The real estate sector is facing challenges from macroeconomics, geopolitics, and long-term structural shifts, impacting both investors and occupiers. Inflationary pressures and concerns about liquidity and access to finance are prevalent, but the drive towards achieving net zero carbon emissions is at the forefront of decision-makers' minds in the coming year. A global survey conducted by JLL shows a significant increase in the number of clients prioritizing sustainability.
Deadlines, regulations, and increased legislation, such as the implementation of carbon taxes on buildings in New York, are creating a sense of urgency among investors and occupiers. Guy Grainger, Global Head of Sustainability Services & ESG at JLL, emphasizes that this decade is about taking action to cut harmful emissions, as pressure from shareholders, employees, and society as a whole grows. Net zero buildings are commanding higher rents as occupiers increasingly seek spaces that align with their sustainability commitments.
Investors are concerned about liquidity, brown discounts, access to finance, and the risk of falling behind the curve. Retrofitting existing buildings will be a critical step in achieving decarbonization goals swiftly and in a financially prudent manner. Companies now need to demonstrate their implementation of sustainability commitments, moving beyond mere targets.
The role of technology in the journey towards net zero is recognized as crucial by survey respondents. Technology is seen as an enabler to meet ESG and net zero carbon goals. The demand for tech solutions that improve efficiency and support companies in achieving their sustainability objectives is increasing. Data collection, monitoring, benchmarking, and reporting on the ESG credentials of real estate assets will require improvements.
The annual Global Real Estate Sustainability Benchmark (GRESB) highlighted the strong performance of Australia's real estate investment funds, partly due to their adoption of technology solutions. Automation and digitization contribute to improved efficiency, better decision-making, and reduced risk. Occupiers also recognize technology as a means to optimize the way people work, with more clients interested in incorporating new tools.
There is a convergence of key issues facing investors and occupiers, as revealed by JLL's survey. Sustainability objectives align with cost-saving efforts, and technology plays a pivotal role in both areas. A greener, healthier, and efficiently managed building is directly linked to a happier workforce, as companies increasingly prioritize the well-being of their employees. Staying proactive and addressing these interconnected issues will be critical in the industry.
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