How to decarbonise your office stock through retrofit, as deadlines loom

The sustainability of offices has been a major theme in property since we emerged from the pandemic. You only have to look around most of the UK’s city centres to see how much work is going into refurbishing existing stock, with the number of schemes underway in London reaching a record high in the first few months of 2024[1].

Legislative imperatives

The momentum behind decarbonisation of offices will only continue over the next few years, with Minimum Energy Efficiency Standards (MEES) deadlines approaching. For now, these rules only apply in England and Wales, but the Scottish Government has said it plans to introduce equivalent regulations next year, supporting the national target of reaching net zero greenhouse gas emissions by 2045[2].?

By 2028 – pushed back from 2027 – with some exemptions, offices will need to have a minimum Energy Performance Certificate (EPC) rating of C for them to be considered lease-able to a new occupier, or to extend and renew an existing tenancy. Just two years later, notwithstanding further changes, office owners will be obligated to bring their stock up again, this time to a B EPC rating.

Previous research has suggested that around 50% of the UK’s office stock is below the level required by 2030[3]. And, even without that legislative imperative, there are growing signs that occupiers, large corporates in particular, are demanding their office space has strong environmentally friendly qualities, to match their own net zero targets and wider ESG strategies.

A requirement to consider retrofitting

Reusing existing buildings is only going to become more important as these deadlines and net zero targets draw nearer. More than 70% of the buildings that exist today will likely be standing in 2050 and the UK's built environment is responsible for around 25% of the nation’s greenhouse gas emission[4].

But, the crucial statistic is that retrofitting an existing building is between 50% and 75% more carbon efficient than constructing the same property from scratch[5]. It is clear that doing more with existing office stock is key and owners are going to be compelled to retrofit wherever feasible – even if that means a longer payback period.

Put a plan in place

If you’re a landlord with a portfolio of assets, and some in poor condition, the first step is to assess the overall state of your stock. Understanding the assets you have is the base line for putting a clear plan in place, providing you with insight into the overall EPC picture, the age of your properties, the types of heating systems in use, and any planned maintenance due to take place.?

It is important to undertake work in a considered and controlled manner. There is no point in implementing repairs and improvements without considering the practical and financial impact it will have on the building. For example, if an occupier’s lease expires in a year’s time, it would be best to plan for a void period where the space is vacant and refurbish it at that point, rather than trying to work with them in place or once a new tenant has arrived.

After the initial assessment you can begin to systematically schedule the necessary works. If you prioritise improvements to the properties in comparatively worse condition, that should drive more interest in this stock and, with the space let, then generate a greater financial return, which can then be invested in making smaller improvements to the less onerous properties.?

A variety of straightforward interventions

With information on each of your office assets, their age, and EPC bandings, there are a number of potential interventions you can undertake. Run scenarios for each of your building types to understand the options you have to bring their EPC ratings up and then consider how they can be implemented to deliver the optimal improvement.

For some properties there will be easy wins, such as installing LED lights or making other lighting improvements that should be relatively straightforward to implement. Installing attic or underfloor insulation may be another quick and straightforward option, but will depend very much on the building and any restrictions that apply to it.

Another good starting point is thermal upgrades to roofs and walls, underpinned by a ‘fabric first’ approach. This principle aims to maximise the energy efficiency of a property through the materials used in its envelope and, while is most often associated with new-build properties, it can also be taken with retrofit projects.

More energy efficient windows and doors are another area that can yield quick results, and can be weaved into maintenance plans rather than requiring standalone interventions. Heat can be lost up to twice as fast through windows with single glazing rather than double, for example, which can make a reasonable difference to a building’s energy performance.

Foot off the gas

Other interventions may be more resource intensive. Taking a property off the gas network, for example, can make a significant difference to its EPC rating. Electric heating systems, air source heat pumps, and photovoltaic panels – depending on what type of roof a property has – are some of the options to consider, along with battery storage for any green energy the latter technology generates.

Technological improvements, such as the introduction of a building management system, are another option. These allow you to implement the likes of motion sensors that turn lights off when there is no nearby movement or, similarly, intelligent heating systems which make buildings run much more efficiently.?

While the cost attached to these options for decarbonisation may be much higher, they should pay for themselves over time depending on the system, the size of PV panels, existing CO2 outputs, and other factors. If you plan on holding the building for a number of years, it can be a worthwhile investment. ?

The deadlines for minimum energy efficiency requirements are fast approaching – and net zero targets are not that far behind. That may seem like a daunting prospect for owners of office stock, but with the right plan and approach in place, you can decarbonise each property in as efficient and cost-effective a way as possible.

For more information on the above article please contact Hamish Paterson via [email protected]

[1] Source: Construction Enquirer

[2] Source: Scottish Government

[3] Source: RICS

[4] Source: UK Parliament

[5] Source: World Economic Forum