Emission levels will affect office deals, says DTZ director

Michael Hunt

Rob Yates, director of office agency at DTZ in Manchester, believes rental values will take a back seat to emission levels when a new Government scheme gets underway from April 2010.

The Carbon Reduction Commitment energy efficiency scheme is a mandatory carbon emissions reduction scheme for the UK. It will act as an incentive to improve energy efficiency and will help large private and public sector organisations generate cost savings through reduced energy bills. It is estimated that the scheme will save organisations £1bn and more than four million tons of carbon dioxide each year by 2020.

Yates said: "In my view, this far-reaching scheme will change for ever the way we do business. Occupiers will focus intently on how efficiently a building runs, rather than comparing rental prices per square foot, with the result that modern, Grade A property will be even more attractive than before.

"Nowhere is this more obviously exemplified than at 3 Hardman Street, the latest building at Spinningfields to receive a BREEAM 'excellent' rating, and which has provided a benchmark for others in the city to follow."

Around 5,000 organisations in the UK will be affected by the CRC scheme, representing an estimated 25% of total business sector emissions. The scheme covers both electricity use and direct emissions from energy use including gas and fuel oil.

From April 2010 qualifying organisations will need to register on the CRC, measure and record energy use and calculate carbon dioxide emissions then provide annual energy data online. They will be able to buy allowances, corresponding to emissions at £12 per ton of carbon dioxide. At the end of the year they will be able to trade allowances with other businesses if they have bought too many or too few.

The Department of Energy and Climate Change published its response to consultation on the scheme at the start of October and as a result has announced some improvements.

To begin with, organisations will only have to report emissions in the first year, thus covering 2010/2011. In subsequent years, companies will have to buy allowances corresponding to their emissions from energy use, and then surrender them by the end of the year.

In the second year, covering 2011/2012, extra weighting will be given to organisations which take action early to improve energy efficiency. Recognition will be given to organisations which use onsite renewable energy like wind turbines or solar panels by publishing the increased carbon savings from such measures.

Yates adds: "The Government is committed to the UK moving to a low carbon economy and the CRC is designed to help large public and private sector organisations make significant headway in reducing their energy consumption.

"Inevitably, these larger organisations will congregate in better quality space, which will be more easily differentiated from tertiary product than previously. Landlords and investors with property holdings which are anything less than efficient need to implement improvements now if they are to be ready for this new world order."

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