased demand for solar energy. Additionally, government incentives such as feed-in tariffs have helped to make solar panels more affordable for homeowners and businesses.

However, while sustainable practices may be more expensive upfront, they can also lead to long-term cost savings through lower energy bills, reduced maintenance costs, and increased tenant satisfaction.

As sustainability becomes more important to tenants, we may also see an increase in demand for sustainable commercial real estate, making it a more attractive investment for developers.

Technology to Improve Sustainable Real Estate in the UK

The commercial real estate market is rapidly changing with technology, and new innovations such as smart buildings and automation are transforming the way properties are designed and managed. Investors and developers need to keep up with these changes in order to remain competitive.

There are several technologies being used to make UK real estate more sustainable. Here are some examples:

Smart building systems

Building managers are using smart building systems to monitor and manage energy use in real-time, enabling them to identify opportunities to reduce energy consumption and improve sustainability. These systems can include sensors, smart thermostats, and building automation software.

Renewable energy generation

The UK real estate sector is increasingly using renewable energy technologies such as solar panels, wind turbines, and geothermal heating and cooling systems to generate clean energy and reduce reliance on fossil fuels.

Energy-efficient building materials

Energy-efficient building materials such as low-E windows, insulation, and green roofs are being used to improve the energy efficiency of buildings and reduce heating and cooling needs.

Building-integrated photovoltaics (BIPV)

BIPV involves the integration of solar panels into the design of a building, for example, by using solar tiles as the roof or cladding material. This technology allows buildings to generate their own clean energy and reduce reliance on the grid.

Intelligent lighting systems

Intelligent lighting systems use sensors and software to adjust lighting levels based on occupancy and daylight levels, reducing energy consumption and improving energy efficiency.

As technology continues to evolve, we can expect to see even more innovative solutions that help to reduce the environmental impact of buildings and make them more sustainable.

Discover Examples of Sustainable Real Estate in the UK

Below we have listed some of the most inspiring sustainable buildings from across the UK. These should provide adequate inspiration for what is truly possible when making cleaner and more environmentally friendly workspaces.

• Sustainable buildings in London

Sustainable Real Estate Trends in the UK

The UK real estate market is giving sustainability more and more thought. These trends are likely to continue as the nation attempts to meet its net-zero carbon emission goals. Tenant satisfaction is a huge motivator for sustainable action from building owners and investors.

The more green a building is the happier it’s users are and the more compliant it will be. Below we have listed just a few of the sustainable building trends from across the UK. Building owners, facility managers and HR alike can all use these assets to further promote just how sustainable their operations are.

Green construction certifications

BREEAM (construction Research Establishment Environmental Assessment Method) accreditation, and others like it, are becoming more and more popular in the UK. Many developers and property owners are investing in green building certifications to show their dedication to sustainability, which helps in monitoring and evaluating the environmental performance of structures.

Buildings with Net-Zero Carbon Emissions

The UK has set a goal of achieving net-zero carbon emissions by 2050, and many anticipate that the real estate sector will play a vital role in meeting this target. In order to decarbonize the built environment in the UK, the UK Net Zero Buildings Standard (UK NZC) will serve as a baseline standard.

Energy Efficiency

Reducing the carbon footprint of buildings is a top objective for the UK government, and many developers and property owners are making investments in energy-efficient materials and technology. This involves utilizing renewable energy resources like geothermal and solar energy systems.

Commercial buildings account for a significant amount of the UK’s carbon emissions, with an estimated 18% of total emissions coming from the sector. Despite this, many commercial buildings are not energy-efficient and consume large amounts of energy.

Discover solutions with Workero for improving energy efficiency in your building.

Green Spaces

The value of green spaces in urban settings has become more widely acknowledged. Many developers are including green spaces in their real estate endeavors. This entails the construction of rooftop gardens, green roofs, and other types of green infrastructure.

