Cities brace for shortage of net-zero carbon office stock

With corporate net-zero carbon (NZC) targets looming, top cities in Asia Pacific are bound to grapple with a growing challenge: the impending demand-supply gap for NZC-ready office space — or all-electric, highly rated, energy-efficient buildings powered by renewable energy.

Take Sydney, which is expected to face a 79% undersupply of NZC-ready office space in the next five years.

The city faces a supply shortfall of NZC workplaces despite taking top spot in JLL’s Sustainable Offices City Index, which ranks cities based on their green-certified Grade A office stock, as well as indicators such as climate risk and government proactiveness.

Hong Kong and Mumbai, which are placed in the bottom half of the index, are likewise expected to see a 68% and 62% supply deficit of top-quality sustainable workplaces respectively.

“Leasing office space in green-certified office buildings is becoming a non-negotiable for occupiers, but there is very little correlation between these certifications and a building’s energy performance,” says Kamya Miglani, Head of ESG Research, Asia Pacific, JLL.

“Even buildings with platinum grade green certifications may not be NZC-ready, partly because current regulations are not stringent enough to demand NZC-ready assets,” says Miglani.

As corporate expectations shift gear and demand for NZC-ready assets grows, the demand-supply gap is poised to widen across Asian cities.

Such buildings remain a rarity in the region, in part due to the availability of renewable energy in countries’ grids. For instance, Seoul, which ranks 10th on the index, trails behind other markets due to its low proportion of renewable energy in its electricity generation.