Building renewal is a process of planning and implementing integrated solutions that maximize energy performance and building value over time. It is a comprehensive lifecycle approach that identifies areas for energy efficiency improvements, financial planning and investment strategies, building and system upgrades and retrofits, and the ongoing operations and maintenance of a commercial property. It helps deliver maximum value and market position by saving energy and reducing operational costs, complying with standards, and future-proofing your building to avoid regulatory risks. Additionally, it enables a healthy and productive indoor environment that can help mitigate risk in an uncertain market.
How is Building Renewal Best Planned and Implemented?
Building investments should be prioritized and timed in a way that reduces energy load and enables the scaling to meet future needs, with a scope that encompasses the entire building as part of a much larger strategy. Opportunities for integrated energy efficiency and building-performance strategies that reinforce and build upon each other can arise when major investments are made in systems nearing their end-of-service life. They can also present themselves within the context of other building improvements that may help address issues such as low occupancy, repositioning the way the space is used (e.g. from retail space to office space), and large-scale renovations. When planned thoughtfully and wholistically, building renewal can complement and even magnify the value attributes for owners, investors, operators, and building users.
Although a broader range of sustainability considerations will follow suit, energy efficiency and decarbonization goals can drive investment priorities. Water efficiency, carbon emissions, renewables, indoor air quality, and other building performance needs will inevitably play a role in shaping your project.
To maximize its value, first evaluate and assess what the future market needs and regulatory landscape for that property may look like. Then design any renovations in a manner that helps future-proof the building. Nationally, office utilization rates are less than 50% of where they stood prior to the pandemic, and in some tech-heavy markets they remain below 40%. Concurrently, regulatory risk is increasing with the implementation of energy and carbon-based building performance standards in a number of jurisdictions. A revitalized building is more cost competitive, attractive to tenants, and has a lower risk profile.
What are the Benefits of Building Renewal?
With the influence of sustainability—and the focus on energy efficiency and its associated cost reductions—net cashflow can be enhanced and the building’s value is likely to increase. Energy costs are the largest controllable operating expense in a commercial building and are almost always overshadowed by an increase in asset value. However, the objective of the building renewal process should extend beyond cost savings to increasing the market appeal of a property.
Indoor environmental quality, user experience, tenant value, energy use, systems, and the building envelope have interdependent implications, and benefits can be maximized when implementing the building renewal process using an integrated design approach. High-performance buildings have been shown to provide tangible value to owners and tenants across a broad spectrum of areas including: reducing operating costs, attracting and retaining talent, increasing asset value, improving health and productivity, and supporting the reporting of enterprise-level environmental, social, and governance benchmarks.
In addition to increasing value, building renewal can help future-proof a property by:
- Addressing existing building performance standards such as Washington State’s Clean Buildings Act requirements and the impacts of building-energy disclosure ordinances.
- Ensuring it will be less impacted by increases in energy prices.
- Positioning it for future ENERGY STAR® and LEED® certifications.
- Supporting corporate or other sector environmental and social governance goals.
- Increasing occupant health, comfort, and productivity through improved lighting and ventilation strategies.
- Creating a more compelling environmental narrative to help attract potential tenants and retain existing ones who are engaged and motivated by the updates.
- Aligning with corporate and governmental leasing policies and environmental platforms.
- Increasing resilience to current and future climate events.
Check out the Building Renewal Series on BetterBricks.com to learn more about this important, comprehensive process:
- Funding Your Building Renewal
- Why You Need a Strategic Operations & Maintenance Program
- The Importance of Measurement and Verification
- Recognizing and Mitigating Common Pitfalls
- Marketing a High-Performance Building