The global head of corporate real estate at one of the world’s biggest banks told attendees at the 2024 ULI Europe Conference in Milan that a lack of sustainable office assets is “one of the biggest challenges” the company faces.
Nicolaas Waaning, global head of corporate real estate management at ING, said in June the company had aimed for its real estate portfolio to be net zero by 2035 but “90 percent of our portfolio is currently not there”. He added: “Our call to action is for the real estate industry to give us the supply [of ESG compliant buildings] we need.”
Waaning, who oversees ING’s 1.1 million square meter (11,840,301.5 sq ft) global property portfolio, said: “When we put that net zero target in place, we thought we would get there easily…[with] every lease expiry we would move to a sustainable building. But the products are not there.”
Europe’s current stock of sustainable buildings has been estimated to fall short of current environmental regulation. In June, half of the 250 European commercial real estate managers that took part in a survey by data intelligence company Deepki said they considered at least a third of their portfolios to be already “stranded” owing to poor energy performance.
Waaning said he believed other corporates were not able to meet similar green targets due to lack of sustainable offices: “Maybe we are a little bit ahead of the pack in terms of our ambitions. But I talked to a lot of other corporates, and most are [aiming for the same]. I’m sometimes surprised that there’s not enough product. I know that the market situation is currently very difficult, and [the industry is] not building, which is understandable. But then I think we have to team up to see how we can jointly reach that goal.”
Catherine Guizol, director of workplace transformation and innovation at global pharmaceutical company Ipsen, said corporate occupiers were “regularly fighting” for the same Class-A buildings. “We always want to be moving to a more sustainable building and we are never compromising on this requirement.”
She said the company had recently signed a lease for a building in Paris that is 20-years old but had been completely retrofitted. “This isn’t good news for you,” she said, addressing the audience, “because we know your portfolios are not only composed with the latest generation buildings.”
Guizol said the company’s top priority when relocating was to find a location that was easily accessible by public transport so Ipsen could “minimize the number of cars” its staff were using to commute. However, she added the company was not seeking to be in a central business district, explaining Ipsen – which is located in 40 countries - wanted to be near its competitors in the life sciences industry. “We want to be part of that ecosystem, and we also appreciate areas with mixed amenities,” she said.
Asked whether Ipsen would be prepared to invest ESG cap-ex alongside the landlord, Guizol explained: “It can happen” adding the company had considered investing in one of the buildings it leases to help with the cost of electrifying the car park spaces which was “super costly” but opted to relocate instead.
Another key criterion for Ipsen, she added, was “the quality of the landlord I’m going to engage with”. She added: “Honestly, I don’t want any more relationships where I’m just tenant. I’d like to be treated and viewed as a business partner because for me, we are really creating value together.”
Waaning said ING’s real estate portfolio had reduced its portfolio and needed “less and less” space, adding the bank was closing branches and consolidating offices in the best locations where people want to work: “We have reduced the footprint significantly and that has not ended yet.”
He added the company was seeking assets with the highest certifications available via environmental ratings systems such as BREEAM or LEED, and said the company also sought buildings where “attention had been paid” to reducing embodied carbon. “So, it is much broader than just looking at energy consumption, there are hard metrics and then other [criteria] that are nice to have,” he concluded.