In a market with such a challenging supply and demand ratio, retrofitting is becoming an attractive option to developers and investors in the purpose-built student accommodation (PBSA) sector. Retrofitting can provide a new lease of life to existing PBSA stock, whilst also presenting opportunities to repurpose non PBSA buildings.
It is estimated that 80% of buildings currently standing will still be in use by 2050. Given that 19% of the UK's carbon footprint is from operational emissions and 25% of UK emissions are directly attributable to the built environment, if achieving net zero by 2050 is to be a reality, decarbonising existing building stock must be a priority.
What is retrofitting?
Retrofitting is incorporating systems to encourage energy efficiency and low carbon consumption into existing buildings. Examples include optimizing energy and water efficiency, space utilisation management, and the installation of green roofs among other strategies and innovations. Retrofitting can also be used to make buildings more flexible and recyclable, so that buildings can be used by occupants for generations to come, with minimal demolition and reconstruction (and associated carbon emissions) required. Energy accounts for approximately 23% of operational cost bases for UK PBSA. With rising energy prices and growing operational costs, the all-inclusive model through which much PBSA is delivered to students is putting pressure on investors and landlords.
For the residential sector, the rewards reaped by retrofitting go beyond achieving net zero. An estimated 387 excess deaths were recorded in London last year, as temperatures rose to 40 degrees Celsius. Research commissioned by the Mayor of London into a city-wide programme to retrofit roofs demonstrates that these efforts could mitigate the effects of rising temperatures. Meanwhile, warmer homes could help to avoid 6,000 winter deaths every year, with an economic benefit of £6.6bn, while the NHS would be saved around £2bn by lessening respiratory conditions. Furthermore, home heating bills could fall by £24bn if the efficiency of 13m homes was upgraded to at least an EPC C rating by 2030.
The potential brought by retrofitting to commercial property is also significant, as showcased by the scheme lodged by Haptic Architects to refurbish and extend Battle Bridge House in Camden. The current 1970s office building has an EPC rating of G, making the property "unlettable". The proposals will bring the EPC rating up to A, increase the office space by 600sq, provide high quality sustainable workspaces as well as seven new homes, all whilst retaining the superstructure of the existing building.
The decision to retrofit a building rather than demolish and rebuild is not always a simple one. The retrofit debate became a live issue in the M&S public inquiry in October, for which a decision is expected later in the summer.
SAVE argued in favour of retrofitting M&S' flagship store on Oxford Street in London, that the carbon emissions expenditure from a retrofit of the site would result in significantly less upfront emissions than a new build scheme, with in-use emissions (both operational and embodied carbon) being very close to that of a new build, as well as avoiding the waste and transport involved in total demolition.
The future longevity of the building was also considered as part of the debate. According to M&S, the new build proposal would have a lifespan of 120 years. However, the Arup carbon assessment discovered that most individual components would have a life expectancy of 35 years or less.
Those representing M&S argued that the operational efficiency of any retrofit scheme for the site would be significantly inferior to that of a new-build alternative. The new-build alternative would be able to provide public realm benefits which would be impossible if the retrofit route was taken, due to the limitations of the existing structure.
The National Planning Policy Framework (the "NPPF") includes a commitment to achieve sustainable development in the planning system, under which 'minimising waste and pollution' and 'moving to a low carbon economy' are listed as objectives. The M&S case demonstrates how a tension can arise between these two ostensibly allied goals.
There are clearly benefits and drawbacks to retrofitting that will vary on a case by case basis. In any event, the Secretary of State's decision in this case will be instructive in determining the weight that should be given to retrofitting when considering the redevelopment of commercial properties.
The future of retrofitting
Can we expect any future regulation on retrofitting? A number of ideas have been floated by the development industry on ways to regulate and encourage retrofitting through planning legislation.
Mace has published a series of 12 recommendations in its report, ‘Transform & Renew - Making non-domestic buildings fit for a low carbon future’ calling on the UK government and real estate sector to increase efforts into retrofitting non-domestic buildings. A suggestion has been made to include a “retrofit first” principle in every major planning application that involves demolition, to move retrofitting up on the development agenda.
In an even more controversial move, Will Arnold at the Architect's Journal has suggested that a 'Grade III' status should be introduced to the Town and Country Planning Act. He proposes to apply this status automatically to every building, only allowing a building to be demolished if it is structurally unsafe, or given special dispensation by the local planning authority. This blanket approach could be restricted so that it only applies to major properties over a certain floorspace size, and would allow changes such as layout alteration, the strengthening of foundations and the upgrade of facades. By restricting demolition in this way, Arnold believes re-using existing buildings would become the norm.
Whether or not we see any of the above measures considered by the government in future, an increase in demand for retrofitting is likely to be driven by the market as the move towards sustainability becomes increasingly imperative for the built environment as we approach 2050. The impact of this on the PBSA sector will likely be magnified as investors will increasingly consider ESG factors alongside the operational costs which a retrofit can seek to reduce.