MEES – The Benefits for the Commercial Real Estate Industry

Following the arrival of the Minimum Energy Efficiency Standards (MEES) on 1st April, it has all been about the worries and risks associated with the regulations. Is my commercial property compliant? Will I have to pay high costs to improve my building?

The truth is that for many property owners, MEES could be a real threat and will impact heavily on rent reviews, lease renewals and valuation. But it doesn’t have to be all bad.

What about the importance of corporate social responsibility? As consumers, we have now become better informed and are more aware of the importance of being energy efficient. In the case of real estate, if buildings are more energy efficient, this makes it more attractive to potential buyers/lenders. MEES is almost forcing commercial property owners to improve the energy efficiency of their building – and it’s a good thing.

In general, professionals within the commercial real estate industry want to show to others that they are adhering to energy efficiency laws and that they have sustainability policies in place. Nowadays, people, and in the case of real estate, potential buyers, want to know that the building they are going to stay in is energy efficient. They, of course, don’t want to live in a building where their energy bills will be exceedingly high every month. Property owners and landlords need to improve their buildings to be as energy efficient as sufficient to the prospective buyer/renter and MEES will help them to do that.

For investors, the importance of energy efficiency plays a big part as a high performing building will reduce any risks associated with it. Investments in real estate are likely to grow as a result of the introduction to MEES.

Energy assessors could also benefit from MEES as they may become advisors in the commercial real estate industry with many other professions looking to them to offer the most accurate EPCs. This also means that there could be an opportunity for a lot more work for energy assessors, allowing them to generate more revenue.

In the case of lenders, MEES (through its application of retrofit opportunities) will present an opportunity to lend which will also reduce risk and therefore meaning landlords will be less likely to default on mortgages and loans.

MEES also presents a chance for facilities managers and engineers to prove their worth by demonstrating building improvements and making long term savings for the occupiers. The regulations will allow them to promote discussion and will lead to greater engagement with tenants.

In terms of the current state of UK building stock, the results are quite worrying. According to Eurostat data, the UK has the oldest building stock in Europe which also means it is one of the least energy efficient. Poor inefficiency, of course, means high energy bills and is the main cause of fuel poverty. If nothing else, the MEES regulations will allow the UK to improve its building stock, allowing us to demonstrate our potential within the European market. What is good for the planet will in turn benefit the economy and the country.

Overall, MEES will be a strong contributor to improving commercial building stock, therefore, working towards the UK’s goal to reduce carbon emissions to net zero by 2050. This also forms part of the Clean Growth Strategy which was set out in October 2017 to meet the fifth carbon budget. The aim of the Clean Growth Strategy is to create measures in which to limit the UK’s annual emissions to 57% below 1990 levels by the year 2032. In order to do this, a strong focus is on wind farms, solar power and electric cars.

Since the introduction of the strategy, there have already been some very positive results, such as:

  • In April 2018, the UK went for 55 hours with no coal production.
  • The UK has been ranked as the world’s most attractive renewable energy markets for investors.

Hopefully, in a few years’ time we will be able to report on the positive impacts MEES has had on building energy performance within the UK, acting as a strong factor in achieving the 2050 net zero goals.

For more information regarding MEES, visit our Resources page.

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