Research by commercial real estate data and technology company Search Acumen suggests that it will take until at least 2040 for all rented commercial properties to meet the 2030 MEES standards (of EPC rating B or higher).
When the same research was undertaken last year, the industry was set to meet the target by 2038. It now appears it will take the industry an extra two years indicating the pace of built environment decarbonisation has slowed and the target could be missed by an entire decade.
- Over 13,000 commercial rental properties recorded as being available for rent in England and Wales still have EPC ratings of F or G, failing to meet the Minimum Energy Efficiency Standards (MEES) that came into effect in April 2023
- 2024 saw a 20% year on year fall in upgrades to the higher rated A*-B bands
- Offices remain the most affected property type, with nearly 5761 buildings still rated F or G, nearly 5% of total stock
- The hospitality sector has the highest proportion of buildings rated A, A*, or B (31%), but retail now boasts the lowest percentage rated F or G (0.54%)
Future outlook
The current outlook for 2025 is uncertain, since last year upgrades to the higher rated A*-B EPC bands were down by 20% when compared to 2023.
By contrast, non-compliant registrations went down by just under 7%, and there were still 425 properties registering for the lower EPC ratings, mainly in the office sector.
Search Acumen’s research shows that the rate of improvement has slowed in the past year. In May 2024, the commercial real estate market was due to miss the target by eight years, but the latest analysis adds an additional two years to the already sluggish pace of change.
Sector performance breakdown
The research identifies the office sector as the most affected, with an estimated 5761 office buildings still rated F or G. Only 15% of offices have achieved an A, A*, or B rating, indicating significant room for improvement.
The retail sector now has the lowest rate of non-compliant EPC ratings, at just 0.5%, while the hospitality sector continues to have the highest rate of top band registrations at nearly 31%, a 4% rise since April 2024.
Education, which now only has 1.8% of buildings rated F or G, now has 19% of buildings rated as A, A* or B – a 7% rise from an already respectable figure in April last year.
[Graph 1: Proportion of A*-B EPC Registrations and F&G EPC Registrations by sector]
Andrew Lloyd, managing director at Search Acumen, commented:
“Real estate owners and investors have faced a barrage of economic and financial challenges over recent years and inevitably this will have had some impact on the appetite for investment in costly retrofits. Similarly, since the pandemic, how we live, work and shop has changed impacting the investment in asset management initiatives. This is most notable in the office sector, where appetite for investment in energy efficiency upgrades has been made more complex by declining occupier demand for larger floorplates. Despite these dynamics, the mission to decarbonise needs to remain a constant, both to lower the environmental impact of the built environment, but also to ensure commercial sustainability for real estate portfolios. 2030 really isn’t that far away.”
This article was submitted to be published by Search Acumen as part of their advertising agreement with Today’s Conveyancer. The views expressed in this article are those of the submitter and not those of Today’s Conveyancer.
