In addition to providing a catalyst for transformational change, the turmoil of the COVID-19 pandemic years provided us with a dress rehearsal for the type of collective action a resilience society will be required to make in order to cope effectively with some of the challenges ahead, including climate change and losses in biodiversity.  

During the pandemic I scribbled a few articles exploring some of the potential challenges and reimagination opportunities ahead as we collectively transitioned to an all-digital, work-from-anywhere world, aka ‘The Great Reset’ (World Economic Forum definition). 

In this article I want to focus on the built environment’s decarbonisation challenge as well as some of the evolving ideas and incentives to help us overcome a multi-dimensional sustainability, climate risk and decarbonisation challenge.

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 “… take the environment .. accountants are beginning to realise that there are some gaps in their view of the world.  For instance, in accounting, ownership does not have the notion of stewardship attached to it. In fact, under accounting principles, if you own something you are entitled to destroy it.  Furthermore, if no one owns something then that something has not price, like air, sea or those things not reflected in the price of land, such as the ability to support life.”  

Charles Handy – Beyond Certainty (1996)

Climate Emergency: Only 7 years left to change course

It is widely acknowledged that the Built environment is one of the highest emitting Industries. According to The World Green Building Council the full life cycle (design, materials manufacturing, construction, usage, and demolition) of all buildings is directly or indirectly responsible for approximately 39% percent of global energy related carbon emissions (28% operational emissions from energy needed to heat, cool and power them and the remaining 11% from materials and construction).    It is also worth noting that Buildings also account for around 50% of all extracted materials, 33% of water consumption and 35% of waste generated.

In under a decade, the Property Industry is tasked with the goal of ensuring all new projects completed from 2030 are net zero carbon in operation and also achieve >40% reduction in embodied carbon.

Whilst the prioritisation of climate-resilient solutions in a fragmented market clearly has many challenges to overcome, perhaps the greatest is the risk of growth outpacing improvements in energy efficiency, energy intensity and lower carbon emissions.

Globally we build the equivalent of a city the size of Paris every week and forecasts indicate the global stock of real estate is set to double by 2060.  As a result, raw material use is predicted to also double by 2060 with two-thirds of this growth occurring in countries without mandatory building energy codes.

As a quick benchmark, the embodied carbon for new construction of office buildings in the UK is typically between 500 and 900 kgCO2e/m2 of GIA which is equivalent to five to ten years of the CO2e emissions due to the energy consumption (taken from The Institution of Structural Engineers).

Welcome to the challenge of our lifetime.

In major cities, buildings on average are responsible for 60% of citywide greenhouse gas (GHG) emissions. In some cities, like New York for example, this figure rises to ~ 80%.

If we are to have any chance of meeting our climate targets, carbon value engineering across both the upstream and downstream sustainability chain will be essential in addition to the collection and publication of reliable environmental performance data aka ‘what gets measured gets done’.  

Whilst voluntary compliance alone is unlikely to secure the cuts needed in carbon emissions, as carbon is a good proxy for resource efficiency, sustainability measures which successfully lower carbon use may eventually become the lowest cost option as well as the best environmental solution.  

Addressing rising demand for more ambitious solutions and whole life cycle accountability, a number of new regulations are on the horizon which may help promote more meaningful net zero ambitions as well as validating an organisation’s decarbonisation pathway. These include -  

• SEC’s climate proposal for climate-related information to be disclosure in financial statements / 10-K annual reports.

• New York City's Local Law 97 which imposes mandatory emissions limits for buildings over 25,000 sqft (targeting 40 % reduction in emissions by 2030 and 80 % by 2050) coupled with fines for non-compliant property owners.

• European Union’s Corporate Sustainability Reporting Directive (CSRD) requiring in-scope companies to report on time-bound sustainability targets, progress and processes; .

• European Union’s revamped Energy Performance of Buildings Directive (EPBD)  requiring all new buildings to become solar equipped and zero emission within defined timelines.

• European Union’s Green Deal which galvanises Europe ambitions to scale climate action with the overarching objective of making the EU the world’s first climate-neutral continent.

Green Sky Thinking: How to Incentivise Climate Resilience

Historically, it could be argued that the price of carbon dioxide emissions across the world has essentially been zero, limiting incentives to decarbonise. As we move towards mandatory disclosure requirements, a consistent approach to benchmarking carbon performance will be essential to ensuring incentives align with lower energy intensity and lower carbon emissions.  

Much has been written about the discrepancy between predicted and measured energy use arising from existing Energy Performance Certificates (EPCs), aka “the performance gap”. As noted in CIBSE’s London Energy Map project, huge variances in energy consumption exist within each EPC rating band which are based on a theoretical assessment of the asset energy efficiency, highlighting the risk that investment to upgrade a building from an EPC D to C may not actually result in lower carbon emissions or even any energy savings.

