Data from international real estate firm Savills has revealed a shocking 185m sq ft of all retail space in the UK is at serious risk of being ‘unlettable’ in by next year if the Minimum Energy Efficiency Standards (MEES) are not met.
This figure, which we think will cause shockwaves around the UK’s commercial property sector, follows ambitious targets set by the Government which will prohibit commercial buildings with an EPC (Energy Performance Certificate) rating of Grade F or G being let from next year (1 April 2023), with a longer term target for all commercial buildings to be rated a minimum of Grade B by 2030.
Buildings at most risk
In its latest Re:Imagining Retail report, Savills highlights that it is the retail property owned by smaller or individual investors, often in marginalised trading locations, that is most at risk.
Savills says that of the total 185 million sq ft of retail space at risk by next year, only 35 million sq ft can be attributed to retail parks, shopping centres and supermarkets. The firm calculates that the remaining 150 million sq ft is the responsibility of smaller investors, largely in fragmented ownership, in locations where other occupational challenges exist.
Savills reports that this is due to the fact that property EPCs are more difficult to improve if they do not reside within institutional ownership, owing to limited access to funding and advice. The international real estate advisor therefore highlights the growing need and importance for more support for retail spaces with traditionally lower levels of investment to avoid them becoming stranded and unlettable by next year.
Longer term, Savills reports that by 2030, a staggering total of 1.4 billion sq ft of retail space needs to be improved to reach a minimum of EPC Grade B, equating to 83% of all UK retail real estate.
Here at Priva, we have always warmly welcomed market and policy that is designed to drive efficiency during the operational phase of a building’s life cycle. However, we are concerned and surprised to hear that such a large number of buildings are so lacking in energy performance. Although the MEES targets to 2030 seem, right now, to be massively ambitious. But, with the right support mechanisms in place – including finance for retrofit projects and the latest in building energy management innovation – positive progress is possible.
For any commercial landlords, commercial real estate operators or managers who want to explore retrofit opportunities that will increase rentable values through more energy efficient, ‘smarter’ and more intelligent building technology – we’re here to help. Drop us a line, or see us at the Smart Building Show at ExCel London on 12-13 October.