Retrofitting the built environment – the $326.5 trillion dollar opportunity

To celebrate World Green Building Week 2022 Cundall offices around the world held both in-person and online events to gather local insights on one big problem – how we address existing buildings and bring them on the net zero carbon journey.

The 11 events throughout September brought together clients and Cundall experts from across disciplines to share the challenges, opportunities and solutions to improving existing buildings. We began with some sobering statistics, including the stark reality that 80% of the buildings standing today will still be operational in 2050, the year the Paris Accord commits us to attaining net zero. There is $326tn of real estate on the planet and almost none of it is net-zero carbon.

Many of these buildings have issues that can compromise global ambition to reduce emissions. Some are hooked up to fossil fuel combustion directly through the use of gas and heating oil. Energy-efficiency and passive thermal performance is poor, resulting in over-sized energy demand. Occupant comfort may be low and the spaces within the buildings poorly adapted for the digital age and flexible, adaptive occupancy patterns.

Their fate is uncertain, as the market is shifting to preference buildings that are energy-efficient, all-electric and healthy for occupants. The coming crisis for asset owners is by 2030, many existing buildings will start to lose stature in the market and become unsaleable and unlettable stranded assets.

One of the major challenges raised in many of the discussions is asset owners and managers may be looking to set targets for addressing the quality of their portfolios, but they are unsure of where to find support to develop appropriate pathways to get there. It is also challenging to see the business case for green credentials and match them to measurable value uplift to convince property stakeholders including investors that building improvements will deliver a genuine financial return.

The awareness is growing, however, standing still is not an option.

As Robin Pritchett, Associate Director, Cundall (UK) said at the London event, “Clients are looking at what they need to do to achieve net zero and that is to do with commitments people have made. Reality is catching up with aspirations, so it is going to be an interesting few years. We need to do things soon; they may not be perfect but that’s better than the cost of inaction.”

Speaker Dan Higginson from Greycoat highlighted a current disconnect between aspirations and available options. “Investors are increasingly focused on environmental credentials. This is because the corporate goals of businesses have changed with lots more adopting 2030 net zero targets. However, the number of buildings that can actually reach that target are limited,” he told the London event.

For design engineers and architects, the opportunity to reinvent ageing or lacklustre buildings is an exciting one. It inspires creativity and ingenuity because there is no off-the-shelf solution.

The design engineering for each element of a project will be as unique as the building itself, whether it is a façade upgrade that improves passive thermal performance or a building services overhaul to bring legacy HVAC systems into the smart buildings age with energy-efficient, zoned ventilation and heating/cooling equipment that connects to a retrofitted smart building control and automation system.

Benoy Design Director Gregory Kovacs told APAC attendees that from a personal perspective as architects, reusing existing underperforming building assets are “actually the most exciting design challenges.”

A clear message across many of the discussions was that any step forward is a positive step. Incremental change is beneficial and committing to staged improvements is a positive signal to stakeholders and to the wider market.

“Tenants are now saying they don't want to move into buildings that aren't net-zero or have a high sustainability credential because they'll have their own policies to meet in their own science-based targets and many of them are actually becoming carbon neutral organisations,” Oliver Grimaldi, Cundall Associate and APAC event host said.

The MENA event included a presentation by Mohamad Khodr Al-Dah, Survey Director at the Dubai Land Department. He shared the findings of recent research by the department, noting that surveys are showing that property owners who take a proactive approach to retrofitting their buildings, place themselves in a great position to both retain existing tenants and attract new ones.

Commercial tenants in particular want to know how sustainable the building is, how good the air quality is, what amenities are on offer, and are willing to pay a premium for those. For owners, the capital invested in refurbishment can pay for itself through increased rental yields.

The commercial imperative was also echoed by Mario Saab, Head of Sustainability MENA, Cundall. “We need to see more and more retrofits so that these properties stay ahead in terms of decarbonisation and maintain their value, in order to keep attracting tier 1 and tier 2 tenants from a commercial and from a residential point of view.”

Across all regions, we heard the shared recognition that retaining and improving existing buildings has multiple benefits including reducing the embodied carbon impacts associated with new buildings.

This was stated succinctly by Gemma Christian. “When it comes to sustainability, it is often said that the best buildings are the ones you don’t build, but that’s not going to happen so the next best thing is reusing what you already have.”

By bringing together clients from across the property value chain and across engineering and sustainability disciplines the discussions also showcased a vital ingredient in the recipe for successfully retrofitting our entire built environment for net zero: collaboration.

Clients, designers and delivery teams all need to work together to understand the opportunities and achieve the best outcomes. The needs of building users – tenants – must be central to decision-making, and financial models need to factor in both risk and reward. Doing nothing is not an option – achieving everything that is possible will be a journey undertaken one step at a time.