Over 80% of commercial assets across major cities are below EPC ‘B’, says BPF | Property Week

Energy Efficiency in Commercial Real Estate: A Growing Concern Across UK Cities

Introduction to the Challenge

The commercial real estate sector in the UK is facing a significant challenge in terms of energy efficiency, as revealed by a recent report published on February 24, 2025. The article highlights that only 2% of commercial assets in major UK cities, including London, Birmingham, Bristol, Leeds, Liverpool, Manchester, and Newcastle, have achieved an ‘A’ rating for energy efficiency. This staggering statistic underscores the pressing need for improvement in the environmental performance of commercial buildings across these cities. The ‘A’ rating is the highest energy efficiency rating, indicating that these buildings are among the most energy-efficient and environmentally friendly. However, with such a low percentage achieving this standard, it is clear that much work remains to be done. For those interested in accessing the full report, a subscription to Property Week is required, offering unlimited access to breaking news, expert analysis, and industry insights.

Performance Across Major UK Cities

The article provides a detailed breakdown of energy efficiency performance across the seven major UK cities. While London, as the economic hub of the UK, might be expected to lead in energy efficiency, the data shows that even in the capital, the percentage of ‘A’ rated commercial assets is surprisingly low. Similarly, cities like Manchester, Birmingham, and Bristol, which are growing economic centers, also fare poorly in terms of energy-efficient commercial properties. This raises questions about the readiness of these cities to meet increasingly stringent environmental regulations and the growing demands of environmentally conscious tenants and investors.

Challenges in Achieving Energy Efficiency

The low percentage of ‘A’ rated commercial assets in these cities can be attributed to several challenges. One of the primary reasons is the age and condition of existing buildings. Many commercial properties in these cities are older structures that were not designed with modern energy efficiency standards in mind. Retrofitting these buildings to achieve higher energy efficiency ratings can be costly and time-consuming. Additionally, the lack of incentives and supportive policies from local authorities and governments can discourage property owners from investing in energy-efficient upgrades. The cost barrier is a significant factor, especially for smaller businesses and property owners who may not have the financial resources to undertake such improvements.

Another challenge is the lack of awareness and expertise in implementing energy-efficient solutions. While larger companies may have the resources to hire experts and invest in energy-efficient technologies, smaller businesses often lack the knowledge and resources to make informed decisions about energy efficiency. This gap in awareness and expertise can hinder efforts to improve the energy performance of commercial assets.

Implications for Property Owners and Investors

The low energy efficiency ratings of commercial assets in these cities have significant implications for property owners and investors. With increasing awareness of environmental issues and the growing demand for sustainable practices, energy efficiency is becoming a key factor in the valuation and desirability of commercial properties. Properties with lower energy efficiency ratings may face higher operational costs, lower demand from tenants, and reduced market value. Conversely, properties with high energy efficiency ratings can command higher rents and attract environmentally conscious tenants, providing a competitive advantage in the market.

Moreover, the introduction of stricter environmental regulations and the possibility of mandatory energy efficiency standards for commercial buildings pose a significant risk to property owners who fail to improve their assets’ energy performance. Non-compliance with these regulations could result in fines, legal penalties, and even restrictions on the use of the property. Therefore, property owners and investors need to take proactive steps to improve the energy efficiency of their commercial assets to avoid these risks and capitalize on emerging opportunities.

Recommendations for Improving Energy Efficiency

To address the low percentage of ‘A’ rated commercial assets, several steps can be taken by property owners, investors, and policymakers. First, increasing awareness and education about the benefits of energy efficiency and the available solutions is crucial. This can be achieved through workshops, seminars, and online resources that provide practical guidance on improving energy efficiency. Additionally, financial incentives, such as grants, tax breaks, and low-interest loans, can be offered to encourage property owners to invest in energy-efficient upgrades.

Governments and local authorities can also play a critical role by implementing policies that promote energy efficiency in commercial properties. For example, setting clear energy efficiency targets, introducing mandatory energy performance standards, and providing funding for energy-efficient retrofitting projects can help drive improvements in the sector. Furthermore, public-private partnerships can be established to share the costs and risks associated with improving energy efficiency in commercial buildings.

Conclusion and the Path Forward

In conclusion, the low percentage of ‘A’ rated commercial assets in major UK cities highlights the significant challenges that need to be addressed to improve energy efficiency in the commercial real estate sector. The implications of inaction are far-reaching, including higher operational costs, reduced market value, and potential penalties for non-compliance with environmental regulations. However, with the right combination of awareness, incentives, and policy support, property owners and investors can overcome these challenges and improve the energy efficiency of their commercial assets.

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