Office market disruption likely with tougher ESG demands
Differentiation between office buildings based on their ability to comply with ESG requirements and remain viable assets is likely to cause considerable disruption according to Adrian Karczewicz, Head of Divestments CEE, Skanska Commercial Development Europe.
First, tenants will begin to reject buildings that do not comply, he said. “After tenants, it’s about banks and investors who understand that without ESG-compliant buildings, you won’t be able to basically maintain a business, you won’t be able to issue any bonds and green bonds. And finally, you won’t be able to find a buyer,” Karczewicz told Real Asset Insight’s Richard Betts.
There will be a disturbance in the market, he said. “Some investors with a portfolio will have to select some assets and sell them at a discount,” he added.
“There will be a big change in the market, there are new aspects of due diligence, like carbon footprint due diligence which is coming into place, you know, ESG due diligence and so there’ll be a totally new profession for many people,”
He said that Skanska is at the forefront of the sustainability agenda but it is not only a case of taking care of the earth, there are now social considerations and Well certification is being introduced so that people feel safe in the firm’s buildings, particularly after the pandemic.
“There’ll be a further flight to core,” he said and some investors’ buildings will become obsolete unless new uses can be found.
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