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Commercial Property – Shape the Debate: Have your say on engagement, value and risk. Chair: Keith Bugden, Programme Director, BBP Paul Edwards, Head of Sustainability, Hammerson Miles Keeping, Partner and Head of Responsible Property Investment, Drivers Jonas Deloitte Stuart Bowman, CoreNet - PowerPoint PPT Presentation
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Commercial Property – Shape the Debate: Have your say on engagement, value and risk
• Chair: Keith Bugden, Programme Director, BBP
• Paul Edwards, Head of Sustainability, Hammerson
• Miles Keeping, Partner and Head of Responsible Property Investment, Drivers Jonas Deloitte
• Stuart Bowman, CoreNet• Matthew Tippett, Upstream Sustainability
Services, Jones Lang LasalleBartholomew Room
Commercial Property – Shape the Debate: Have your say…..
Paul EdwardsHead of Sustainability
OWNER OCCUPIER ENGAGEMENT
Key issues….
1. Sharing information is the key to success
2. Owners and occupiers have the same challenges and opportunities
3. Best results can be achieved through partnership and collaboration
Questions…..
1. Who is most responsible for taking the lead in engagement? Owner or Occupier?
1. Owner2. Occupier
2. Do you think regulation over the past 5 years has helped in any way to improve owner / occupier relations?
1. Yes2. No
Miles Keeping CEnv MRICS FRSAPartner, Sustainability
GREEN VALUE
Key issues….One main issue & two key issues
The main issue we really do need to get over:Value premium or value discount?
Other issues:What are the key drivers of value?
We all need to be more sophisticated in our analysis!
Premium or Discount: ‘Re-phrasing’ the EvidenceRental Value divergence between energy efficient and non-energy efficient offices – The Netherlands
9
80
85
90
95
100
105
110
115
2006 2007 2008 2009 2010
Green Index Non-green index
Source: The Value of Energy Labels in the European Office Market – Nils Kok & Maarten Jennen – May 2011
Premium or Discount: ‘Re-phrasing’ the EvidenceRental Value divergence between energy efficient and non-energy efficient offices – The NetherlandsSource: The Value of Energy Labels in the European Office Market – Nils Kok & Maarten Jennen – May 2011
80
85
90
95
100
105
110
115
2006 2007 2008 2009 2010
Green Index Non-green index
JLL Prime European Rental Index IPD Netherlands Annual Property Index (Office)
Correlation between Energy Efficiency and Rental Indices
“Generally” Positive
“Generally” Negative
Drivers of value: Some scenario implications
Source: IIGCC (2010)
Sophisticated analysis: Understanding the threats to valueLikelihood of occupiers acting on their policies
0
50
100
Public Sector PLC, B2C PLC, B2B Private, B2C Private, B2B
Sector Source: SIAM LLP
Prop
ortio
n of
rent
al in
com
e (%
)
Strength of carbon reduction policy amongst different business types (based on sample of £1.5bn of tenant-occupied real estate assets)
No PolicyPolicyWith targets
Source: Deloitte LLP
Conclusion• Increasingly compelling evidence available supporting value
shift as a result of energy efficiency/wider sustainability factors
• Risk that trend is interpreted as delivering ‘Premium’ or ‘Added’ Value… of greater concern is depreciation and obsolescence
• Impact on property and portfolio performance will be property specific – and not based solely on sustainability credentials
• Impact of tenant demand will be interesting & important to monitor
• Strategy should focus on immediacy, likelihood and scale of impact together with ability to mitigate and harness upside.
Questions…..1. Do you believe there is a link between sustainability
performance and value? 1. Yes2. No
2. What do you think will be the biggest driver linking sustainability to value?
1. Obsolescence2. Tenant retention3. Increasing Regulation4. Rental value5. Building Ratings (EPCs, DECs etc)
Stuart Bowman CEng MEIDirector of Breathe Energy LtdKnowledge & Learning Group Leader CoreNet UK
CLIMATE CHANGE RISK
Key issues….
1. Tangible climate change risks
2. How big are these risks?
3. How important are these risks?
Questions…..1. What do you consider the biggest climate change
risk?1. Buildings no longer fit for purpose2. Escalation of operational costs3. Insurance availability4. Disruptions to supply chain5. None are of significance
2. How important, relative to other business issues, is the management of climate change risk?
1. High2. Medium3. Low4. Not on our radar
Commercial Property – Shape the Debate: Have your say on engagement, value and riskMatthew Tippett, Upstream Sustainability Services, Jones Lang Lasalle
Bartholomew Room
