OK, so that title is a pretty basic ruse to get anyone involved in the property world to read on.
Knight Frank have researched the impact of BREEAM ratings on London office rents since 2010, and found that they do command a premium. (In very simple terms, that should be a good thing for the environment and the climate crisis.)
What I found most interesting was that the difference between 'Very good' and 'Excellent' is only 1%, whereas the rental uplift for 'Outstanding' is more than 7.5% over an 'Excellent' rating. This is clearly going to mean that there will need to be detailed consideration of the cost-benefit of that extra push to get that top rating. I am working on a development deal at the moment where a client is doing exactly this on a site where 'Excellent' is on the cards but 'Outstanding' would be possible, even if that means increasing the overall costs for which it had initially budgeted and has got internal approval.
If tenants are prepared to pay top dollar for the best BREEAM rating, it is clearly important to them. Could a property's BREEAM standard make the difference not just in terms of levels of rent, but also between having a tenant and having a void?
It would also be interesting to see if the same logic applies to all sectors. Could top BREEAM ratings further heat up the industrial and logistics market?
A BREEAM Very Good rating results in an average rental premium of 3.7%, while BREEAM Excellent leads to a 4.7% rental premium, according to the study. The highest score, BREEAM Outstanding, results in a 12.3% premium.