Future-proof: retrofitting commercial property

Offices, restaurants and shops are among the most challenging buildings to upgrade, but global investment in retrofits is part of a push towards net zero carbon targets


  • Stephen Cousins

26 January 2023

Wooden office block filled with plants against blue sky

Underperforming homes make up the majority of the world’s building stock, but net zero carbon targets will be put in jeopardy if the output of non-domestic buildings is not addressed – they are some of the most energy inefficient and arguably trickier to upgrade successfully.

The operation of commercial buildings is responsible for 6.6% of total global greenhouse gas emissions, according to a recent study by Climate Watch. Furthermore, the rate at which commercial building stock is repurposed must increase to around 5% annually to meet global emissions standards by 2050, according to estimates from JLL.

In the UK, non-domestic stock accounts for 23% of overall operational carbon emissions in the built environment. And with around 70% of these constructed before the year 2000, thousands of buildings will need to undergo some form of retrofit to improve energy efficiency before 2050.



Recognising the scale of the non-residential challenge, politicians, investors and other decision makers worldwide have embarked on ambitious retrofit incentives and campaigns intended to deal with underperforming stock.

Commercial building renovations will be a key beneficiary of Germany’s huge €177.5bn plan to transform the climate and the economy between 2023 and 2026. The draft Climate and Transformation Fund includes a €56.3bn retrofit finance package, intended to retrofit buildings in the bottom 25% of energy performance.

In neighbouring Denmark, The UN’s Global Status Report for Buildings and Construction acknowledges the country’s work as climate leader, aiming to reduce its CO2 emissions by 70% by 2030. Towards that goal, life-cycle assessments, including embodied carbon calculations, became mandatory for all building projects from the start of 2023.

In South America, Colombia has developed a roadmap that requires all large building renovations (plus new builds) to achieve a 40% reduction in operational carbon and a 30% reduction in embodied carbon by 2030. And a decade later, 80% of major renovations in urban areas must be net zero carbon in operation and achieve a 70% cut in embodied carbon. In the US, having rejoined the Paris Agreement, President Biden set a target of a 50% reduction in economy-wide greenhouse gas pollution by 2030.

Meanwhile, Indonesia’s plan for climate adaptation includes a plan for existing buildings to achieve a nearly zero-energy building operational standard by 2050.

Targeted support

National strategies are a powerful force for change, but targeted forms of funding and investment are also necessary to achieve building upgrades on the ground at scale.

The European Bank for Reconstruction and Development (EBRD) supports investment in renovations across central and eastern Europe, as well as Middle East and North African (MENA) countries through various programmes. Its €50m equity investment in December, in partnership with Adventum Penta, will be used to support the purchase and green refurbishment of commercial real-estate assets, including the Sky Tower mixed-use building in Poland and a portfolio of Tesco-anchored retail parks in Hungary and the Czech Republic. 

A Commercial Building Retrofits Initiative run by Canada Infrastructure Bank was expanded in October 2020 to allot CA$2bn for larger buildings. Last year, the bank committed up to CA$136.6m to retrofit 19 buildings, owned by the Dream group of companies and built between 1875 to 1992.

Various commercial retrofit projects in Canada should experience ‘knock-on’ benefits from the launch of an innovative training and certification scheme set up to tackle the huge volume of demolition waste linked to building insurance claims. The EcoClaim initiative was set up by multi-disciplinary engineering firm MBC Group to reduce the environmental impact of claims, by increasing the recyclability and repair of materials retrieved from demolition.

Roughly 35% of waste disposed in landfill in Canada comprises demolition debris and much of it comes from the insurance industry, as buildings are hastily broken down in the wake of damage from incidents such as fires or flooding.

The scheme teaches insurance companies, independent adjusters and building restoration companies the processes and skills to better manage demolition waste and quantify the impact of carbon reductions achieved, in support of ESG and regulatory commitments.

The six national restoration contractors already signed up (alongside four insurance firms) will apply their skills to refurbishment projects as they recycle building materials to allow for new installations.