Sustainable Materials

In the UK, it is becoming more and more common to use sustainable materials in real estate developments. This covers the use of resources with a smaller carbon footprint, such as bamboo and hardwood, as well as recycled materials like recovered wood and recycled plastic.

According to the Timber Trade Federartion, the UK is one of the largest importers of timber in the world. More than half of the timber consumed, which in 2018 was more than 17 million cubic metres, comes from Europe.

Cement is another key area where progress is being witnessed. As highlighted by ThisIsCementUK, over 95% of UK concrete is produced in the UK. By comparison, 67% of timber and 60% of steel is imported from around the world.

Many developers still use non-sustainable materials for the construction of commercial buildings. This can contribute to deforestation, increased carbon emissions, and other environmental issues.

The complicated relationship between UK Real Estate and ESG.

Despite growing awareness of Environmental, Social, and Governance (ESG) issues in the commercial real estate sector, many companies are not fully integrating ESG principles into their operations.

ESG standardisation in the UK is being hindered due to a lack of a centralized authority to oversee ESG reporting requirements. This isn’t an assumption our part. Just look at the Financial Conduct Authority’s letter to administrators highlighting ESG failings. Companies and individuals are working to change this fact, but the industry recognizes failings.

Another challenge is the absence of a consistent framework for measuring and reporting ESG performance. This is leading to missed opportunities for sustainability improvements and hindering progress towards a more sustainable future. Coworking Insights highlights how half of UK landlords believe the office market is falling behind on ESG policies.

Additionally, there is a need for increased education and awareness of ESG issues among companies, investors, and the general public. Kate Dawson, director at KPMG’s regulatory insight centre provides great insights. She highlights the divergence between the UK & EU in this regard despite global standard-setters’ best efforts.

The market lacks a standard due to the many providers of ESG ratings. Daniel Klier is the former global Head of Sustainability at HSBC. He shows how these ESG scores and ratings become “useless” as they are merely amalgamations of different things that have little relation to each other.

These factors make it difficult to establish a universal standard for ESG reporting in the UK. As it stands, ESG isn’t exactly flourishing.

Sustainable Real Estate Leaders in the UK

There are a number of leading individuals in the UK real estate industry who are driving the sustainable development agenda.

• Emma Hoskyn: Emma Hoskyn is the Head of Sustainability at JLL UK. The UK recognises her as one of its leading sustainability professionals. Emma leads on commercial and corporate sustainability agendas with a growing team 100+ sustainability professionals across the UK. She plays a key role in driving JLL’s sustainability strategy, which includes a commitment to becoming net-zero carbon by 2030.
• John Alker: John Alker was the Director of Policy and Places at the UK Green Building Council. He has been a leading voice in the sustainable development movement in the UK. He has played a part in several initiatives that aim to promote sustainable building practices. Among them is the development of the UK’s first industry-wide sustainability framework.
• Oliver Heath: Oliver Heath is an architect and sustainable design consultant. No doubt you have seen a number of his high-profile sustainable building projects across the UK. He regularly speaks on sustainable design so be sure to keep an eye out for upcoming events. Moreoevr, Oliver  been involved in a number of initiatives aimed at promoting sustainable building practices across the industry.
• Sarah Ratcliffe: Sarah Ratcliffe is the Chief Executive of the Better Buildings Partnership. This is a collaboration of leading UK property owners and investors committed to improving the sustainability of the built environment. She has been instrumental in driving the partnership’s sustainability agenda. Areas of focus include reducing carbon emissions and promoting sustainable building practices.

Final thoughts on sustainable real estate in the UK

In conclusion, developers and investors in the UK real estate market are gradually adopting sustainable development to reduce environmental impact. The demand for greener buildings is growing, pressuring developers to incorporate sustainable features. Retrofitting existing buildings with sustainable technology is challenging and expensive, but can lead to cost savings and increased tenant satisfaction. Sustainable practices can help meet the UK’s net-zero carbon emission goals. Innovative technologies and trends offer hope for more sustainable buildings and fighting climate change.

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