A stone’s throw from London’s affluent Sloane Square, a 1980s redbrick facade hides a fully revamped office building, partially built from reclaimed materials. The new features include larger, opening windows, higher ceilings and two “green walls” of living plants on the outside. The car park at the rear has given way to almost 80 cycle spaces, along with lockers and showers.
Holbein Gardens, which is nearly complete and will house up to 260 workers across six floors, is Grosvenor Group’s first net zero carbon office building in its 346-year history – and Grosvenor is keen to points out that it is net zero in operation, without relying on carbon offsets. The Duke of Westminster’s property company, which owns swaths of London’s most exclusive neighbourhoods in Mayfair and Belgravia, decided to redevelop the mid-1980s concrete-frame building and add another storey – the latest example of the nascent “retrofit” boom.
Retrofitting is a conscious move away from the practice of knocking down office blocks after 25 to 30 years to build again, and it is starting to catch on. For instance, the US bank Citigroup plans a major overhaul of its 42-storey tower in Canary Wharf, to be completed in early 2026.
Retrofitting the UK’s historic buildings, from Georgian townhouses to the mills and factories that kickstarted the Industrial Revolution, could generate £35bn of economic output a year, create new jobs and help the government achieve its climate goals, according to a new report jointly authored by the National Trust, the housing trust Peabody, Historic England, the crown estate and Grosvenor.
The British Property Federation (BPF) supports a “retrofit first” approach, and wants the government to introduce an “overarching retrofit strategy and tax incentives”.
“There certainly is a shift,” says Tim Downes, development director at British Land, one of the UK’s biggest developers. “Carbon saving has undoubtedly gone up the agenda for, I hope, all developers but certainly all of the publicly listed developers, particularly on the commercial side.”
Higher borrowing costs, following the Bank of England’s 10th interest rate rise to 4% in February, are another factor. “As interest rates go up, the cost of capital goes up,” says Anna Bond, an executive director at Grosvenor. “You can quickly find that it becomes commercially unappealing to take forward large projects. While every building is different, retrofits can offer a more cost-effective way to create highly sustainable modern office space that can attract competitive rents.”
When deciding whether to retrofit or knock down and build again, developers have to weigh up the balance between “operational” carbon – having a brand-new building that is highly energy-efficient to run – against “embodied” carbon – the substantial emissions caused by making building materials and constructing a building from scratch.
The World Green Building Council has calculated that two-fifths of global greenhouse gas emissions come from constructing, heating, cooling and powering buildings. The BPF has urged the government to regulate embodied carbon and has called for planning reforms to prioritise the reuse of buildings, and a VAT exemption for refurbishment works.
The real estate investment group CBRE predicts that embodied carbon associated with buildings will make up 50% of built-environment emissions by 2035, up from 28% now, as operational emissions reduce “but we carry on building”. It warns: “Without action on embodied carbon, the UK’s 2050 net zero goal is not achievable.”
CBRE says: “There are tough choices ahead around whether operationally efficient newbuilds or refurbishments are most effective at reducing overall carbon emissions. But given that 80% of 2050’s built stock is already standing, the need to reduce the impact by refurbishing existing buildings is clear.”
Grosvenor, owned by one of Britain’s youngest billionaires, Hugh Grosvenor, hails Holbein Gardens as a big step in its ambition to become net zero by 2025. Retaining the 1980s brick facade saved 59 tonnes of carbon emissions, according to the UK Green Building Council.
The windows have been enlarged, letting in more natural light, and can be opened on every floor; sensors tell you when it is a good idea to do so to save energy, says project director Philip George. Ceiling heights were expanded by leaving the cooling and heating pipework exposed.
The company has opted for low-carbon products rather than concrete, such as Thermalite aircrete blocks with tiny pockets of trapped air for high thermal and sound insulation, and cross-laminated timber. About a fifth of the steel used (24 tonnes) is reclaimed, including columns from the firm’s revamp of the Peek Freans biscuit factory in Bermondsey, east London (Grosvenor offloaded the build-to-rent project to the US developer Greystar last summer).
Other reclaimed materials include blue bricks and raised floor tiles. There is a strong market for the latter, while using reclaimed steel is “really complicated and expensive” and harder to get insurance for, says George.
Downes says material passporting – stamping specifications on to steel and other materials and barcoding them – should help as the secondhand materials market evolves. British Land is already doing this at some sites.
The future occupier of Holbein Gardens, a local asset manager in Chelsea, will save 50% on energy compared with typical London offices, Grosvenor claims.
The group has a £90m retrofit fund and spent £19m on this building. Its other retrofit projects include turning a former ice factory near Victoria station into offices and shops, and Newson’s Yard – London’s oldest timber yard, also in Belgravia – into boutiques.
“Your real estate is one of the easier ways to reduce emissions as a business,” says Bond. “Sustainability is becoming more important to occupiers, investors and employees.”
Similarly, the flexible workspace provider The Office Group has vowed to refurbish rather than build where possible. The renovated Chancery House from 1885, which still has the London Silver Vaults market in its basement, is its biggest office retrofit to date and is due to open this spring, while the revamped 1950s Parcels Building in Oxford Street will open later this year.
Charlie Green, the firm’s president, says retrofitting “gives us speed to market” and points out that “the embodied carbon is significantly lower with a refurbishment”.
In Birmingham, the Rum Runner Works, the former home of a nightclub where Duran Duran used to play, has been turned into an office building after a £2m refurbishment, overlooking a canal. CBRE, the developer, says half the space is under offer. It has also completely revamped nearby 10 Brindley Place, formerly bank offices and flats, where the flexible office operator Spacemade is moving in, along with the Caribbean restaurant chain Turtle Bay.
Despite the shift towards retrofits, British Land argues that new developments are still needed, to “deliver best-in-class buildings which are operationally highly energy efficient”. For example, it is knocking down 1 Broadgate in the City of London, built in 1987, and replacing it with a building in which energy use will be one-sixth of the old one.
Downes explains that when a building comes back to British Land after the end of a lease, it is carefully assessed to see how much can be kept. For example, the firm decided to retain the facade and most of the structure of a 2002 office block at its Paddington campus, while a retrofit of 1 Triton Square near Euston station, originally built for First Bank of Chicago in the late 1990s with a huge atrium, has been more extensive. British Land filled in some of the atrium, added more floors and refashioned the facade of the building – let to Facebook owner Meta, which is looking to sublease the space.
And not everyone is going down the retrofit route. Marks & Spencer’s decision to demolish its 90-year-old landmark store close to Marble Arch in London sparked a public inquiry last year. But chief executive Stuart Machin has said that the store is “riddled with asbestos” and “belongs to a bygone era”.