"Real estate owners and investors have faced a barrage of economic and financial challenges over recent years and inevitably this will have had some impact on the appetite for investment in costly retrofits"
- Andrew Lloyd - Search Acumen
Research by property data and technology company, Search Acumen, reveals that the commercial property sector is still struggling to meet the required energy efficiency standards. At the current pace, it is projected that it will take just over fifteen years, or until 2040, for all rented commercial properties to meet the 2030 MEES standards, missing the deadline by an entire decade.
Future outlook
The current outlook for 2025 is uncertain, since last year upgrades to the higher rated A*-B EPC bands were down by 20% when compared to 2023.
By contrast, non-compliant registrations went down by just under 7%, and there were still 425 properties registering for the lower EPC ratings, mainly in the office sector.
Search Acumen’s research shows that the rate of improvement has slowed in the past year. In May 2024, the commercial real estate market was due to miss the target by eight years, but the latest analysis adds an additional two years to the already sluggish pace of change.
Sector performance breakdown
The research identifies the office sector as the most affected, with an estimated 5761 office buildings still rated F or G. Only 15% of offices have achieved an A, A*, or B rating, indicating significant room for improvement.
The retail sector now has the lowest rate of non-compliant EPC ratings, just 0.5%, while the hospitality sector continues to have the highest rate of top band registrations at nearly 31%, a 4% rise since April 2024.
Education which now only has 1.8% of buildings rated F or G, now has 19% of buildings rated as A*, A or B, a 7% rise from an already respectable figure in April last year.
“Real estate owners and investors have faced a barrage of economic and financial challenges over recent years and inevitably this will have had some impact on the appetite for investment in costly retrofits," Andrew Lloyd, Managing Director at Search Acumen, commented "Similarly, since the pandemic, how we live, work and shop has changed impacting the investment in asset management initiatives.
He added, "This is most notable in the office sector, where appetite for investment in energy efficiency upgrades has been made more complex by declining occupier demand for larger floorplates. Despite these dynamics, the mission to decarbonise needs to remain a constant, both to lower the environmental impact of the built environment, but also to ensure commercial sustainability for real estate portfolios. 2030 really isn’t that far away.”
