Viewpoint: On whether net zero will mean stranded property assets

Neil Bannon, co-founder and executive chairman, Bannon Commercial

Neil Bannon, executive chairman Bannon Commercial: ‘Will they be as concerned about suburban locations or remote locations?’

“I don’t see obsolescence happening in prime city centre locations. Because the values will support the costs required to convert them to a sustainability standard demanded by the market.

“But in locations where the values of offices are lower, they’ll struggle to absorb the same level of investment required. Because the cost of fixing a building will cost the same in a low-value location as a high-value location. So I think there’s a risk of viability obsolescence.

“If you’ve got to get to net zero, you can’t set the regulations lower so you’ve got to have some sort of grant or subvention to bridge the gap. If it’s financial obsolescence because the market values don’t support it, then it’s only through tax and grants that you can bridge that.

“The question for policymakers will be: do they want to do that? I understand the motivation to do that in city centres, because you need city centres to be vibrant. So you’d be very wary if large parts of your city centre office blocks becoming obsolete, because then you lose the jobs in the city centre and the vibrancy.

“Will they be as concerned about suburban locations or remote locations? I’m not sure they will. Traditionally, policymakers in Ireland like offices because offices mean jobs, and jobs are good.

“If we start seeing jobs leave locations because we’ve nowhere to accommodate them, then that’s when policymakers might start paying more attention.”