Proposed federal government legislation would require property investors,occupiers and building managers to report emissions in their annual reports,potentially starting in the 2024-25 financial year with the biggest companies and largest emitters.
The new regime has seen a tenant flight to new,quality,energy-efficient buildings to help achieve their climate goals. However,many prime office towers are still well short of tenant requirements,and would need major upgrades over the next few years if they are to remain competitive in the rental market.
Georgia Warren-Myers,former ESG,sustainability and climate risk expert at the University of Melbourne,says building owners are being forced to step up to improve their carbon credentials and cut investment risk.
“Net zero carbon ready buildings in Melbourne are rare,and there are only a handful of projects in the pipeline,” she says. “We are going to see a massive imbalance of supply and demand,which will have a direct impact of occupancy rates and rental prices.”
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Warren-Myers,now JLL’s Asia pacific head of ESG risk advisory,says an escalation of extreme weather events,including more bushfires at a greater intensity,and extended heatwaves,are making building owners sit up and take notice. “They are becoming aware of the serious impact that these events – now and into the future – may have on their[investment] portfolios,” she says.
Many older office towers have fossil-fuel powered heating and their cooling systems are outdated. Their low energy-efficient ratings are likely to see them continue to lose energy-efficient hungry tenants if they don’t act.