How sustainability-conscious tenants are assessing new space

For growing numbers of companies searching for new spaces to lease, sustainability is now a top consideration.

While traditional priorities such as location and talent continue to factor strongly, buildings that tick the boxes as low carbon, high quality spaces are increasingly sought after – even in a subdued office leasing market.

And tenants are often prepared to pay more to secure sustainable space. JLL research shows an average green premium of 7.1% across eight major cities in North America, 9.9% across nine cities in Asia Pacific and 11.6% in London.

“The buildings companies occupy are typically part of their scope 1 and scope 2 emissions, which means is essential for them to address this in their real estate strategies to help achieve their targets and comply with reporting legislation," says Kirsty Draper, Head of Sustainability, UK Agency at JLL. “Even though for many companies, their workplaces are just a small part of the overall carbon footprint, they’re also an important reflection of their sustainability commitments to the outside world."

Take Spanish bank BBVA. It is planning to relocate its New York headquarters as part of its commitment to power operations by renewable energy. Its new HQ at Two Manhattan West in Hudson Yards will source 100% of its electricity from the run-of-river hydropower. The building is also located near major transport hubs with amenities including outdoor terraces and a fitness center.

“Expectations around sustainable buildings are growing at a time when companies are also downsizing and opting for higher quality spaces,” says Jaime del Alamo, ESG Value & Risk Vice President at JLL.

“Together with an increasing number of incoming regulations, more companies signing up to stringent carbon goals such as the Science Based Targets initiative (SBTi), and higher pressure to decarbonize from shareholders, a building’s sustainability credentials will come under increasing scrutiny.”