Tenants Want Sustainable Space: New Opportunities for Real Estate Companies

Sustainability and low operating costs are now decisive criteria for businesses selecting real estate. Faced with increasingly strict ESG requirements, companies are prioritizing office and retail spaces with low energy consumption and minimal emissions.

However, demand for sustainable, high-quality office space far exceeds supply. "There is already a shortfall today, and too few projects are in the pipeline to meet the growing demand for energy-efficient and low-emission office space", explains Hela Hinrichs, Senior Director at JLL EMEA Research & Strategy. "Without greater retrofitting efforts from property owners, the gap will continue to widen year by year."

JLL’s "The Green Tipping Point" study published this year reveals the scale of the issue. In Berlin, the demand overhang for sustainable office space is expected to reach 31% by 2030. The situation is even more critical in Frankfurt, with a projected shortfall of 87%.

Sustainability is now a top priority for office selection. According to CBRE’s 2023 Office Occupier Survey, 55% of European companies identify sustainable building features and operations as important when envisioning their ideal office environment — up from just 37% two years earlier. This trend demonstrates not only the high absolute importance of sustainability but also its rapidly growing relevance.

Focusing on sustainable real estate creates benefits for all parties involved. For tenants, sustainable spaces offer lower operating costs, compliance with regulatory requirements, and improved brand reputation. Moreover, employers who prioritize sustainability are increasingly preferred by employees.

For owners and investors, however, sustainable properties present a competitive advantage, enabling them to:

• Achieve higher long-term rental income: Well-equipped, sustainable spaces command premium rents and attract quality tenants.
• Mitigate risks and secure the future: Energy efficiency reduces exposure to rising CO₂ pricing and minimizes the impact of stricter ESG regulations.
• Enhance reputation: Properties meeting ESG standards enjoy greater public goodwill, higher tenant loyalty, and increased satisfaction.

A sustainability-focused portfolio not only stabilizes value but also ensures long-term resilience.

The growing demand for sustainable office space presents significant opportunities for real estate companies that prioritize sustainability and ESG standards early. By investing in energy-efficient solutions, companies can achieve greater tenant satisfaction, stable long-term rental income, and protection against rising regulatory risks and CO₂ costs.