A rise in the number of empty commercial buildings following the pandemic has elevated demand for better environmental, social and governance (ESG) performance of properties, indicates a study.
A survey of UK commercial real estate investors and property professionals by ESG data intelligence and consulting firm Deepki has found that 74 per cent of respondents agreed that the Covid-19 pandemic had increased the focus on ESG in commercial real estate.
The results indicate that tenants are demanding better ESG credentials for the buildings they rent, said Deepki.
A Sustainable Future for Commercial Real Estate found that 60 per cent of those surveyed believe that more commercial buildings had been empty during the pandemic. Four out of 10 (43 per cent) also said that less activity in the sector had provided the opportunity to review and improve the ESG credentials of buildings.
Just under a third (31 per cent) of respondents said that tenants had started to demand better ESG standards for the buildings they occupy, with 9 per cent of building owners saying they now had to provide more ESG data on their buildings when marketing them.
A third of those polled think that the ESG credentials of property assets are “extremely important” in the investment decision-making process, and another 57 per cent class them as “quite important”.
Just under three-quarters (74 per cent) of the survey respondents predict that the importance of ESG credentials to investors in UK commercial property would increase over the next 12 months.
Furthermore, 81 per cent said they believe that it would become even more important in three years’ time.
Katie Whipp, head of Deepki UK, said: “Commercial real estate investors need to future-proof their investments, and strong ESG indicators are a key part of this, representing a trend which is set to continue. The Covid-19 pandemic has also changed the focus on ESG in the sector in different ways, from owners having more time to review empty buildings, to a greater demand from tenants for higher standards.”