Mumbai and Hong Kong, already placed at the bottom of the Sustainable Offices City Index, are expected to see a 62 percent and 68 percent supply deficit of top-quality sustainable workplaces respectively, a JLL report released on October 31 said.
Meanwhile, Singapore, Melbourne and Delhi are also expected to be 56 percent, 43 percent and 44 percent undersupplied respectively, JLL added.
The index that evaluated 20 cities in Asia Pacific (APAC) on four themes - green stock, physical risk to buildings, city competitiveness and city administrations’ proactiveness with net-zero carbon (NZC) targets - added that major cities in Asia Pacific will be facing a shortage of sustainable workplaces as companies aim to meet the net zero targets.
Occupiers will look beyond green certifications and make decisions based on building-level sustainability metrics, including energy efficiency and green energy procurement to meet the NZC targets, the report pointed out.
“Leasing office space in green-certified office buildings is becoming non-negotiable for occupiers, but currently there is very little correlation between these certifications and a building’s energy performance,” says Kamya Miglani, Head of ESG Research, Asia Pacific, JLL. “Even buildings with platinum grade green certifications may not be NZC-ready, partly because current regulations are not stringent enough to demand NZC-ready assets.”
According to the JLL analysis, the APAC region must accelerate the rate of retrofitting to comply with future regulations to meet the growing demand for sustainable workplaces.
The research concludes that redeveloping or upgrading assets to be NZC-ready will serve as the most efficient solution to bridge the supply-demand gap.
"Furthermore, investors and owners are encouraged to start incremental upgrades now, including retrofitting, to gain a first-mover advantage, or risk a brown discount, or less rental income, as climate-related regulations become more stringent," it said.
Untapped retrofitting potential
JLL said that with over half a billion square feet of Grade A office space in the region built before 2011, retrofitting potential is substantial in Asia Pacific.
In some cities, governments have already been playing a crucial role in addressing the supply-demand gap for NZC-ready office spaces.
"In June this year, Australia formally incorporated an energy performance measure in its National Australian Built Environment Ratings System (NABERS) to reward electrification of buildings and the procurement of renewable energy for building operations," the report said.
Similarly, the Singapore government last year provided subsidies to building owners to lower upfront capital costs for energy efficiency retrofits, depending on the level of energy standards attained, it added.
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