Property experts are urging governments and industry to spend significant money electrifying Canberra office buildings or giving them new lives.
In 2023 the federal government committed to achieving net-zero greenhouse gas emissions from its operations by 2030.
From July 1, 2025, new building leases signed by government departments for more than four years must have a 5.5-star or higher NABERS energy rating.
Reaching this rating requires a stringent list of requirements, which developers say would cost millions of dollars to meet in most existing C- and D-grade Canberra buildings.
Canberra is the jurisdiction most affected by the changes. Ninety-two per cent of NABERS-rated office blocks in the territory were still using gas in October 2024, according to Knight Frank.
Several new buildings, including the Australian Tax Office's new building in Barton, will already be behind schedule once construction is complete.
The Tax Office signed a 15-year lease for the new building, which was constructed especially for the agency, for more than $320 million.
That was before the government's net-zero strategy was brought in.
The Property Council of Australia's ACT chief executive, Ashlee Berry, said the ACT had a particular requirement to balance sustainability requirements while ensuring the CBD is not left with vacant office buildings.
"It may not be possible for some buildings to meet new energy requirements without significant upgrade costs.
"This presents an opportunity for government tenants to work with building owners and contribute towards upgrade plans and cost," Ms Berry said.
Retrofitting buildings to be electric is not only costly - almost $45 million was spent to bring West Block up to standard - but it can also take up a lot more floor space than gas.
"Typically, mechanical electrical plans could be two to three times larger in size than [gas]. In a commercial office building, space is limited," Daniel Potts of Amalgamated Property said.
Zoning in much of the Canberra CBD also made this difficult.
But Knight Frank's ACT head of asset management Rebecca Jakubaszek said that given the significant number of government tenures in Canberra, she expects landlords would aim to upgrade buildings, even at substantial cost.
"There are an increasing number of clients looking for advice on electrifying existing buildings and exploring sustainability roadmaps to maximise the opportunity of retaining all tenants," Ms Jakubaszek said.
Office blocks that fail to meet these standards and can not be used for future government tenancies risk being land banked, developers previously told The Canberra Times.
There has been a push across Canberra to turn some of these buildings into homes since the 5.5-star rating was announced.
Mr Potts said that aside from construction costs, lease variation charges made this difficult, but solutions to housing were within reach.
"We need to have proper infrastructure and a decent capital contribution from the government and industry to make it a modern city," he said.
Turning offices into apartment blocks or build-to-rent spaces would generate long-term revenues, housing and ultimately revitalise the city.
Many of the buildings were past their life, even if electric plans were added, he said.
"I honestly think with a couple of changes - and that's from local taxes and planning legislation - we should be converting these office buildings," he said.
