Flight-to-quality has been the main highlight of the office sector for the better part of a year. In the mind of many office occupiers, newer is better.

Now those occupiers have another demand. They want their office space and buildings to be sustainably designed as well. A recent article written by JLL noted that companies on a global basis are flocking to environmentally friendly buildings in an attempt to reach their own carbon net-zero goals, and to meet the demands of a younger workforce.

“More companies are releasing carbon neutral or carbon reduction statements, and one of the ways they are meeting their objectives is by moving into office buildings that have high sustainability credentials,” said JLL Research director Paul Chapko in the article. This has been true in Hong Kong and Australia, in which newer, more sustainable office buildings experienced higher net absorption than older office space.

“This year, most of our clients have upgraded from leases in buildings with lower sustainability credentials, to buildings with the best credentials, better entry experiences, end-of-trip and wellbeing facilities third space and placemaking activations,” said Sherrie Jones, workplace strategy lead at JLL.

While the article pointed out that retrofitting existing buildings to meet minimal decarbonization targets need to triple from the current 1% to at least 3%, cost is getting in the way. An estimated $3 trillion will be required for the office sector to meet this target.

As such, cost is a fairly large obstacle to action, even with sustainability as a potential value driver. This is especially the case with buildings in which the required investment for compliance outweighs their value. The JLL article dubs these as “stranded assets.”

And in some places – especially in Europe – these stranded assets aren’t very much in demand. “Six months ago, you could sell off stranded assets and someone would buy them,” said Guy Grainger, JLL’s global head of sustainability and ESG at a recent climate finance panel. “We’re seeing real evidence that that’s not happening now, particularly in Europe. Those assets are becoming illiquid.”