“First General, one of the larger national restoration firms we signed up, handles up to 20,000 insurance claims a year,” explains Ross Huartt MRICS, president and CEO of MBC Group. “Over five years, that could mean 100,000 insurance claims/retrofit projects that benefit from a more sustainable approach to demolition materials.”

Trial and retro-bution

Demand for sustainable commercial space is surging as occupiers pursue net zero agendas and investors respond to tightening regulation, as well as seeking to avoid the risk of stranded assets. But delivering retrofits for non-residential buildings, especially at scale as part of a portfolio of properties, brings some unique challenges.

A report on the key considerations for a commercial retrofit, published by the UK Green Building Council in 2022, highlights the need to develop a business case that takes into account changes to existing and forthcoming regulation. In the UK, this would include the government’s intention to raise the lettable threshold for non-domestic Minimum Energy Efficiency Standards (MEES) to EPC B by 2030.

The report underlines the need to understand the original use of the asset through the collection of metered data and set up a “standardised, scalable approach to multiple building or portfolio retrofits.”

Countries with a historic and diverse building stock, such as the UK or France, throw up more technical challenges than most when it comes to standardisation. Morwenna Slade MRICS, head of historic building climate change adaptation at Historic England says: “The key risk is appropriate materials and appropriate detailing for the age and typology of the building. Many of the larger-scale programmes talk about an archetype approach, whereby you develop a standard set of details and materials for a particular archetype.”

A nuanced strategy is vital, she adds, because the specific use and the type of occupancy of a building “strongly influences how effective a retrofit design will be.”

The inherent complexity of large non-domestic buildings, and the sheer size of teams needed to assess and upgrade them, is another factor to consider. A multi-disciplined team of experts is often required to tackle each aspect, such as a structural engineer working with a building surveyor or a team of energy assessors working under a lead assessor to understand energy uses. Others are employed to assess heritage impacts when altering historic buildings.

Access to trained professionals can become an issue, as well as finding contractors with the appropriate skills and enthusiasm to engage in large-scale retrofit work. Stephen Richardson, director of the Europe Regional Network of the World Green Building Council, says: “There's less incentive to get into the retrofit space for larger contractors – projects are perceived as higher risk because often you just don't know what you're going to find when you go in there.”

There's also a perception that newbuilds are greener, he adds, “which is a fallacy because in most cases, considering the whole lifecycle, retrofitting an existing building lowers your carbon footprint.”

Poorly prepared

Part of the skills challenge, according to John Edwards FRICS, director of Edwards Hart consultants, is many individuals entering the building retrofit sector are from energy backgrounds, rather than construction, and therefore ill-equipped to assess buildings, carry out condition surveys and understand common faults and issues. “This isn’t just about improving energy performance, it's about keeping buildings in good repair and maintaining them,” he says.

With so many interdependent factors to consider in a commercial retrofit, experts often point to the need for a systematic approach involving a whole life carbon assessment. This considers carbon impacts throughout the building’s lifecycle, including construction and associated manufacturing, operation and end of life impacts such as reuse and recycling, demolition and disposal.

The RICS professional statement on Whole Life Carbon Assessment for the Built Environment is a key source of information. Industry guidance, such as PAS2038:2021 Retrofitting non-domestic buildings, covers how to manage retrofits from inception to completion, including assessment, design and specification measures, installation testing and handover of measures, plus fine-tuning performance.

Whereas UK guidance for domestic retrofits demands, according to Edwards, “a fairly low level of competency” for different disciplines, PAS2038 “relies on a professional team approach, so you should get a better outcome.”

Many organisations are now gearing up to upgrade their portfolios, he adds, because they believe there will be a legal requirement for it in the future, potentially attached to funding. Meanwhile, private sector rental regulations in the UK, for both domestic and non-domestic properties, are compelling building owners to demonstrate high levels of energy performance to ensure buildings can be let.

Strong retrofit policies around the world, backed up by robust industry guidance and expertise, will help ensure climate goals remain within reach in the critical years ahead.


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