Building Owner vs. Energy User: a Split Incentive for Energy Reduction

The UK’s historically low cost of energy has encouraged a culture that considers energy to be in limitless supply and excessive levels of consumption acceptable. Now that supplies are becoming restricted and costs rising, it is becoming recognised this energy culture has created a legacy stock of buildings with poor building fabric, limited energy efficiency equipment and even lower levels of energy awareness. Cost effective technologies are readily available but not adopted by UK SMEs in non-domestic buildings, as rational economic theory would expect. Policy-makers attribute this to inaccessibility of information and investment and design policies accordingly. However, as escalation of demand continues an alternative driver of this paradox must exist. This research hypothesises that this is the ownership structures of non-domestic buildings. Tenure of business premises is found to prevent adoption of energy conservation opportunities; 64% of SME surveyed encountered barriers to energy efficiency related to building ownership. When increased pro rata to reflect the UK SME population, almost 2.5 million businesses appear unable to benefit from energy improvements.

Technology is Set to Change Real Estate Forever

Major developments in the technological environment can become commonplace very quickly. They are now impacting upon a broad range of information-based service sectors, as high growth Internet-based firms, such as Google, Amazon, Facebook and Airbnb, and financial technology (Fintech) start-ups expand their product portfolios into new markets. Real estate is one of the information-based service sectors that is currently being impacted by this new type of competitor and the broad range of disruptive digital technologies that have emerged. Due to the vast troves of data that these Internet firms have at their disposal and their asset-light (cloud-based) structures, they are able to offer highly-targeted products at much lower costs than conventional brick-and-mortar companies.