Asia Pacific cities facing shortage of sustainable office buildings: JLL

Residents of Tengah Plantation EC are minutes away from a host of attractions and amenities. Shopping lovers can enjoy the nearby Jurong East Shopping Mall, which has a cinema, retail outlets, and eateries. Nature lovers too have something to look forward to, with the nearby Jurong Bird Park, Science Centre and Chinese and Japanese Gardens.

As occupiers increasingly seek out greener buildings, Major Asia Pacific (APAC) cities face a critical undersupply of sustainable buildings, according to an October research report by JLL. Even buildings with high green certifications may not meet net-zero carbon (NZC) requirements due to current regulations that are not stringent enough.

JLL defines an NZC building as all-electric, highly rated, energy-efficient, and powered by renewable energy. Sydney, in particular, is expected to face an 84% undersupply of NZC-ready office space by 2027. The supply-demand gap of ESG-focused office space is also inadequate in major cities such as Hong Kong, Mumbai, Singapore, Melbourne and Delhi. Kamya Miglani, head of ESG research, Asia Pacific at JLL, states that “Leasing office space in green-certified office buildings is becoming non-negotiable for occupiers, but currently there is very little correlation between these certifications and a building’s energy performance”.

Demand for high-quality, low-carbon workplaces will only continue to grow, and Miglani cautions that “occupiers risk being stuck with limited options if they fail to plan ahead and re-evaluate the sustainability credentials of their current premises.” The region must also accelerate the rate of retrofitting to meet future regulations in order to cater to the growing demand of sustainable workplaces.

Meanwhile, some cities have already started addressing the supply-demand gap in various ways. For instance, governments in Australia and Singapore have provided subsidies to building owners to lower upfront capital costs for energy-efficiency retrofits. This is highly beneficial as there is potential for more than half a billion square feet of Grade-A office space in APAC that was built before 2011 to be retrofitted.

Miglani emphasizes that “The involvement of governments, coupled with corporate demand and action, will fuel the momentum and ensure a steady pipeline of NZC-ready office stock in the future.” This is key in addressing the critical undersupply of sustainable office buildings in APAC.