CONTACT US
Share: Share on Facebook Share on Twitter Share on LinkedIn I recommend visiting cushmanwakefield.com to read:%0A%0A {0} %0A%0A {1}
Sustainability Sustainability

Sustainable Dilapidations – Shifting Trends in The Green Agenda

26/02/2024

A recent decision by the Secretary State to reject M&S wholesale development of their London flagship store at Marble Arch, and whilst it has been challenged, it does highlight the attitude to planning where redevelopment can no longer be taken for granted as pressure grows to prioritise adapting and reusing existing buildings. When making a case for a redevelopment the whole life carbon impact will need to be considered alongside that for reuse options.

We are also seeing similar patterns where landlords undertaking dilapidation works are retaining and refurbishing suspended ceilings, raised access floors and central mechanical and electrical systems in particular HVAC. As a result, landlords are finding it easier to recover costs from outgoing tenants for repairs as opposed to seeing greater savings where landlords previously were undertaking improvements for which the outgoing tenants are not liable for.  

The landlord and tenant relationship needs to move away from focusing purely on financial and working more closely together with a more sustainable agenda.  

Dilapidation liabilities represent a significant opportunity to help reduce the impact on the environment where both landlords and exiting tenants can work more closely for a mutual benefit to reduce the environmental impact and meet respective net zero targets.  

The lifecycle of occupation requires stripping out the outgoing tenant’s alterations (in the case of offices reinstating to open plan Cat A standard) ready for marketing the space before being fitted out by the new incoming tenant. The cycle of waste is significant. The lease liability plays a large part in this, where outgoing tenants are legally required to reinstate the premises. Whilst most tenants settle the liability financially, some undertake works before the end of the term removing alterations which could be of use to a new tenant.  

Landlords with net zero targets may see outgoing tenants argue and defend against claims on the basis that removal and reinstatement of alterations which are in good condition will have a negative impact on net zero targets.  

The industry must bring all stakeholders together to formulate a far more efficient and sustainable approach to dilapidations, including landlord’s, tenants, letting agents, lawyers, valuers, as well as manufacturers and the wider supply chain.   

The industry will achieve significant improvements to sustainable dilapidations by adopting the following: - 

Before Lease Commencement

  • Adopt assumed CAT A specifications instead of physical works avoiding waste when the tenant fits out the space. 
  • Amend the lease to encourage a financial dilapidations settlement. 
  • Landlords should ensure a tenant’s fit out is designed and materials specified which can be adapted easily by a future tenant.   
  • Licences to Alter can play a greater part in controlling the impact the tenant’s fit out will have on the environment.  

End of Lease 

  • An environmental audit to assess the impact of removing and reinstating a fit out will identify elements which could be retained, reused, or upcycled, including the furniture.  
  • Landlords should market the space with the existing tenant’s fit out presenting an opportunity for incoming tenants to adopt some or all the fit out.  
  • Provide virtual reality imaging so the incoming tenants can visualise open plan space and help identify where parts of the old fit out can be retained and reused.  
  • Landlords and tenants must work together to facilitate early marketing of the fitted-out space before lease termination, to encourage new tenants to consider re-use.   
  • Embed waste management into the dilapidations process.  Works being undertaken should be done with a more sustainable approach including careful separation and aggregation.   

The process of preparing space for letting, fitting out for occupation, and reinstating at lease end presents a cycle of waste at each stage, and environmental impact is significant. The real estate industry has a genuine opportunity to bring all stakeholders together and adopt changes to meet respective net zero carbon commitments. Sustainable dilapidations is part of this process, but the opportunity extends to all stages of the marketing, occupation and end of lease life-cycle. 

I’D LIKE TO DISCUSS A DILAPIDATIONS QUERY
For more information, visit www.dilapidations.net External Link
Enquire

Meet the team

Alex Charlesworth
Alex Charlesworth

International Partner
London, United Kingdom


Download VCard

Anthony-Haigh
Anthony Haigh

Partner
London, United Kingdom


Download VCard

James Welch
James Welch

Partner
London, United Kingdom


Download VCard

Related Insights

landlords vs tenants
Article • Sustainability / ESG

Landlords vs Tenants: Future MEES Conflicts

The pressure on Landlords is growing. Cushman & Wakefield is seeing evidence that investors are reducing purchase offers accounting for the capital expenditure required to meet minimum energy efficiency standards.
Alex Charlesworth • 22/01/2024
ESG
Research • Sustainability / ESG

Unlocking Sustainable Success: The Rise of ESG Benchmarks in Real Estate

With benchmarks becoming increasingly prominent, it’s essential to understand what exactly they are and why they’re becoming an integral part of the decision-making process for organisations.
Emily Oldfield • 08/12/2023
Changing Attitudes Towards Greener Homes
Article • Sustainability / ESG

Changing Attitudes Towards Greener Homes in the Face of the 'Cost of Living Crisis'

The residential sector accounted for approximately 17% of all carbon dioxide emissions in the UK in 2021, meaning our homes are key to cutting emissions and reducing our chance of hitting the 1.5℃ global warming threshold. 
Ellie Healy • 04/10/2023

Ready to talk?

Get in touch with one of our professionals.
With your permission we and our partners would like to use cookies in order to access and record information and process personal data, such as unique identifiers and standard information sent by a device to ensure our website performs as expected, to develop and improve our products, and for advertising and insight purposes.

Alternatively click on More Options and select your preferences before providing or refusing consent. Some processing of your personal data may not require your consent, but you have a right to object to such processing.

You can change your preferences at any time by returning to this site or clicking on Cookies.
MORE OPTIONS
Agree and Close
These cookies ensure that our website performs as expected,for example website traffic load is balanced across our servers to prevent our website from crashing during particularly high usage.
These cookies allow our website to remember choices you make (such as your user name, language or the region you are in) and provide enhanced features. These cookies do not gather any information about you that could be used for advertising or remember where you have been on the internet.
These cookies allow us to work with our marketing partners to understand which ads or links you have clicked on before arriving on our website or to help us make our advertising more relevant to you.
Agree All
Reject All
SAVE SETTINGS