Because of this performance gap, many sustainability professionals now favour the NABERS energy performance ratings which is based on an annual review of an office building’s energy efficiency including actual metered energy consumption data.   

Similar to a graduated vehicle exercise duty, once a consistent approach to benchmarking asset performance has been identified, real estate taxes could be restructured to incentivise sustainable long-term decarbonisation improvements.

Without the right incentives, we may risk favouring the creation of a trillion dollar carbon offsetting market by 2030 as opposed competing in the race to zero, decarbonisation of our built environment, achieving a fifty percent reduction in global greenhouse-gas emissions by 2030 and maintaining our promise to limit global warming to 1.5 degrees C.  

Net Zero Obligations & Model Lease Language  

Whilst it would be foolish to simply wait until a lease has expired before seizing the opportunity to work together, too few incentives have historically existed for closer and more effective cross collaboration between Commercial Real Estate Landlords and Tenants.

For larger institutional landlords, one way of addressing this gap is to gather all tenants together (including across whole estates) at regular environmental forums / workshops aimed at promoting data sharing, performance benchmarking and joint evaluation of planned sustainability initiatives with a view to capturing and promoting common commitments in a ‘Green Performance Pledge’ or ‘Memorandum of Understanding’.

Whilst simple in approach, long-term leases typically lack the provisions needed to support landlord and the tenant cooperation throughout the lease term which has led to advent of green leases clauses aimed at ensuring the property is used as sustainably as possible, according to different shades of green.

However in most cases, the landlord is responsible for compliance with energy efficiency regulations, meaning that Tenants will commonly opt out of additional legally binding language if it entitles a Landlord to offload costs relating to improvements necessitated by changes in future environmental regulations.

Given the long-lead times to sway the needle, we may be rapidly approaching a critical juncture on our path to reimagining the built environment as a low carbon and climate resilient environment.

To ensure we meet our 2030 and 2050 decarbonisation goals, effective regulatory intervention will likley be required to ensure accurate carbon emissions data is made available and collaborative incentives aligned across the Industry.

Rather interestingly, Local Law 97 establishes a price for excessive carbon emissions (aka a carbon tax) at a rate $268 for every metric ton of CO2 equivalent exceeding prescribed carbon caps.

Will be interesting to see if other cities follow suit and opt to tax citywide building emissions in the future. 

What do you think ?

Which building certificates offer the most meaningful performance benchmark ?  

Are carbon taxes required to offset the social cost of carbon ?

Can we truly build net-zero emission buildings in a net-zero way ?

The best coders collaborate extensively, it’s why open source exists. In a world where the hottest new programming language is English what friction could be removed by emulating the open source movement ?  

The corporate real estate profession stands at an inflection point. Artificial intelligence is set to transform what in-house property and facilities leaders can achieve, how portfolios are managed and critically how value in the future is defined.

However, the first barrier most teams will need to clear is not a technology gap, it is a mindset one.

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“The difficulty lies not in the new ideas but in escaping from the old ones.”
— John Maynard Keynes

From the printing press to the internet, every major technology wave has delivered compounding returns, after an initial period of anxiety and adaptation, and AI may be no different, except perhaps in speed and magnitude - welcome to an exponential world!

The challenge for in-house CRE leaders is not whether AI will transform the discipline (..it will), but how quickly they can turn apprehension into strategic action; training teams, redesigning workflows and closing the gap between deployment and genuine capability. 

01. The Productivity J-Curve: Where Most Teams Are Today

Erik Brynjolfsson’s “Productivity J-Curve” describes a pattern that follows every transformative technology where productivity typically dips first, as organisations unlearn old habits, rebuild workflows and update playbooks, before accelerating sharply. Accordingly adaption, not merely adoption, is where our AI race truly begins.

Most corporate real estate teams currently sit at the bottom of that curve. AI is being used to generate analysis, draft briefs and summarise reports ... in other words, to do yesterday’s tasks slightly faster. That is useful. It is not yet transformative.

The more important questions to be asking now are:

•   What is possible that was previously impossible?
•   How do we reframe corporate real estate as a strategic enablement asset, measured on outcomes, not activity?
•   What does our new north star look like and how do we build towards it collaboratively?

Alongside training and ideation, one key imperative during this lull is to understand where all your estate data lives, who holds the keys, who owns it, how accurate it is and which systems can access it. The right technology architecture may determine whether tomorrow’s agentic AI succeeds or fails. 

02. The Hidden Productivity Tax: Human and Functional Friction

In-house corporate real estate (CRE) professionals overseeing large, complex portfolios must navigate a highly fragmented operating landscape; spanning geographies, asset types, lease structures, service providers, and diverse stakeholder groups. This fragmentation often gives rise to organizational friction that remains largely invisible to traditional performance dashboards. In such dynamic environments, teams are frequently challenged by duplicated processes, siloed knowledge and sequential approval chains which often leads to operational drag and bottlenecks in the real estate lifecycle.

