Report | Creating Resilience

Is Sustainability Certification in Real Estate Worth it? 2024

09 December 2024 3 Minute Read

Is Sustainability Certification in Real Estate Worth it 2024

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Executive Summary

CBRE’s fourth edition of the research report, "Is Sustainability Certification in Real Estate Worth it?" examines the influence of office sustainability performance on value creation and its contribution to enhancing the future resilience of the office sector.

Key Findings

  1. Property owners and investors continue to progressively pursue sustainability certifications for their office buildings. As of the first half of 2024, certified properties constitute 26% of the market, an increase from 17% in 2019. The decision on certification to be pursued is often postponed until the later stages of construction, reflecting developers’ strategic focus on the changing preferences of occupiers and investors.

  2. The proportion of certified office take-up has risen from 40% in 2019 to 50% by mid-2024, underscoring the increasing significance of sustainability in occupiers’ building selection. It is important to recognise how local office supply dynamics affect the availability of certified options. In established office markets, the certification process for new and renovated buildings can take considerable time, impacting market dynamics.

  3. Certification can significantly mitigate vacancy risk; however, it is not the exclusive determinant. Achieving an equilibrium between locational preferences and sustainability objectives presents challenges in occupiers’ selection of new spaces. In the short-term, local market dynamics will be influenced by the office developments underway, with a markedly higher proportion of certified projects in the development pipeline compared to the existing stock.

  4. Sustainable interventions that reduce carbon emissions provide enduring benefits on rental pricing. On a Continental European level, buildings possessing sustainability certifications attain a rental premium of 4.9%. This premium is applicable to certified office assets, irrespective of their year of construction. Consequently, obtaining certifications for both new and existing office buildings results in enhanced rental income when compared to non-certified counterparts.

  5. Properties with lower EPC ratings generally command lower rental levels relative to those with elevated ratings. As occupiers progressively prioritise energy-efficient buildings, property owners who undertake proactive retrofitting of their assets are poised to realise substantial long-term benefits.

Methodology

This report examines office markets in 17 countries and 39 cities across Continental Europe. Our study analysed 23,750 lease agreements, including 10,750 leases in certified buildings and 13,000 leases in non-certified buildings.

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