Transcript Slide 1

Commercial Property – Shape
the Debate: Have your say on
engagement, value and risk
• Chair: Keith Bugden, Programme Director, BBP
• Paul Edwards, Head of Sustainability, Hammerson
• Miles Keeping, Partner and Head of Responsible
Property Investment, Drivers Jonas Deloitte
• Stuart Bowman, CoreNet
• Matthew Tippett, Upstream Sustainability Services,
Jones Lang Lasalle
Bartholomew Room
Commercial Property –
Shape the Debate:
Have your say…..
OWNER OCCUPIER
ENGAGEMENT
Paul Edwards
Head of Sustainability
Key issues….
1. Sharing information is the key to
success
2. Owners and occupiers have the same
challenges and opportunities
3. Best results can be achieved through
partnership and collaboration
Questions…..
1.
Who is most responsible for taking the lead in
engagement? Owner or Occupier?
1. Owner
2. Occupier
2.
Do you think regulation over the past 5 years has
helped in any way to improve owner / occupier
relations?
1. Yes
2. No
GREEN VALUE
Miles Keeping CEnv MRICS FRSA
Partner, Sustainability
Key issues….
One main issue & two key issues
The main issue we really do need to
get over:
Value premium or value discount?
Other issues:
What are the key drivers of value?
We all need to be more
sophisticated in our analysis!
Premium or Discount: ‘Re-phrasing’ the Evidence
Rental Value divergence between energy efficient and
non-energy efficient offices – The Netherlands
Source: The Value of Energy Labels in the European Office Market – Nils Kok & Maarten Jennen – May 2011
115
110
105
100
95
90
85
80
2006
2007
2008
Green Index
9
2009
Non-green index
2010
Premium or Discount: ‘Re-phrasing’ the Evidence
Rental Value divergence between energy efficient and
non-energy efficient offices – The Netherlands
Source: The Value of Energy Labels in the European Office Market – Nils Kok & Maarten Jennen – May 2011
Correlation
between Energy
Efficiency and
Rental Indices
115
110
105
“Generally”
Positive
100
95
“Generally”
Negative
90
85
80
2006
2007
2008
2009
2010
Green Index
Non-green index
JLL Prime European Rental Index
IPD Netherlands Annual Property Index (Office)
Drivers of value: Some scenario implications
Source: IIGCC (2010)
Sophisticated analysis: Understanding the threats to value
Likelihood of occupiers acting on their policies
Strength of carbon reduction policy amongst different business types
(based on sample of £1.5bn of tenant-occupied real estate assets)
Source: Deloitte LLP
Proportion of rental income (%)
100
50
0
Public Sector
No Policy
Policy
With targets
PLC, B2C
PLC, B2B
Sector
Private, B2C Private, B2B
Source: SIAM LLP
Conclusion
• Increasingly compelling evidence available supporting value
shift as a result of energy efficiency/wider sustainability
factors
• Risk that trend is interpreted as delivering ‘Premium’ or
‘Added’ Value… of greater concern is depreciation and
obsolescence
• Impact on property and portfolio performance will be property
specific – and not based solely on sustainability credentials
• Impact of tenant demand will be interesting & important to
monitor
• Strategy should focus on immediacy, likelihood and scale of
impact together with ability to mitigate and harness upside.
Questions…..
1.
Do you believe there is a link between sustainability
performance and value?
1. Yes
2. No
2.
What do you think will be the biggest driver linking
sustainability to value?
1.
2.
3.
4.
5.
Obsolescence
Tenant retention
Increasing Regulation
Rental value
Building Ratings (EPCs, DECs etc)
CLIMATE CHANGE RISK
Stuart Bowman CEng MEI
Director of Breathe Energy Ltd
Knowledge & Learning Group Leader CoreNet UK
Key issues….
1. Tangible climate change risks
2. How big are these risks?
3. How important are these risks?
Questions…..
1.
What do you consider the biggest climate change
risk?
1.
2.
3.
4.
5.
2.
Buildings no longer fit for purpose
Escalation of operational costs
Insurance availability
Disruptions to supply chain
None are of significance
How important, relative to other business issues, is
the management of climate change risk?
1.
2.
3.
4.
High
Medium
Low
Not on our radar
Commercial Property – Shape
the Debate: Have your say on
engagement, value and risk
Matthew Tippett, Upstream Sustainability Services,
Jones Lang Lasalle
Bartholomew Room