Cities brace for shortage of net-zero carbon office stock

Currently, none of the cities in Asia Pacific including Singapore and Melbourne, the two highest-ranked cities after Sydney, are equipped with an adequate supply of NZC-ready office spaces.

The same trend is playing out in other regions. Major U.S. markets face a similar supply deficit of 75%, or 57 million square feet, by 2030, JLL data shows.

“Demand for high-quality low-carbon workplaces will inevitably grow when lease expiries approach,” says Miglani. “Occupiers risk being stuck with limited options if they fail to plan ahead and reevaluate the sustainability credentials of their current premises.”

To address this issue, the region must accelerate the rate of retrofitting to meet future regulations and keep up with the growing demand.

“Redeveloping or upgrading assets to be NZC-ready will be the most efficient solution to bridge the supply-demand gap,” says Miglani.

“Investors and owners have to start with incremental upgrades now to gain a first-mover advantage, or risk a brown discount as climate-related regulations become more stringent,” she says.

The good news is that the retrofitting potential is substantial in Asia Pacific, with over half a billion square feet of Grade A office space in the region built before 2011, according to JLL.