The Australian Government has set a Net Zero Plan to achieve net zero greenhouse gas emissions by 2050, in line with its commitment to the Paris Agreement in 2016 – a global pledge to limit the rise in global average temperatures to below 2°C and to keep warming under 1.5°C. With a growing global emphasis towards sustainability and reducing carbon footprints, businesses within the Perth CBD office market are also increasingly following the same trend. Consequently, the current market finds itself in a significant mismatch between the urgent demand for sustainable buildings and the limited supply.
In recent years, net zero targets in Australia have become the root of corporate sustainability strategies. Notably, 81% of current active businesses in the Perth CBD have net zero carbon commitments. The mining sector shows the strongest commitment to sustainability, with 89% of businesses having net zero targets. The professional and financial services sectors follow suit, with 60% and 57% of businesses committed to net zero, respectively. A staggering 82% of existing tenant leases committed to a net zero target are set to expire over the five years to 2029. Among these lease expiries, 7% have net zero targets set before 2030. The pressure to meet these targets extends beyond corporate responsibility, stressing the expectation for developers and investors to meet these growing demands.
Many offices in the Perth CBD market are occupied by businesses with net zero targets, yet, the existing supply of net zero buildings falls short of meeting this demand. Currently, there are only four carbon-neutral buildings in the Perth CBD: QV1 (250 St Georges Terrace), one40william (140 William Street), WorkZone Building A (202 Pier Street) and WorkZone East (1 Nash Street). The city averages 4.3 stars on the NABERS energy scale – on par with Adelaide and Melbourne but trailing behind Sydney and Brisbane (4.9 stars). A substantial portion of occupiers are committed to sustainability goals that many existing buildings in the Perth CBD do not meet.
Occupiers in the Perth CBD office market face considerable challenges in meeting their short-term net zero targets, as many struggle to find suitable office spaces that align with their environmental goals. Securing green buildings may become a strategic advantage for occupiers within the market, and competition could drive demand higher for certified sustainable office buildings, further straining the current market.
The race to net zero is not just a challenge but also an opportunity to reshape Perth’s commercial real estate landscape. Is it not time for stakeholders to collaborate to bridge the gap between supply and demand in Perth’s pursuit of net zero?
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