A new CBRE study of Auckland prime office and industrial property occupiers shows a mismatch between tenants’ sustainability goals and the green credentials of the buildings they occupy - highlighting an opportunity for building owners and developers.
The report, which looks at how occupiers’ sustainability commitments inform their property decisions, reveals that while most major office and industrial occupiers have formal carbon emissions reduction targets, a significant proportion still occupy buildings with no Green Star or NABERS rating.
Zoltan Moricz, head of research at CBRE New Zealand, said this gap is a sign of unmet demand that is likely to influence leasing decisions over the next five years. However, other aspects such as building efficiency and transport connectivity may override tenants’ preferences for green buildings.
Of the 100 largest prime office occupiers in Auckland, 78% have adopted greenhouse gas reduction targets and 49% have publicly committed to achieving net zero. These occupiers currently lease 325,000sq m of space - 58% of all space occupied by the top 100 tenants. Of that, 252,000sq m is in buildings with 4-star or higher NABERS or Green Star ratings. Sustainable buildings make up 63% of total prime office stock in Auckland.
Start your property search
Of the 100 largest occupiers of prime industrial property, 59% have greenhouse gas reduction targets and 28% have set net zero goals. The tenants with net zero policies currently occupy 928,000sq m of prime industrial space. Of this, only 146,000sq m, or 16%, is in sustainable premises.
Bianca Cornforth, CBRE senior research analyst, said this equates to around 850,000sq m of prime Auckland office and industrial space occupied by tenants with net zero carbon targets that is not in green buildings.
“The alignment is stronger in the office market than industrial, but there is still over 70,000sqm of prime Auckland office space occupied by some of the largest net zero-aligned organisations that does not have sustainability ratings.”
The mismatch is much more evident in the prime industrial market, where sustainable buildings make up just 9% of prime stock in Auckland, said Shang Du, senior research analyst at CBRE.
“In the early years of Green Star, there was not a strong focus on industrial buildings and generally less than 10% of new build registrations for Green Star were industrial facilities.”
The industrial sector is now catching up. Since 2021, industrial buildings have often made up 30% or more of the number of new Green Star rated buildings. Existing industrial facilities are now also starting to rate through Green Star Performance benchmarks.
While the numbers suggest developers have a sizeable opportunity to deliver new green-rated buildings that meet increasing occupier expectations, tenant decisions are also shaped by other factors. Occupancy trends reflect the importance of the full suite of location and building attributes considered in tenants’ decision making, with sustainability just one of these, said Moricz.
“For many tenants sustainability is a key consideration, but it often doesn’t outweigh other key considerations like efficient building layouts or convenient transport access. Green credentials on their own don’t always provide a compelling enough offset for occupiers if a building is in an inferior location.”
Organisations’ sustainability targets are under growing public scrutiny. More than 200 New Zealand organisations are now required to produce formal climate-related disclosures, making it harder for companies to overlook the environmental performance of their premises.
A sizeable portion of organisations are targeting 2030 for achieving their sustainability goals. This creates an immediate opportunity for landlords with upcoming vacancy to invest in upgrades or redevelopments that will meet future tenant expectations.
The New Zealand Green Building Council has also introduced a new Net Zero Buildings certification to complement existing Green Star and NABERS tools. These standards are increasingly being used to differentiate high-performance buildings.
Despite recent global pushback from some multinationals around interim net zero targets during the economic downturn, CBRE’s local analysis found minimal evidence of New Zealand occupiers softening their targets. Only two large office tenants had publicly reduced or deferred their net zero commitments, while none of the largest industrial occupiers had done so.
“The momentum towards net zero in New Zealand remains strong. Even amid global economic uncertainty, changing political climates, and some lack in available technological solutions, large occupiers continue to work towards long-term sustainability goals. This underpins the case for more high-performing sustainable buildings,” Moricz said.
“New sustainable buildings will have a clear advantage in securing major occupiers who are committed to carbon reduction. We expect this to shape developers’ considerations when planning new projects in the coming years.”
- Supplied by CBRE
