- Fewer than half of FTSE 350 Reits have hit next year's target
- Over 185mn square feet of space could be unlettable
To the long list of things that real estate investment trusts (Reits) have on their plate right now, we can add one more. As well as trying to manage plunging share prices and the soaring cost of debt, a series of energy efficiency deadlines loom in the short and medium term. With energy prices surging and concerns over the climate crisis growing, these targets are sorely needed and a long time coming, yet commercial landlords who own hundreds of millions of square feet (sq ft) of real estate are nowhere near ready.
By April next year, every commercial property that is leased needs to have an energy performance certificate (EPC) of E or above. The government plans to increase that threshold to C by 2027 and B by 2030. Commercial developers cannot let buildings that don’t meet those targets. So they are spending billions of pounds on retrofitting and redeveloping their properties to avoid being lumped with scores of empty, useless assets.