Property lifecycles:

why the ‘S’ matters

Up until now, the focus in corporate real estate has mainly been in relation to the environmental aspects of property ownership and occupation. For some, ESG in property only really relates to the race to net zero and the reduction of carbon emissions.

What are the changes?

Carbon reduction, and now reporting, is still a key concern and requirement of any properly formulated ESG property strategy. But whilst organisations get to grips with the new reporting requirements, this year’s focus is also on society and how your property can enhance the experience of the occupier.

Benefits to business

There is a lot of commentary on the benefits of adopting a people-centric approach of property occupation but the key elements to this from a corporate occupier’s point are view are:

1. Through clear design, you can increase collaboration and productivity by creating space in which people can work better together.

2. An inclusive office with events or incentives such as free breakfasts or drinks in the office café after work encourages people to come into the office. Face-to-face engagement is known to enhance the social capital of an organisation, leading to greater cross-fertilisation of ideas, improved productivity and ultimately, more profit.

3. Following the “great resignation” during the pandemic, staff retention is an important factor for any organisation. The impact of home or remote working is yet really to be understood or measured in respect of employees’ mental health. However, employers are now seriously starting to focus on how to provide a safe and supportive environment that employees want to work in. For each organisation this is going to be different, but it could incorporate elements such as biophilic design and access to well-lit, well-ventilated space with all proper amenities.

How the above is achieved and what it looks like in practice is going to vary from organisation to organisation. However, in order to incorporate this objective into your overall ESG strategy, you should consider:

Carrying out a review of your current property offering, identifying any upcoming lease events, and gettingyour staff’s opinion on how the current property supports their needs and working practices.

Conducting a review of your corporate objectives and strategy and seeing if your current property supports them. This requires you to consider what the user experience is of your property, both from an employee and client perspective.

Review your current HR strategy and working policies. Do these support your corporate and social objectives? Do your property and HR strategy align and support each other?

Can an upcoming lease event, like a break or lease expiry, be used to move or upgrade your current property? If so, do you have time to carry out staff and stakeholder engagement surveys to properly identify the key objectives for your organisation?

What activities, programmes and facilities would your staff and stakeholders value? What would enhance their working lives and occupation of your office? This takes many different forms, and could be a coffee bar with barrister in your office/reception, subsidies gym membership, yoga classes at lunch, free breakfasts or monthly office drinks.

Carry out a review of the current property market. At present there is a lack of grade A available space, but there is plenty more coming online in the next few years. Can you wait or do you need to look for space now?

When interacting with your landlord, collaboration is going to become key. With the advent of increased reporting requirements, the implementation of the MEES regulations and the requirement for higher EPC ratings coming in, buildings will have to be upgraded rather than simply knocked down and rebuilt. Therefore, occupiers and landlords will have to find a way to work together to achieve this objective.

Expert opinion

Since the rise of remote and flexible working, the appetites of your employees have changed. With the benefits of increased work-life balance and financial savings that come with working from home, many now need a good reason to make the trip into the office. Your company must ensure that you’re creating an attractive, inclusive environment to maintain colleague engagement.

Will Scott

Partner