1.4 billion sq ft of retail space across the UK - 83% of all stock - will need to be improved by 2030 to meet the minimum standards required for a Grade B Energy Performance Certificate (EPC) set by the Government in its 2021 Net Zero Strategy, according to new research by Savills released at the COP26 climate change summit.
185 million sq ft (17.2 million sq m) of this space may become unlettable as soon as 2023, says Savills, where ambitious targets to decrease carbon footprints through the Minimum Energy Efficiency Standards (MEES) will prohibit commercial buildings with an F or G rating from being let.
Approximately 25% of retail property carbon emissions are generated by units within shopping centres, retail parks and high street blocks, which arguably are the easiest to eradicate, according to Savills, due to these assets tending to be larger, more modern, and principally owned by large institutional landlords which have access to the finance and expertise required to ‘green’ them. 75% of retail property emissions, however, are generated by smaller premises in secondary and tertiary locations and owned by private landlords, posing financial significant challenges, particularly in the current environment when the retail industry is suffering significant financial hardship amid ongoing structural change.
Tom Whittington, director in Savills commercial research team, comments: “When looking at the EPC ratings and size of UK retail properties it’s no surprise that the average A-rated shop is five times larger than a G-rated shop, with the former far more likely to be modern and owned by a large landlord. There is also a strong correlation between the worst performing assets and high retail vacancy rates, which begs the question whether improving some shops is actually worth the investment, particularly in these straightened times. Landlords are either going to require more Government intervention, policy and support to drive the change, or this space may find a new life under a different use which could make the upfront investment in improving its energy performance more cost-effective.”
Read Savills Real Estate and the Carbon Challenge report here
Notes to editor:
Savills recognises real estate is responsible for 40 per cent of carbon emissions and, to coincide with COP26, it is launching its latest research examining how the sector is adapting to meet climate change challenges. Savills is committed to achieving net zero carbon in its operation by 2030. Through Savills Earth it brings together the expertise of more than 100 specialists to support and advise clients on their sustainability, energy and carbon strategies. Visit Savills Earth to find out more.