5 minute read 10 Jun 2022
Tall building covered up in green

Why the future of real estate is written in green

By Michael Armstrong

EY Ireland Associate Director Capital & Debt Advisory

Michael is focused on finding solutions for his clients with a range of lenders from Banks to the ever-increasing Direct Lenders in Ireland and the UK.

Contributors
Rebekah Mulryan
5 minute read 10 Jun 2022

    With an ever-increasing focus on sustainability and the green transition, commercial real estate operators are modifying business models to include refurbishment projects to futureproof income streams and attractiveness to potential tenants.

    In brief
    • The increasing prominence of Sustainability is changing attitudes towards commercial real estate
    • It is estimated that approximately €300bn of debt finance could be required to bring commercial real estate assets across Europe in line with environmental standards
    • The issue of “stranded assets” emerging through the green transition has escalated considerably in recent years

    Ensuring new buildings are sustainable and energy efficient is key to global efforts to tackle climate change. Sustainability in modern offices takes many forms but has been predominantly introduced at design stage, rather than through renovations. What does this mean for older, less sustainable buildings that are not up to spec from a sustainability perspective?

    With awareness of climate change and sustainability at an all-time high and Ireland’s ambitious Climate Act actively pushing to Net Zero emissions, the real estate choices that an investor or occupier makes will either enable their net zero carbon journey or obstruct it.

    In this publication, Michael Armstrong, Director, Debt Advisory and Rebekah Mulryan, Manager, Debt Advisory, EY Ireland, take a closer look at the debt financing required to fund the green transition in commercial real estate and the resulting escalation of stranded assets amid that transition.

    Summary

    As more companies embed sustainability goals and emission reduction targets into their strategies, we can expect capital to continue to be invested in sustainable real estate solutions, leading to a divergence between ‘green’ and ‘brown’ assets.

    About this article

    By Michael Armstrong

    EY Ireland Associate Director Capital & Debt Advisory

    Michael is focused on finding solutions for his clients with a range of lenders from Banks to the ever-increasing Direct Lenders in Ireland and the UK.

    Contributors
    Rebekah Mulryan