Why real estate is starting to go electric

With switching buildings to electricity a potential game changer – similar to the electric shift taking place in the auto industry – companies and governments are starting to make the move.

Computer software company Adobe is building what it says is the first all-electric office building in California. Lendlease and Australia’s GPT Group have electrification high on their agendas, making it a key focus within their energy masterplans alongside reducing high-energy demand periods, off-site renewable energy procurement, and on-site battery storage.

“Electrification is the direction everyone is moving, as it is one of the most important tactics for decarbonising our sector,” says Ian McDonald, a director in energy and sustainability at JLL.

Time for action

The rising pressure for climate action is already pushing broad shifts in the commercial real estate industry. The Global Real Estate Sustainability Benchmark, or GRESB, reported a 22 percent leap in participation in 2020 as global investors, pension funds and financial institutions demand ESG performance be incorporated into the risk-adjusted returns of their investments.

“Businesses need to adopt a total systems approach to managing risk around social inequality, climate, and regulation, then seize the commercial opportunity through effective measurement and investment into net-zero carbon technology solutions,” says Guy Grainger, Global Head of Sustainability Services and ESG, at JLL.  

Governments are also making policy moves to pull the property industry in line. The UK, for instance, has just confirmed a ban on fossil fuel heating systems from new homes by 2025 in line with the country’s 2050 net zero commitments. California is encouraging and even in some cases mandating all-electric buildings, as well as providing incentives for the use of electric heat pumps over gas boilers.