Reuse culture: why property owners need to embrace the circular economy to make secondary offices viable
The office market continues to experience a substantial shift, as landlords, investors, and creditors grapple with the financial challenges of profitably refurbishing secondary office spaces, before bringing them to market. However, these conditions provide developers with a workable scenario, and a fantastic opportunity, to viably implement circular economy principles within commercial assets, while producing a healthy return on investment and a more equitable approach to end-of-serviceable-life system replacement, Hedley Jones, Partner and Head of ESG Refurbishment and Development, writes in Property Week.
Traditionally, the market approach has been to strip and replace aging systems, but the current economic climate, along with hybrid working patterns, has forced a rethink, especially in key locations like M25 periphery, Bristol, Birmingham, and Glasgow. These are markets where the divergence of office rental revenue is the clearest, with new builds and refurbished offices pulling sharply away from legacy schemes.
More investors are now considering buying and refurbishing secondary offices, driven by a shift towards practical, cost-effective solutions that elevate the make-do-and-mend techniques of generations gone by, embracing the circular economy as a part of their business strategy.
A fresh acceptance of circularity is key to this cultural shift: witness Gen Z’s appetite for upcycling and re-selling everything from trainers to turntables to trousers. Of course, the built environment is not impervious to the benefits of this approach. A circular economy could reduce global CO2 emissions from building materials by 38% in 2050, by reducing demand for steel, aluminium, cement, and plastic, according to The Ellen MacArthur Foundation. It could also make the sector more resilient to supply chain disruptions, and price volatility of raw materials.
Business plans that once focused on replacing everything with new, and were unviable as a result, are now being reworked on more circular principles – and becoming commercially feasible as a result. With a rise in awareness of the benefits around recycling and repair, there is an increased acceptance of reusing existing elements, such as flooring, M&E systems and cladding, rather than starting from scratch.
Maximise the life of existing systems
Investors and occupiers alike are realising the need to maximise the life of existing systems rather than rushing to spend money upfront, which in turn supports lower embodied carbon through refit projects. For example, GPE has recently announced the introduction of a ‘circularity score’ to benchmark the level of reuse of materials in their developments, and is targeting 50% reuse from 2030.
Beyond pure sustainability considerations, reuse culture is being driven by additional factors such as high construction costs and the BCO’s now-lower occupational density standards, meaning M&E plant is being put under less pressure, which in turn can extend its service life – especially when used in conjunction with energy efficiency strategies that account for reduced occupancy. The benefits of energy optimisation systems like IBOS provides credible energy use data, helping tenants see the tangible benefits of smart energy use.
Potential occupiers may previously have been concerned about the long-term maintenance and performance of refurbished Cat B buildings – and it is true that many leasing agents severely discouraged landlords bringing forward refurbished Cat B offices. But where investors can present a coherent message, ensuring occupiers understand the benefits of reused systems that are insured with robust maintenance and service guarantees, the market is now demonstrating understanding and positivity, with increased investor interest in reusing materials and systems to balance costs and environmental impact.
Occupiers may feel also concerned about taking on accommodation with existing M&E systems and the potential for them to be asked to contribute towards replacement. However, they could ultimately become beneficiaries of more efficient systems with lower running costs. In this way, a shared allocation of investment against the returns can seem an equitable approach when systems eventually reach the end of their serviceable life.
As building owners seek to balance short-term economic needs with long-term environmental goals, this is a market in transition, where creative, lateral – and circular – thinking is required to unlock the full potential of secondary office spaces.
By Hedley Jones, Partner and Head of ESG Refurbishment and Development
This article first appeared in Property Week:
Reuse culture can revive offices | Property Week
