On 8 June, I had the opportunity to take part in a panel discussion at the FIABCI Congress, held in Paris. The topic for discussion was how do we add value in real estate while also improving the lives of end-users.
Here I provide some of my thoughts on this topic.
With thanks to Jens-Peter Schulz for the photo.
Context
I view value through the lens of Environment, Social, and Governance (ESG) considerations. I work with companies across the built environment to focus on how they create value. The end-user, whether this be occupiers, local communities, or employees, have to be very much part of the conversations on what constitutes value.
Making the case
The view of value in purely financial terms in real estate and the wider built environment is too narrow. Value needs to be considered in the context of the extent to which activities improve social, environmental and economic wellbeing. And this involves engagement from every discipline including for example, engineers, architects, designers, planners, builders, asset owners and managers.
The priority now is to rethink and relink real estate to place based priorities. Doing more of the same that we did prior to COVID and the ongoing expansion of on-line shopping is not working. We need to think about how we repurpose our places and spaces.
But this is not without its challenges. We know that buildings account for 40% of global carbon emissions. We also know that Europe has some of the oldest building stock. In the UK, 80% of the homes we’ll be living in in 2050 have already been built. In addition, greater focus is being paid to the ‘cost’ of embodied carbon resulting in an increasing focus on retrofits and refurbishments as opposed to demolition/new builds.
Moving forward
In my client work, I’m seeing this trend towards putting a broader sense of value at the core of business. While certainly this needs to be balanced against financials and profit margins, there is an increasing drive towards creating places and spaces that work for owners, occupants, and communities.
And what’s critical here is to understand that doing this is no longer an optional extra or a ‘nice to have’. With the climate crisis, COVID, the Black Lives Matter movement, the invasion of Ukraine, we’re seeing real change including in terms of our expectations of business. Specifically, we’re seeing this in the context of
- changing demands from investors by way of global sustainable funds
- changing demands from occupiers who are increasingly focused on their own ESG credentials including the buildings out of which they operate
- changing demands from the workforce where there’s a greater drive by employees to ensure their employers values are aligned with their own and
- changing demands from governments and international bodies -by way of new regulations and new standards and norms.
And these demands are ever increasing and fast paced. My concern is that many companies across the real estate sector will effectively be caught out. This could result in limited access to finance, being stuck holding brown and stranded assets, and potentially ultimately no longer being viable as businesses.
What’s needed is for businesses to both ensure they contribute value in this wider sense, and learn to capture this is a meaningful and robust way.
Get in touch if you’d like to know more about working with me and how I can help in developing your approach to ESG.
