Reimagining Real Estate 2024

Buildings account for nearly 40% of total global greenhouse gas (GHG) emissions.7 As 80% of buildings will still exist in 2050, action to reduce these emissions must be accelerated.8 Unfortunately, only a small percentage of buildings, approximately 1-2%,9 are renovated annually. Therefore, achieving net-zero carbon goals necessitates significant energy retrofits, the use of renewable energy and a focus on sustainable building practices throughout the asset life cycle, from construction to decommissioning. The Forum’s 2021 report, Green Building Principles: the Action Plan for Net-Zero Carbon Buildings, outlines the key steps for asset decarbonization to meaningfully reduce emissions in the interim and ultimately achieve net zero by 2050. Key issues and challenges: Whole-life carbon emissions from buildings: Buildings have a tremendous carbon impact throughout their life cycle. According to the Royal Institute of Chartered Surveyors (RICS),10 35% of those life cycle carbon emissions from a typical office building occur before the building is even occupied; for residential buildings, this figure is even higher at more than 50%. This indicates that constructing new buildings incurs a significant “carbon debt” that can take decades to offset, let alone the larger share of emissions that result from operations. Low renovation rates: Given the upfront carbon impact of construction, keeping existing buildings in use is critical, which means addressing their significant operational carbon through retrofitting. These renovations can be costly and challenging, but they offer the potential to cut energy demand for heating by two-thirds and reduce overall CO2 emissions when paired with renewable energy solutions. There is also increasingly demonstrable economic value tied to upgrades. According to JLL, light to medium energy retrofits can unlock 10-40% in energy savings, depending on the asset class. Access to clean power: The provision of clean energy is necessary to meaningfully decarbonize real estate assets. Unfortunately, most cities’ energy supply is not adequately clean and grid infrastructure needs a lot of improvement to effectively support widespread electrification. Owners and developers should aim for as much on-site generation as possible; however, this is not always feasible, and securing corporate or physical power purchase agreements (PPAs) or obtaining international renewable energy certificates (I-RECs) can also be challenging.3.2 Sustainability of buildings will still exist in 2050.80% Energy saving potential ($/square foot) across asset classes FIGURE 8 Improving energy efficiency is a crucial element of a successful energy strategy as it allows consumers to mitigate challenges from energy price volatility and reduce the risk of overwhelming ageing grids. According to the International Energy Agency (IEA), energy efficiency has the potential to deliver the second-largest contribution to cutting down CO2, emissions globally. At a building level, lower energy use intensity has a direct linear relationship with lower emissions in all cities in the JLL study. However, the marginal improvement in emissions from a unit improvement in energy efficiency becomes lower as the grid gets cleaner.Data centres Laboratory Healthcare Food sales/service Education Hotel Multifamily Industrial/manufacturing Retail Office Warehouse & distribution Light MEP*$2.44 $10.98 $4.75 $4.65 $3.99 $2.76 $2.25 $1.9 $1.67 $1.54 $1.57$1.9 $1.03 $1.14 $0.69 $0.67 Note: *MEP = Mechanical, electrical and plumbing Source: JLL research Reimagining Real Estate: A Framework for the Future 23