Less than a third of businesses know how energy efficient their office is

A surprisingly high proportion of UK businesses are unaware of new environmental legislation concerning the energy efficiency of their buildings, or even how energy efficient they are in the first place, according to a new survey commissioned by Irwin Mitchell: Redefining the Office – A report on office occupier trends in 2023.  The new Minimum Energy Efficiency Standards (MEES) legislation means that from 1st April 2023, property owners must not continue to let properties that have an EPC rating of F or G (unless they have an exemption) and all let properties will need to have a minimum EPC rating of E.

Despite the rules only being a month away, the survey of over 500 office property decision makers found that only 32 percent of respondents said they knew the Energy Performance Certificate (EPC) rating of their main office building, with a similar percentage of only 31 percent saying they know what EPC rating their office needs to be in April.

Nearly a fifth (19 percent) of the property decision makers surveyed said they do not know their office’s EPC rating at all. Another 18 percent admitted they do not know what it needs to be to be compliant in April. Additionally, 10 percent of respondents said they do not understand EPC ratings.

The survey claims to reveal a number of concerns with the new MEES legislation amongst property occupiers. Topping the list of concerns was lack of knowledge– with just under a third (32 percent) of respondents saying that they were concerned  that they don’t know whether their office will be MEES compliant from April 2023. And this was across all sectors.

Other concerns respondents listed were that landlords would pass on the extra costs of upgrading buildings via the service charge or dilapidations claims (21 percent) and the disruption to working when landlord upgrades are carried out (18 percent). 16 percent of respondents said that they were concerned that if their landlord did not carry out the requisite work, they won’t be able to renew their lease.

Among other findings from the survey:

• UK businesses seem to be on the move with many looking for higher quality space than they had previously.
• This shift in aspiration appears to be  particularly high in Greater London where 42 percent of respondents said they would look for higher quality/Grade A office space, 39 percent for flexible workspace and 36 percent voted for a hub of similar industries.
• 84 percent of respondents said they’d be prepared to pay higher rents for office space that reduces their impact on the environment- but most would expect some payback from the landlord in terms of reduced service charge or energy bills.
• 41 percent of respondents said rising costs were the biggest threat to their business in the next 12 months. This is followed by UK economic downturn (39 percent) and inflation (36 percent). Interestingly 15 percent of respondents still saw the pandemic was still a threat.
• Smaller companies are particularly worried by rising costs. Over half (56 percent) of respondents who work for a company with 10-49 employees said the biggest threat to their business in the next 12 months is rising costs, this is compared to a third (33 percent) of respondents who work for a company with 250-500 employees who said the same.
• Only 4 percent of respondents said they had no particular worries in the next 12 months.
• Over three quarters (76 percent) of respondents said they have either moved in the last 12 months or are considering moving now.
• Over half (56 percent) said they either took on more office space in the last 12 months or plan to in the future and 20 percent said they had reduced or are looking to reduce their office space.

The top driver for change appears to be reducing energy bills and improving energy efficiency (25 percent). This is followed by having greater flexibility in how and where businesses work (24 percent) and thirdly to accommodate different working patterns following the pandemic (23 percent).

This is borne out in terms of the three most desirable aspects of space businesses wish to move to, with the highest vote going to higher quality/Grade A space (39 percent), together with flexible office space such as WeWork or Regus (39 percent) and space in a hub where there are other similar industries (32 percent).

Image: Moo office designed by trifle