Corporate carbon reduction pledges will have big impact on office market

Corporate carbon reduction commitments will have a significant impact on office leasing over the next few years.

Businesses that have pledged to reduce their organization’s impact on climate change must ensure their next lease allows them to show material progress on their goals, according to a report by JLL. This factor will have a significant impact on the office market over the next 12 to 24 months and beyond.

“Tenants are prioritizing buildings that are energy efficient, free from onsite fossil fuels and powered by clean energy,” JLL says. “For construction projects, occupiers are beginning to focus on lower embodied carbon designs.”

With the increasing adoption of work-from-home and hybrid models, demand for new commercial real estate construction drastically slowed since the Covid pandemic, and low-carbon office space supply is struggling to keep pace with an uptick in demand. So, businesses will be challenged to find space that meets their corporate environmental goals.

“Today, rightsizing and ‘flight to quality’ are driving leasing decisions,” JLL says. “The concept of 'flight to quality' is evolving to encompass energy performance and sustainability credentials.”

Tenants increasingly expect a well-crafted property that feels unique, authentic, and comfortable—with technologically advanced systems and spaces that optimize performance and encourage collaboration and engagement. The following guidance will help owners and property managers keep tenants happy.