The commercial real estate sector will only meet Minimum Energy Efficiency Standards (MEES) of an Energy Performance Certificate (EPC) of B or higher by 2040, almost a decade after the deadline.
A report by Search Acumen reveals that this is a deterioration from last year when the report was undertaken, which estimated that the commercial real estate sector would meet the MEES target by 2038.
Search Acumen said the additional two years to meet the deadline showed the “pace of built environment decarbonisation has slowed”.
MEES that were implemented in April 2023, which prohibit the leasing of properties with an EPC rating of E or lower, have also not been met, with around 13,000 rental properties with EPC ratings of F or G.
The report found that upgrades to higher EPC bands of A* and B in 2024 were 20% down on the prior year.
Non-compliant registrations fell by around 7%, and there were 425 properties registering for lower EPC ratings, primarily in the office sector.
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Search Acumen noted there are around 5,761 office buildings with an EPC rating of F or G and only 15% of properties have got an A, A* or B rating.
The retail market has the lowest rate of non-compliant EPC ratings at 0.5%, with the hospitality sector with the highest at 31%.
Andrew Lloyd, managing director at Search Acumen, commented: “Real estate owners and investors have faced a barrage of economic and financial challenges over recent years and inevitably this will have had some impact on the appetite for investment in costly retrofits. Similarly, since the pandemic, how we live, work and shop has changed impacting the investment in asset management initiatives.
“This is most notable in the office sector, where appetite for investment in energy-efficiency upgrades has been made more complex by declining occupier demand for larger floorplates. Despite these dynamics, the mission to decarbonise needs to remain a constant, both to lower the environmental impact of the built environment, but also to ensure commercial sustainability for real estate portfolios. 2030 really isn’t that far away.”