This hidden productivity tax, the accumulated drag of human and functional friction, represents one of the most significant and consistently underestimated challenges in the corporate occupier world. Without continuous improvement it can compound at every stage across the plan-build-operate lifecycle, from strategic workforce & portfolio planning to facilities management & stakeholder reporting.

By enabling global collaboration, open source offers a compelling way to promote continuous improvement and confront the challenges of excessive fragmentation and customisation. Over time a dedicated CRE professional community focused on exposing and eliminating friction could help compress both the time and effort required to reimagine a future-fit operating model.

03. The Hottest New Programming Language is English

As demonstrated by emerging agentic AI platforms, AI is already capable of taking actions, running processes and operating with genuine autonomy across complex workflows.

CRE intrapreneurs (persons driving innovation from within a large organisation) are destined to play a crucial role in an AI-enabled world by leveraging new ideas and new technologies to drive innovation and efficiency within their organisations. Intrapreneurial employees need to be technologist, instead what sets them apart is a curiosity-centric approach and willingness to challenge initial assumptions and status quo, coupled with an ability to frame problems and treat experimentation as a team sport.

In a world where the new programming language is English, the opportunities to reimagine operating models focused on harnessing the full potential of AI is significant. Consider the practical applications already within reach:

•  AI agents continuously monitoring a global portfolio in real time, compressing weeks of manual analysis into hours
•  Automated lease event tracking and critical date management across hundreds of agreements
•  Dynamic scenario modelling for “stay vs. go” or “build vs. buy” decisions, with environmental and financial variables integrated from the outset
•  Improving building efficiency, reducing carbon emissions and automating FM workflows
•  Natural language querying of portfolio data and ability ask your lease administration teams the same questions you would ask a senior analyst

Teams seeing the most tangible return will be the ones giving people permission to experiment, building on what works and retiring what does not. 

04. Crowdsourcing Solutions: The Case for an Open CRE Repository

The software development community has long understood something that the corporate real estate profession has yet to fully embrace, that the collective intelligence of a well-organised community outperforms any individual organisation working in isolation. In other words, innovation accelerates as knowledge and ideas flow freely.

Platforms like GitHub and Stack Overflow exist because developers recognised that sharing source code, approaches and solutions, openly and iteratively, accelerates innovation for everyone. The code improves. The community learns faster. And the pace of progress compounds.

Corporate real estate has no equivalent. In-house teams routinely solve the same complex problems independently; how to structure a business case for a strategic relocation, how to integrate sustainability considerations into a sourcing decision, how to negotiate break clauses in uncertain conditions, how to design a management information framework that senior leadership will actually use. Each team starts largely from scratch. Each set of solutions is siloed. The wheel is reinvented constantly.

The Open Source Way of Thinking reshapes this dynamic. By creating a shared repository of corporate real estate ideas, prompts and playbook templates, continuously contributed to and refined the potential exists to replicate for CRE what open-source development achieved for software (faster discovery, stronger solutions and a collective uplift that accelerates innovation across a connected community).

The value of collective insights and contributions lies not in the perfection of any single playbook but in the cumulative improvement that comes from many practitioners building on each other’s work.

05. Learning from Peers: The Network Effect

In-house CRE professionals often operate in relative isolation, with limited consultation with peers who share the same specialist knowledge or face the same complexity of challenges.

Teams managing large, complex estate interests have accumulated hard-won knowledge about what works, what fails and why. Bringing together the collective efforts of a community to explore collective ideas and expertise in a collaborative ecosystem could help unlock a step-change in the pace of innovation, mirroring how developers collectively advanced today’s AI software.

For in-house teams navigating the AI transition in particular, peer collaboration offers honest intelligence about what the real sticking points are and which approaches are generating genuine return.

06. What can you Discover with your Occupier Community

As witnessed in the software industry, when a community aspires to move from a reinvention of the wheel towards open ecosystems, innovation accelerates as knowledge and ideas flow freely. A coalition of forward-thinking in-house CRE leaders, harnessing the collaborative effort and contributions of an entire community would be able to: 

• Tap into the wisdom of peers to test what new tools or solutions really work
• Co-develop and iterate prompt libraries
• Build, share and refine playbooks
• Like, share and comment on best practices, recommendations and experiences
• Crowdsource insights and benchmark evolving approaches to emerging challenges such as AI adoption and decarbonisation pathways

Amplifying Opportunity: Collective Thinking at Scale 

The QWERTY keyboard was designed in the 1870s to prevent mechanical typewriter keys from jamming. It remains on every keyboard today simply because it became the accepted standard.

Corporate real estate teams poised to shape the next decade will be those with an unrelenting drive to eliminate friction across the full lifecycle, harnessed by shared insight and an appetite for continuous experimentation.

The question is not whether corporate real estate will be transformed. It is who will lead the way. The tools to write something better are available. Reimagination opportunities are enhanced by thinking together and a collaborative mindset willing to build in the open.

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