Supply Of Green Buildings Isn't Keeping Up With Demand, JLL Says

Demand for low-carbon buildings is poised to outstrip supply, and without greater levels of retrofitting, 30% of demand for such space will go unmet by next year across 21 cities worldwide, according to a new report by JLL. Assuming no change in the sustainability of the built environment, that gap will be 70% by 2030.

For owners who don't upgrade their properties as tenants seek low-carbon options, “inaction over decarbonizing real estate will lead to their economic obsolescence sooner than most investors realize,” the report predicts.

Also coming soon is a "tipping point" for net-zero carbon in lease markets, the report notes, with one out of every three leases tied to a carbon commitment expiring in less than 24 months.

Low- to zero-carbon buildings depend on three factors, the report explains: energy efficiency, no onsite fossil fuel use and clean energy sources. Running buildings on electricity generated by sustainable sources is key to decarbonization as renewable tech becomes more cost-effective, according to the report.

Public policy is also pushing toward building decarbonization, with the draft National Definition for a Zero Emissions Building released in the U.S. by the Biden administration in January and similar standards emerging in the UK, France and Sweden.

“These definitions offer a consistent and measurable basis for zero-emissions buildings,” the report says.

Another aspect of decarbonization involves the reduction of “embodied carbon,” which the report calls an emergent issue. The term refers to emissions associated with building construction, including the manufacture and transport of building materials.