Green labels losing edge as occupiers seek performance data
Grant Thornton report reveals Indian occupiers now demand measurable performance data and retrofit readiness over simple green certifications.
In the evolving landscape of India’s commercial real estate, a simple green certification is no longer the golden ticket it once was. According to a recent report by Grant Thornton Bharat, the office market is witnessing a significant shift where occupiers are moving past mere labels to demand tangible, measurable performance data and operational efficiency.
Beyond the Green Sticker: The Shift to Real Performance
The era of relying solely on a sustainability badge to attract tenants is fading. The report suggests that the next phase of green real estate will be defined by how a building actually functions in real-time. Instead of just looking at a certificate on the wall, occupiers, lenders, and investors are now hunting for:
- Measurable performance metrics: Hard data on how energy and water are actually consumed.
- Operational benchmarks: Clear evidence of how efficiently the building is managed.
- Decarbonisation roadmaps: Transparent plans on how an asset will reduce its carbon footprint over time.
This trend is particularly evident in Grade A office markets. Multinational corporations and Global Capability Centres (GCCs) are leading this charge, integrating sustainability data directly into their site selection and lease renewal processes. For these high-value tenants, sustainability has transitioned from a "nice-to-have" differentiator to a core requirement.
The Landlord’s Dilemma: No Automatic Premium
For property owners, the report delivers a reality check: certification does not guarantee a premium. While a green label can help, the true financial advantage—the "green premium"—is only realized when the certification is backed by strong location, high-quality tenants, and proven building management data.
If a building holds a certificate but fails to demonstrate efficient operations or a credible path toward decarbonisation, landlords may find themselves struggling to command higher rents.
The Rise of the 'Brown Discount' and Retrofit Opportunities
The shift in demand is creating a widening gap between modern, efficient spaces and older structures. The report warns of a potential "brown discount" for older assets. Buildings that lack strong sustainability credentials or are difficult to upgrade may face several challenges, including:
- Increased costs to lease to premium tenants.
- Difficulty in securing financing.
- Higher costs associated with retrofitting.
However, this challenge presents a massive silver lining. As older buildings strive to remain competitive, retrofitting is expected to emerge as a major market opportunity. Furthermore, the rise of "green leases" is anticipated, as occupiers demand more transparency and direct access to data regarding energy, water usage, and other critical sustainability metrics.
Ultimately, the long-term value of a commercial asset will no longer be judged by its initial design, but by its climate resilience, retrofit readiness, and continuous performance data. Without these, assets risk facing obsolescence in an increasingly eco-conscious market.