CBRE NI warns up to 75% of Belfast office stock could be unusable by 2030

CBRE NI has issued a stark warning that three quarters of Belfast’s office stock may become obsolete by 2030 due to upcoming EPC (Energy Performance Certificate) legislation.

Speaking to over 500 guests at firm’s annual commercial property Outlook event at ICC Belfast, CBRE NI managing director, Brian Lavery, said that it is only a matter of time before regulations, already in place in England and Wales, take effect in Northern Ireland.

Brian Lavery, said: “A seismic shift is looming over Belfast’s commercial real estate sector, as new Energy Performance Certificate (EPC) regulations, prevalent in Great Britain, will require significant upgrading or repurposing of Belfast office stock.”

In April 2023, the minimum EPC rating for commercial buildings was raised to ‘E’, for any commercial building being sold, leased or rented across England and Wales. It is predicated that the next change in EPC legislation, due in 2025, will see the minimum rating increase to ‘B’ by 2030.

“With our research indicating only 25% of Belfast’s large office buildings are currently rated EPC ‘A’ or ‘B’, property owners and investors are faced with a stark choice: either make substantial investments to bring properties up to speed with EPC and ESG requirements or contemplate changing the use of these buildings altogether.

“With regulatory change inevitable, it is imperative that landlords of older commercial stock act now to implement ESG strategies or risk being left with properties that are unlettable or difficult to market successfully.”

‘Sustainable Horizons’ was the theme of the ‘CBRE NI Outlook 24’ event, recognising the prevalent shift in the sector towards ESG, sustainability, latest regulatory requirements, tenant preferences, investor expectations and the potential for competitive advantage and improved reputation.

In his keynote speech, Sir Timothy Smit KBE, executive vice-chair and co-founder of the Eden Project near St Austell in Cornwall, widely recognised for his contribution to sustainability and the environment, explained: “The looming crisis in the commercial property market requires bold action but presents unrivalled opportunity. Positively championing new technologies, materials and philosophies to make our buildings not only fit for purpose but also healthy for those that live and work in them, enables us to ultimately do the right thing.

“By embracing change and acting fast on ESG, Northern Ireland could put itself at the forefront of a new green energy enlightenment. Cities and towns in Northern Ireland could become beacons of best practice, encouraging innovators and investors to these shores and instilling confidence in all who live here.”

CBRE NI executive director, Gerard McCann, presenting CBRE NI’s new ESG partnership, continued: “We realise how daunting ESG can be for businesses. That is why CBRE NI, in partnership with FPM Accountants, has become the first commercial property agent in Northern Ireland to form a Consortium of Experts specifically tasked with assisting companies manage their properties and estates along their ESG journey.

“A new, proactive five-stage process aims to support clients by ensuring they are legislatively compliant, in order to maximise and futureproof the value of their assets and ensure return on their investment.

“We aim to empower stakeholders in the sector by assisting them to: identify a baseline to understand the carbon footprint of an asset; implement a materiality assessment to identify key risks; develop the ESG roadmap, strategy and KPIs to measure progress; implement an ongoing review of strategy; and ultimately develop a full sustainability strategy.

“We have already seen how buildings like City Quays, The Ewart and Olympic House, all developed to the highest ESG credentials, have proven to be very attractive to potential tenants in Belfast.”

Will Church of the Northern Ireland Investment Fund (NIIF), which is managed by CBRE’s Lending Team, underlined the Fund’s efforts to revitalise Belfast with sustainability at the forefront, added: “In challenging market conditions, NIIF is addressing market failure and has, since its inception in 2018, provided £150m in real estate development projects. This includes the most recent Hamilton Dock Hotel loan, which at £28 million, represents the Fund’s largest loan to date.

“The NIIF remains highly active and ready to make further loan investments to support innovation, business, energy efficiency, low carbon energy generation, job creation and regeneration at reasonable market rates.”

In his closing remarks, CBRE NI managing director, Brian Lavery referred to the challenges ahead concluded: “The changing landscape shaped by ESG presents unprecedented challenges for Northern Ireland’s commercial property sector in 2024. Political stability is crucial for investment and our politicians must play their part.

“The time to act is now. By embracing sustainable practices, fostering innovation and investing in our office stock, we can not only safeguard our environment but also ensure a prosperous and dynamic future for Northern Ireland.”