Sustainability has become a key agenda point for most modern businesses. Companies, today, often consider their carbon footprint when making decisions about business strategy and operations, as well as the design and construction of their office space.
Demand for climate-friendly offices has been rising, as firms seek to achieve internal ESG and sustainability goals. But this trend is set to accelerate in the UK thanks to the reintroduction of energy-efficiency regulations by the Labour government.
The minimum energy efficiency standards (MEES) aim to prevent buildings with low environmental ratings from being let, thus encouraging landlords to ensure energy efficiency in their rental properties. Businesses must assess, and prepare for, the impact of these rules on their office plans.
What is MEES?
The MEES regulations were introduced in 2015 to address carbon emissions in the built environment. Assessments under the standards are based on energy performance certificate (EPC) ratings, which range from A, the most energy efficient, to G, the least.
The 2015 standards mandated that, by 2018, leases must not be renewed, nor new leases granted, for any property with an EPC rating below E. In 2021, a proposal was made to raise the minimum standard to a C rating by 2028.
Although the regulations were abandoned by the Conservatives in 2023, Labour has announced the reintroduction of MEES under new rules, which will require all rental properties to achieve at least a C grade by 2030.
The move is a reassuring sign of the UK’s commitment to achieving its net-zero targets and a recognition of the crucial role that urban planning and architecture plays in emissions reduction.
As property owners prepare for the new rules to take effect, a record number of retrofit planning applications were approved in London’s Square Mile in 2023. The City of London Corporation said the 17 major retrofit applications approved last year will lead to tens of thousands of tons of carbon being saved.
Demand grows for sustainable offices
“MEES represents a real shift in the commercial property landscape,” according to Graeme Dick, principal consultant from procurement consulting firm Proxima. It also presents a new challenge for businesses renting offices that do not meet the standards, he explains, adding: “There is a possibility that many office buildings in the UK will become unlettable.”
In London, for instance, the majority (80%) of office buildings do not meet the future minimum requirements for energy performance, according to Deloitte’s latest London Office Crane Survey.
Callum Leary, senior associate at law firm Moore Barlow, says, currently, commercial landlords are not competing over who’s greener, as tenants are still being led by factors such as price and size. “Tenants are looking at different office spaces depending on their employee’s demand for office work, with a focus on fitting out offices in ways that encourage staff back into the office.”
He adds, however, that green leases and provisions on sustainability are becoming more common. “One of the main points in these provisions is that landlords can retrofit and make alterations as required to improve energy performance without the need for further consent from the tenant.”
Offices designed and operated sustainably are steadily becoming more sought after. They are seen as a better place to base a business because they are likely to offer lower energy costs and are now less likely to see imminent work as landlords race to bring non-compliant properties up the MEES standards.
Last year, demand for greener buildings was the main driver of office uptake in London, according to analysis by real estate consultancy Knight Frank. It found that more than 40% of London office leases in 2023 were for EPC-rated A or B buildings, up from 21% in 2018 and 37% in 2022.
