Obsolescence is rapidly accelerating, office lifecycles are shortening and depreciation is quickening. If you’re an investor who doesn’t already have a firm control of your asset strategies, then ageing properties – particularly secondary product – could become a burden as sustainability, technology and and changing occupier needs increasingly impact the offices sector. Of all the factors, environmental legislation across Europe will hit hardest, sooner than you think and to an extent that might make it illegal for you to lease a building if it falls below a determined ‘energy performance’ level.  This might consign buildings to the demolition pile or alternative uses. More optimistically, refurbishment will restore many offices to commerciality – but what will be required is deep ‘retrofit’ surgery and not the facelift of a lick of paint.

However this should not be viewed wholly as a ‘rescue mission’ for there also undoubted competitive advantages for those investors and developers that move first. Office replacement rates are at very low levels and occupier hunger for cost-efficient, flexible and sustainable buildings remains unsatisfied –  new or significantly upgraded stock that fits the tenant bill (and timeline) is going to win out and secure attractive premiums as a potential supply crunch threatens. At the same time there will be investable opportunities, for those with access to equity and finance (and the vision to refurbish or redevelop) for stock which is already compromised.

In a world of ‘value generation’ and ‘value protection’, obsolescence and depreciation must therefore be ‘front of mind’, along with a clear understanding of what occupiers will need as well as what and how to deliver. For investors, strong proactive asset management – more than ever before –  will define those that have succeeded. As the value gap between prime and secondary looks set to widen, future-proofing assets will be essential to protect income, reduce voids and attract occupiers. Is your foot on the pedal?

[For the bigger picture on obsolescence, see what we are saying in our Offices 2020 programme which is looking at the future of offices across EMEA – better still, join in and share your thoughts with other occupiers].