Green office space construction emerging as promising new market

Green office space construction is set to emerge as a promising new commercial construction market, particularly in central London as and when companies ask staff to return from home to work at their premises.

A new report from agents JLL, The Impact of Sustainability on Value has shown that so-called “sustainable office buildings” which help firms meet their carbon targets are proving attractive to investors thanks to the higher rents and strong leasing which they achieve. It suggests that a new wave of Green office construction and refurbishment will be needed to meet demand for at least 8 million sq ft of highly sustainable, net zero carbon space across central London by 2030.

JLL’s research found that new Grade A office buildings in central London and with a BREEAM rating of ‘very good or higher’ achieved higher rents; the average rental premium over non-rated buildings over the last three years was around 8%.

Urgency to build and redevelop

Sophie Walker, UK head of sustainability at JLL, said: “Clearly the urgency to build and redevelop these offices in central London to support corporate environmental and people goals is only speeding up. The first developers to undertake the task will reap the rewards of high levels of demand and the intrinsic higher performance of their product.”

Glenigan Construction data shows that developers in London are already seeking to meet high levels of sustainability on major new office and refurbishment projects in the capital.

For example, Land Securities’ £13.1 million Nova Place office and retail scheme in Victoria has been designed to achieve a BREEAM Excellent rating. Work on the scheme, which also includes a 1 400 sq m library, is due to start this summer and continue for 14 months (Glenigan Project ID: 19016209).

Similarly, the £57.6 million Skanska UK Building at Featherstone Street in the City, where work started last autumn, has also been designed to achieve an BREEAM Excellent rating (Glenigan Project ID: 15273575).

One major office refurbishment and extension scheme in the City, the £40 million Tower Bridge Court development, has also been designed to achieve a BREEAM Excellent rating. Work on the scheme is due to start this summer and continue for 23 months (Glenigan Project ID: 19268279).

Highest levels of sustainability

The highest levels of sustainability are also featuring on other types of commercial projects in the capital. The £25 million citizenM Hotel Victoria, where tenders have recently been returned, is designed to achieve a BREEAM Outstanding rating; the most demanding performance category for sustainability, met by just 1% of buildings. Work is set to start later this spring and continue for 12 months (Glenigan Project ID: 15250788).

Glenigan data suggest that contractors with specialisms in the construction of sustainable buildings could also find good opportunities in the education sector.
The new £7 million extension to The City University in Islington, where the contract has recently been awarded and work is due to start this summer, has recently been designed to achieve a BREEAM Oustanding rating (Glenigan Project ID: 19131083).

Similarly, the new £18.75 million University School Buildings at Lancaster University, where work is continuing, have also been designed to an Outstanding BREEAM rating (Glenigan Project ID: 15178194).

Among new schools, the £6.83 million Salmon’s Brook Special Free School in Enfield where construction is due to start this summer has also been designed to an Outstanding BREEAM rating (Glenigan Project ID: 19429358).