Sustainable Renovations: Transforming Aging Buildings to Net-Zero

Real Estate insight by Gayathri Udhay, Senior Sustainability & Net Zero Consultant

August 31, 2023

Globally, organisations are putting sustainability on top of their agenda as part of continuous improvement plans. As the building sector contributes to more than 40% of global emissions, it is imperative to include the refurbishment of ageing buildings as part of a net zero strategy to address these emissions.

State of net zero in UAE

UAE is the first country in the MENA region to pledge to reach net zero emissions by 2050. The nation unveiled a clear pathway during COP 27 held in Egypt in November 2022. The UAE government has set a target to achieve a 40% reduction in emissions by 2030, thereby achieving Net Zero by 2050.

Numerous initiatives are in place nationwide to achieve this target. An investment of almost USD 40 billion in clean energy is already showing positive results. Dubai Electricity and Water Authority (DEWA), in its last 10th sustainability report, has reported 9.22 million tonnes of emissions reduction.

Moreover, by the end of 2030, the Abu Dhabi government aims at a 22% electricity consumption reduction via Building Retrofit Programme and Dubai aims to retrofit 30,000 buildings.

Retrofitting existing buildings to achieve net zero

Existing buildings are ageing and ready to play a significant role in the race to net zero. Decarbonising these assets is crucial, and various tools exist to accomplish this. The International Energy Agency (IEA) has created a roadmap for the building sector globally, which says that at least 50% of existing buildings must be retrofitted by 2040 to achieve the 2050 target.

Across the globe, 80% of existing office building stock will likely be in-use in 2050. In addition, 90% of commercial space in 10 major cities is over 10 years old and ageing. Considering these numbers, JLL conducted a research establishing that 1 billion sqm of office space requires retrofitting annually to keep pace with decarbonisation targets. This means 3-3.5% of stocks each year, whereas the current rate is only 1% and needs to triple to keep pace with this target.

Understanding the difference between offsetting and retrofitting

According to United Nations, net zero means cutting greenhouse gas emissions to as close to zero as possible, with any remaining emissions re-absorbed from the atmosphere, oceans and forests.

In its commitment to net zero, a building must eliminate its operational and embodied carbon across all three scopes over its lifetime. The first step in the process would be to understand the energy use intensity and then to optimise the operational efficiency by addressing asset or space efficiency. The third level is deep retrofits – significantly changing mechanical, electrical and plumbing (MEP) systems, building structures, onsetting renewable energy and offsetting the non-renewable energy.

Offsetting alone cannot be the primary action to Net Zero, as measuring carbon and offsetting does not lead the building to reduce its own emissions. For instance, the embodied carbon from a nine-story residential building will be three times more than the carbon that 1 million mangroves can absorb in 25 years.

JLL used different retrofits methods in its client portfolios and consolidated data from various assets – office residential, retail, logistics and hotel. Data confirmed that light retrofit or performance optimisation could save 10 to 15% energy. In comparison, deep retrofit on MEP equipment could save 30 to 40% of power in the office and other assets. This percentage goes up to 60 when the whole building undergoes a deep retrofit.

There is no set strategy or roadmap to achieve net zero, although the Carbon Risk Real Estate Monitor (CRREM) pathway gives a direction. Using the CRREM curve, organisations can understand their asset types and the maximum reduction they must target for each asset type based on age and location.

Retrofitting must be part of sustainability strategies

Irrespective of the roadmap, apart from enhancing operational efficiency and decarbonising buildings, retrofits must take a more holistic approach and address resiliency, space use and human interactions to make the buildings future-ready and protect the asset value.

Solar roof panels, smart glass, efficient air-cooled chillers, or lighting control can be some of the mediums to reduce embodied carbon. These will improve the energy performance and decarbonise the buildings but will not be sufficient. The project can then look into outdoor green spaces, health and wellness, transportation, and community commuting connections, which are a few risk spaces.

Investing in existing buildings makes climate sense and is imperative from a resource standpoint. Various case studies have proved that retrofitting an existing building emits 50-75% less carbon than constructing the same building from scratch.

Take the example of a modular flooring company, Interface – a third-party certified Carbon Neutral Enterprise claiming to have achieved net zero in 2020. JLL worked with Interface to retrofit their Atlanta office space. The project was planned to be a 70,000 sqft new build, but JLL helped renovate 40,000 sqft of existing space built in 1960 by adding half a floor and interior fitout. The project achieved a 42% reduction in the environmental impact, and total CO2 emissions fell by over 50%, along with a 93% waste diversion – recycling and donating materials.

Challenges in the UAE market

A study of four office buildings in the UAE ascertains the typical Energy Use Intensity (EUI) benchmarking. After ECM interventions, the four office buildings showed 35-50% energy savings. The study gave an idea of how much reduction a building can achieve to make financial sense, and this is before investing in renewable energy. Another JLL research showed the potential of buildings and highlighted the challenges in the region.

Embodied carbon still faces challenges in terms of technology, materials, and market development for retrofit projects. In order to promote the adoption of low-carbon materials, policies need to be implemented to support investment in sustainable alternatives. While some organizations may invest in carbon credits to achieve net-zero targets, it is crucial to actively reduce embodied carbon emissions rather than relying solely on offsets, as this can be seen as greenwashing without addressing the underlying issue.

It is also difficult to determine ownership post-handover, often resulting in unaccounted carbon, and owners/tenants have limited control over grid decarbonisation.

Everyone has a role to play within the industry

Despite the above challenges, retrofitting is the most meaningful way to reduce emissions and the quickest way to accelerate decarbonisation in the building sector. The technology, systems, processes, tools and means to reach net zero and beyond exist today; JLL are working to demonstrate real OPEX reductions for payback on this investment to entise more developers and occupiers to take action.

Now is the time for organisations to choose the right tools and pick the right pathway.

Contact Gayathri Udhay

Senior Sustainability & Net Zero Consultant, Project & Development Services

Looking for more insights? Never miss an update.

The latest news, insights and opportunities from global commercial real estate markets straight to your inbox.