30th November 2023
There are a variety of measures that will help improve a property’s EPC rating. Some of these might seem relatively straightforward, such as changing to LED lighting or installing draught excluders, but it’s unlikely that this will be enough to reach the minimum requirements for an older building. Other, more complex and costly options will likely need to be implemented, such as upgrading the heating system to a high-efficiency one and installing a smart, energy management system, upgrading the glazing, and installing up-to-date insulation throughout. As one of the biggest sources of heat loss, that will include upgrading the roof to ensure that it’s properly insulated in line with current building regulations, but this is clearly difficult to monetise for asset managers. Similarly, insulating walls and floors could result in loss of area and major disruption. Renewable energy sources, such as installing solar panels on the roof, are yet another avenue that will no-doubt be sought to generate clean energy and reduce reliance on the grid.
The reality for commercial landlords though, is that all of this represents significant cost and resource, as well as having to deal with the disruption that this causes to existing tenants. We’re already hearing some of the repercussions of this with landlords re-thinking their position amidst what they see as an unviable option. Unfortunately, many landlords may need to sell their assets for a knock-down price if they determine that the cost of uplift is prohibitive.
As a leader in the airspace development sector, we see huge synergies in what we do and the challenges facing commercial landlords. For years, we’ve worked closely with residential landlords to build additional homes on top of their existing buildings, whilst also improving the state of the building. This includes some of the proposals outlined above such as upgrading their heating to new, more efficient systems, installing PVs and improving the insulation of the roof, by virtue of building on top and installing building-regulations-approved insulation on the new roof. At the same time, we look to improve some of the aesthetics of the building to help add value for the residents and freeholders. We’re able to do this without emptying a building of its occupants – rather, we work with the existing tenants to put a strategy in place that allows them to go about life with minimal interruption.
All of this helps to improve the existing building’s energy efficiency, thus reducing landlords’ service-charge bills and reducing the burden of having to dive into sinking funds or raise S20 requests onto existing residents. It seems obvious that this model would be perfect for commercial landlords also, especially given the impending costs they are facing. Working with an airspace developer offers commercial landlords an opportunity to deal with the requirements of the MEES, whilst also potentially extracting value from their asset and turning the situation from a loss-making conundrum to an appealing value-add proposition.
MEES are clearly not going away and the need to improve the energy efficiency of buildings is a real one, so landlords need to consider their options seriously. We’re keen to work with commercial clients and work collaboratively to help solve an energy crisis, whilst also helping to solve the housing shortage.
Fruition Properties’ current commercial airspace project comprising 9-units in Bermondsey, SE1 started on site in May 2023, with completion due summer 2024. We can also add new commercial space above existing buildings in areas which are well sought after, thereby delivering value through cost savings but also future value through new income. With the right partners and know-how, what is a liability could now become a future asset. This is more than just blue sky thinking.