MAP Market Insight
ESG criteria have long since found their way into the real estate sector. The realization that involvement in this area offers many opportunities is now firmly established. Many companies have set up departments with specialists for ESG. However, the concept of ESG is still mainly reduced to environmental and sustainability aspects. While corporate governance has been an issue for some time, far less attention is paid to the social dimension in particular.
The industry is currently challenged economically and operationally by meeting current and future CO2 reductions. It might therefore be tempting to assume that the S of ESG could be postponed. However, given the rising vacancy rates on the office market, this could prove to be the wrong decision.
At MAP Real Estate, we do not believe that improving the E criteria alone will fully optimize the competitiveness of a property. Investors also need to implement the S components in order to achieve the best for a building. The prerequisite for this is, of course, that the property with its mobility concept and existing qualities, such as space efficiency, offers a good basis for this upgrade.
The aim of implementing the S criteria on the office market is to make the workplaces so attractive that employees will return to the office space. In addition, this will help to reduce vacancy rates, achieve faster letting success, achieve sustainable rents, optimize the overall return on investment and make the assets more resilient to market challenges.
In our Market Insight, we clarify these considerations by taking a closer look at the S component of ESG. We introduce what this means and report on current research findings on the relevance of S on the German real estate market. Finally, we highlight the difficulties in measuring the social impact of a property and clarify whether green building standards offer a way out.
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