roundtable: commercial property 53


occupier prepared to sign up to a 10-year certain term. It often makes much more sense to recycle buildings rather than knock them down and redevelop.”


Finnis stated that the western corridor replacement rate is under 1% within an 85 million sq ft market. “That means only 450,000 sq ft is being constructed that will be delivered this year. To replace the stock at issue is going to take us 50 years. That’s a fundamental problem coming at us like a train.”


occupational cost message for the property director to tell to his finance director.”


Coote agreed, mentioning a Grade A central Reading headquarters-style building with an EPC rating of F. “I couldn’t believe it, and nearly fell off my chair. Fortunately that one is going to be refurbished.”


Jones: “Over the past 20 years our industry (design and engineering) has changed beyond recognition. Our driver in the ‘90s was maintaining working conditions, but now it‘s all about energy consumption. About 80% of our work involves managing margins. The building might look the same, but what we do now to create it is a world apart.”


Castle agreed modern looks could be deceptive. “Today, it is about quality design; integrating the energy uses, fundamental geometry, and systems within the building. It is now a highly complex structure, in which even desk layouts might have a significant effect on the energy use. You might get very different ratings per floor dependent upon the types of occupation.”


Robin Harris


While people might be focusing on EPC E-ratings for 2018, Griffiths pointed out that the government’s long-term ambition was clear and consideration should be given to more stringent EPC ratings in the future. “So, there may be a business case to do more significant investment now rather than later.”


Architect Castle agreed that undertaking extensive upgrading work in one go was not only cost-effective but a sustainable approach, “rather than throwing away some of the kit every five years.”


Finnis revealed that Jones Lang LaSalle had recently been working on long-term portfolio analysis for clients. Buildings without suitable specifications for cost-effective refurbishment or re-engineering were being spotlighted with specific advice being provided to clients to optimise capital spend on uprating EPCs.


Castle said it could be a fine balance between re-engineering or demolition, but sustainability-wise demolishing buildings was undesirable. “We know that it is possible to intelligently re-engineer or refurbish upwards to a decent EPC rating. It can be done, but it needs commitment from the client, investment and strategic management to future-proof a property portfolio.”


Appearances can be


deceptive… Dean felt the appearance of buildings might be one reason that occupiers are not focusing on the Energy Act’s EPC issues. “Their building is modern and still looks lovely, so there is an assumption that it operates efficiently in energy terms. But, it’s EPC rating could be a difficult


THE BUSINESS MAGAZINE – THAMES VALLEY – JUNE 2013


Cast a fresh light on energy use


Castle pointed out that developers and landlords often invested much time and money in premises to achieve high EPC ratings, but such ratings could be largely irrelevant depending on whether the occupier adopted a responsible approach to energy use. Maybe tenants should be incentivized to use energy wisely, he suggested.


Coote suggested they could be taxed on the differential between the building’s EPC rating and their actual energy use recorded by a premises DEC.


Finnis felt tenants were already incentivised nowadays by their payment of ever-rising utility costs which flows through to their running costs or service charge bills.


Pavey stated lighting was one of the biggest energy triggers for EPC ratings. “Up to 50% of energy usage can be office lighting.” Optimising natural light through the office layout or good use of LED energy-efficient lighting could bring significant advantages, he suggested.


Coote: “Not only can you drive around at night and see office blocks lit up, but it is contributing to environmental light pollution in urban areas.”


Funding the upgrades and the Green Deal


initiative Dean mentioned that the Government’s Green Deal funding was launched in February to encourage people to upgrade their buildings before 2018. “I suspect that nobody is applying


Matthew Jones


Griffiths suggested landlords could alleviate such concerns by providing acceptable alternative funding options for occupiers, and then it would be reasonable to refuse Green Deal financing within leasing agreements.


Dean: “It’s all about what is ‘reasonable’ and ‘acceptable’, and that could lead to more case law examples.”


www.businessmag.co.uk Continued overleaf ...


for Green Deal money in a commercial environment because of the costs (7% interest rate), and it appears the Government is doing little to target commercial occupiers and owners.”


Coote: “Aspects of the Green Deal seem incredibly complicated in commercial terms.


If an occupier does take it on the energy costs of that building after he has gone may continue to be much higher. I don’t know how that works from a landlord perspective, trying to re-let the property. There is the potential of loading comparative costs on a building and blighting it commercially.”


Roundtable discussion followed which revealed much confusion about Green Deal funding in relation to EPC upgrading. One person even suggested the Green Deal would generate more legal-tests through the courts.


All were agreed that most large commercial occupiers would get finance elsewhere, and the Green Deal would only be of interest to smaller occupiers at the lower end on the market


Dean highlighted that 60% of SEGRO’s occupiers are SMEs, so high uptake of Green Deal financing could present the company with significant issues, particularly when re- letting. “When tenants come back we refurbish and upgrade the quality of the stock, but sole occupiers could secure Green Deal funding and when they come back we are left with inflated costs.”


Page 1  |  Page 2  |  Page 3  |  Page 4  |  Page 5  |  Page 6  |  Page 7  |  Page 8  |  Page 9  |  Page 10  |  Page 11  |  Page 12  |  Page 13  |  Page 14  |  Page 15  |  Page 16  |  Page 17  |  Page 18  |  Page 19  |  Page 20  |  Page 21  |  Page 22  |  Page 23  |  Page 24  |  Page 25  |  Page 26  |  Page 27  |  Page 28  |  Page 29  |  Page 30  |  Page 31  |  Page 32  |  Page 33  |  Page 34  |  Page 35  |  Page 36  |  Page 37  |  Page 38  |  Page 39  |  Page 40  |  Page 41  |  Page 42  |  Page 43  |  Page 44  |  Page 45  |  Page 46  |  Page 47  |  Page 48  |  Page 49  |  Page 50  |  Page 51  |  Page 52  |  Page 53  |  Page 54  |  Page 55  |  Page 56  |  Page 57  |  Page 58  |  Page 59  |  Page 60