According to real estate consultancy Knight Frank, around 404 million ft² of warehouse space in the UK could become unlettable by 2030 if not brought up to new sustainability standards.
From 2027, renting out property with an EPC rating lower than ‘C’ will risk serious fines and in 2030, this minimum requirement will be raised to a ‘B’ rating.
Because of this, Knight Frank says that 128 million ft² of UK warehouse space (18% of all units above 50,000ft²) is at risk of becoming unlettable by 2027, with this number tripling to 404 million ft² (60% of all units above 50,000ft²) by 2030.
Charles Binks, Head of Logistics and Industrial at Knight Frank, said: âOccupier demand is becoming increasingly focused on high-quality facilities that can offer ESG credentials.
“Operators are increasingly discounting facilities that do not fit with their, or their customersâ, sustainability strategies. While newly constructed warehouses generally meet top sustainability standards, 82% of the UKâs existing stock built before the year 2000 do not meet minimum EPC requirements.
“It is obvious that significant capital expenditure is required to retrofit these warehouses and mitigate obsolescence risk, however just 6% have undergone upgrades in the past five years. The prospects for rental growth should offer incentive. However, investors must accelerate the rate at which older facilities are upgraded or they will become unlettable.”
Although sustainability is a key focus for most occupiers and developers in today’s world, rising costs have meant that it might not be an organisation’s top priority in the immediate future. However, legislation changes like this highlight the need for urgent action to be taken if facilities do not meet modern standards.
For more on sustainability in the logistics property market, check out the morning and afternoon highlights from Logistics Manager’s ESG Industrial & Logistics Conference.
