The vast majority of warehousing up to 100,000sq ft could be unlettable within five years because it won’t meet energy efficiency standards, according to an industry report.
The research by property firm Potter Space in partnership with Savills found that demand within the sub-100k sq ft market is expected to continue rising, but supply is lagging behind.
But this situation is predicted to be exacerbated by impending minimum energy efficiency standard (MEES) regulations.
By 2027, industrial and logistics (I&L) facilities must have an EPC rating of at least C to be let. According to Potter Space, 47% of small to mid-box stock currently doesn’t meet this standard and in 2030, when facilities will require an EPC of B or higher, up to 85% of these spaces could be unlettable.
Potter Space is now urging the government to review the timescales to see whether they are achievable.
Jason Rockett, MD of Potter Space, said: “Two years ago, the journey to net zero and the incoming EPC regulations were high on the industry agenda, but this seems to have fallen away – which is surprising considering the impending guidelines.
“2027 is not that far away in property terms, and we need to see immediate action on this to ensure the businesses that use our facilities and that are the lifeblood of our economy have the space they need to keep doing business.
“We welcome a more sustainable future within I&L and support the EPC regulations, but we want to see the timescales and the support needed from government reviewed to ensure they’re achievable.
“The industry needs a clear roadmap including available funding where appropriate to assist occupiers and owners to bring buildings up to scratch,” he added.
“We would also like to see an integrated approach to planning at all levels, so that land can be made available for small box to mid-box developments alongside big box and residential.”
The UK Warehousing Association said the small to mid-box market catered to an enormous range of businesses and losing significant portions of existing stock would be “very challenging”.
The association’s chief executive Clare Bottle said: “We are here to support our members in meeting MEES standards and urge them to take a proactive approach.
“We would recommend as a first step that landlords have their EPC reassessed to confirm accuracy following methodology changes in recent years.
“There are a number of initiatives to consider such as upgrading to LED lighting or adopting rooftop solar that could help you meet those EPC standards without significant retrofitting.”
