But experts say new net zero rules intended to boost the eco-credentials of office blocks, and the continued trend of working from home, means the outlook is bleak.
“Valuations have been hugely affected by the uncertainty of future office demand and ESG considerations,” Greenshields says.
New rules came into force in April requiring all office buildings to have an energy efficiency rating of at least E in order to be let out. The minimum threshold will ratchet up quickly over time, which will require many owners to sink more money into upgrades.
That which doesn’t – or can’t – meet the new standards removes from the market, that then right sizes the remaining supply to demand.
Maybe – and it’s a crazy way to do it too, but it could happen….
Rather like unemployment and a declining economy. If GDP falls then, in theory, all could take a small paycut. Or some could take a 100% pay cut by being unemployed. All office space could decline in value, or some to zero……
The post Might solve itself actually first appeared on Tim Worstall.