Call to make offices in Scotland more eco-friendly ahead of expected tightening of rules

Building owners are being encouraged to make their properties greener on the back of the revelation that nearly a third of Scotland’s office space could soon face being unusable if new energy efficiency rules are introduced.

'It is only a matter of time before building owners will have to take action,' says Toby Withall, office agency partner at Knight Frank. Picture: contributed.

Commercial property consultancy Knight Frank has found that 29 per cent of Scotland’s office stock has an Energy Performance Certificate (EPC) rating of E or below – and under rules brought in earlier this year in England and Wales, non-domestic properties that fail to meet this standard cannot be let out.

Knight Frank added that these Minimum Energy Efficiency Standards (MEES) rules applicable south of the Border will be tightened twice more in the coming years; from April 2027, commercial properties will need at least an EPC rating of C to be lettable, while in 2030 this will rise again to B and above.

The consultancy is stating that if the Scottish Government pursues a similar path, 55 per cent of office space will need to be brought up to a C rating or better, with just 21 per cent in Scotland currently rated B or above, and 8 per cent achieving A or A+.

Edinburgh has the highest percentage of properties rated C or better of Scotland’s three largest cities, with 53 per cent, while, Aberdeen has the highest percentage of space with an A or B rating at 24 per cent, according to Knight Frank, which also cites the World Green Building Council having calculated that the built environment is responsible for 39 per cent of global energy-related carbon emissions.

The firm also noted that a consultation document recently released by the Scottish Government set out its intention to align with the English EPC system and to reduce the validity of EPCs from ten years to five.

Toby Withall, office agency partner at Knight Frank, said: “It seems inevitable that there will be some form of legislation coming in Scotland that reflects what the UK Government has sought to do with MEES... it is only a matter of time before building owners will have to take action. Even in the absence of legislative pressure, many corporate occupiers have their own net zero targets and will not consider space with an EPC rating below B.”

Action

The firm also pointed to some positive steps already being taken, with Gordon Hamilton, building consultancy partner at Knight Frank, commenting: “We’re working with a range of landlords who are keen to get the EPC ratings of their buildings to as high a level as possible, given the direction of legislation and demands from current and prospective occupiers. There are a range of steps you can take, whether it is improving the mechanical and electrical features of a building or, in more extreme cases, potentially recladding the exterior.”

Euan Kelly, capital markets partner at Knight Frank, added: “From a capital markets perspective, we are increasingly finding that investors have their own carbon targets to achieve and won’t consider assets below a certain standard. Where work has not already been undertaken, they want to see a clear pathway to bringing EPC ratings up. Office assets that require a significant amount of work are also seeing this reflected in pricing, with a ‘brown discount’ – where buildings have poor ESG credentials – now becoming common.”