Retrofit: the UK’s next multi-million pound market?

Sensemaking / Retrofit: the UK’s next multi-million pound market?

A new partnership may unlock the door to a highly profitable market in green retrofit and refurbishment Eighty per cent of the UK's current building stock will still be standing in 2050. So if we are to meet our climate targets, we can't just focus on designing shiny new zero-carbon developments. We need to do much more to make our existing homes, hospitals and offices fit for purpose in a low energy, low waste world. The opportunities are immense – but so is the scale of the challenge: the green retrofit and refurbishment market is worth in excess of £10 billion a year in the UK alone. But no one can harvest that potential single-handed. It's not just the number of properties, but the diverse groups of people who will have to be on board to – quite literally – open the doors.

07 Jul 2011

A new partnership may unlock the door to a highly profitable market in green retrofit and refurbishment

Eighty per cent of the UK's current building stock will still be standing in 2050. So if we are to meet our climate targets, we can't just focus on designing shiny new zero-carbon developments. We need to do much more to make our existing homes, hospitals and offices fit for purpose in a low energy, low waste world.

The opportunities are immense – but so is the scale of the challenge: the green retrofit and refurbishment market is worth in excess of £10 billion a year in the UK alone. But no one can harvest that potential single-handed. It's not just the number of properties, but the diverse groups of people who will have to be on board to – quite literally – open the doors.

A survey of senior executives in the UK's commercial development sector revealed that 71% believe retrofit projects "are hard to get right because an integrated and planned approach is needed from the outset" [see box below].

Now a new partnership has been launched which addresses that head on – and which could make investment in this vitally important field a commercial no-brainer.

Construction giant Skanska has joined forces with engineering and planning consultants Arup to overcome these teething issues by providing a one-stop shop. Their combined design and delivery service will help property owners spot opportunities, and turn them into real value on the balance sheet.

Careful selection is the key. "It can be virtually impossible for portfolio holders to identify which retrofit and refurbishment initiatives would have the most impact on a property's market value", says David Glover, Arup's Global Property Market Leader. "While short-term cosmetic upgrades may have an immediate effect, businesses need to ensure that they make investments that bring value both today and tomorrow."

Arup and Skanska are combining their skills in architectural, engineering and financial risk analysis to find out where the best returns are, and exactly what's needed to deliver them. And they're not just talking about a series of quick fixes: the aim is to offer clients an ongoing monitoring and management service to take full advantage of the building's energy (and cost) saving potential.

As Glover puts it: "This partnership bridges the gap between sustainability and value. It allows portfolio holders to… meet the requirements of new legislation, improve performance and reduce risks." And crucially, he adds, it will help them "satisfy the sustainability criteria of tenants, owners and investors".

Refurbishment, of course, is only the first step on the road to efficiency. The day-to-day use of a building accounts for 20% of the overall management cost. Simply educating tenants about efficiency has been found to cut energy use by around 15%. A separate partnership between Skanska and advanced technology company GE will offer occupiers opportunities to learn about smart building management solutions, and how to get their own building running at maximum efficiency.

"We can no longer work in silos", concludes Craig Sparrow, who heads up Skanska's Green Business Team in the UK. "Property owners deserve a better response from our industry."

Getting fit

Green retrofit is the next big thing for the UK's commercial property market, according to Skanska's March 2011 report, Towards Zero. A survey of senior executives in the sector revealed the extent to which commercial developers are ready to reap the benefits.

  • Just over half (53%) had seen increased interest in green retrofit and refurbishment, and 33% perceived it to be the next big thing in the commercial property sector.
  • Over a third (35%) had already undertaken a green retrofit or refurbishment project.
  • 78% reported a positive outcome, citing increased client or tenant demand, proven reduction in energy consumption and improved marketability of the property.
  • Of those who hadn't yet embarked on a refurb, nearly a third intended to do so in the future – with 47% of those viewing it as a potential source of profit.

Anna Simpson

Skanska
is a Forum for the Future partner.

Image credit:  Haveseen/istock

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