MAJOR cities in the Asia-Pacific (Apac) will face a supply shortage of sustainable workplaces, as more corporate occupiers demand office buildings that contribute to net-zero targets.

When renting net-zero carbon-ready (NZC-ready) workplaces, firms will look beyond green certifications to building-level sustainability metrics, including green certifications and green energy procurement.

In particular, Singapore is expected to face a 56 per cent undersupply of environmental, social and governance (ESG)-focused office space by 2027, said real estate consultant JLL in a report on Monday (Oct 30).

“Leasing office space in green-certified office buildings is becoming non-negotiable for occupiers, but currently there is very little correlation between these certifications and a building’s energy performance,” said Kamya Miglani, head of ESG research of Apac at JLL.

“Even buildings with platinum-grade green certifications may not be NZC-ready, partly because current regulations are not stringent enough to demand NZC-ready assets.”

An NZC building is all electric, energy efficient and powered by renewable energy. Current green building standards are, however, largely insufficient to achieve an NZC-built environment in major Apac cities including Sydney, JLL said.

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“Demand for high-quality low-carbon workplaces will inevitably grow when lease expiries approach,” said Miglani, adding that office building occupiers might be stuck with limited options if they fail to plan ahead and re-evaluate current leases’ sustainability credentials.

Despite being top-ranked in the region on JLL’s sustainable offices city index, Sydney would face an 84 per cent undersupply of NZC-ready office space by 2027.

Hong Kong would register a 68 per cent supply deficit of sustainable workplaces, while Mumbai is expected to have a 62 per cent deficit, said JLL.

Apac must accelerate the redevelopment or upgrade of assets to meet NZC criteria in order to bridge the supply gap.

“Investors and owners are encouraged to start incremental upgrades now, including retrofitting, to gain a first-mover advantage,” the report concluded.

Miglani highlighted that property owners who do not adapt would risk a brown discount or less rental income, as climate-related regulations become more stringent.

“The involvement of governments, coupled with corporate demand and action, will fuel the momentum and ensure a steady pipeline of NZC-ready office stock in the future,” she added.