Data Is Shifting The Dial On How To Retrofit An Asset, For Both Financial Wins And Environmental Gains

Commercial real estate is finally being realistic about retrofits. While measures can boost sustainable performance, there’s a sense it’s not underhand for retrofits to have a return on investment, too.  

This is the view of Katie Whipp, chief business officer at re:sustain. As data on performance has improved, so has an understanding of the need to create a retrofit strategy that includes ROI.

“Increasingly, there’s recognition that data can show how some operational improvements have a clearer ROI than others, and they are what’s going to be prioritised,” Whipp said. "Overall, people are talking more transparently about these decisions than they used to.”

Across real estate, there has been growth in retrofit activity as awareness of the need to improve assets has risen. In 2024, 45% of London office investment was on value-add opportunities, while across the UK outside London, £991M was spent on office investments for redevelopment.

However, more than half of construction professionals cite cost as the main barrier to retrofitting real estate. The UK Green Building Council said retrofit projects are often delayed or abandoned due to a lack of ROI.

There also has been a tendency to blame landlords for not acting fast enough to reduce real estate’s environmental impact, Whipp said. This includes a misconception that asset managers have bottomless cash outside of a fund for improvements.

All this is now changing, she said. People are recognising that when asset managers create operational improvement and carbon reduction is a happy by-product, it still has to perform.

“When you consider that investments are often people’s pensions, we do want our pensions to perform,” Whipp said. “So they need to find the balance between actions that please the market and what works for the bottom line.”

This shift is driven by data and artificial intelligence, which are reaching the point that they are shifting the dial on retrofit outcomes, she said. It is now possible to see which measures produce both a demonstrable operational gain and an improvement in performance.

Tools can map out both the fastest route to net-zero for a building with an unlimited budget as well as the most economical route to reach a decarbonisation target with the lowest level of capital expenditures, Whipp said. They allow property owners to find a middle ground, a strategy to get there a bit sooner with peaks in investment but with optimal payback. 

There are still gaps in data and technology, she said. It’s still not possible to know what impact all retrofit measures might have on a building. However, sustainability is becoming part of the natural asset management decision-making set, which means the industry is building up a wider pool of comparables and data on ROI.

“Real estate is a large tanker to turn, but the more data we put into models, the more accurate they’ll become,” Whipp said. “AI isn’t a secret weapon to make everything happen, but it will have its place in different portfolios and strategies depending on the data a company has available.”

Alongside better use of technology, there is a growing understanding that the right measures to invest in depend on the business’ overall strategy and expected ROI timeline, Whipp said.

“If the landlord is looking to hold the asset for 80 years, with a committed long lease to a major corporate, that will create one list of priorities,” she said. “If they have a shorter lease and less certainty around how long they will hold the asset, there is less certainty around budgets for improvements.” 

Alongside this greater level of honesty spurred on by data, there is a wider sense of optimism that real estate has the potential to be sustainable, Whipp said. There’s a clearer dialogue between environmental, social and corporate governance managers and asset managers, while tenants are also engaging on their side, sometimes choosing to put in capital to improve buildings, she said. 

“Today, people have sustainability milestones for real estate that are more rounded and reflective of regulation and market dynamics,” she said. “Rather than complaining or looking for the unicorn to solve the problem, there’s a dialogue that has the potential to spur the industry on.” 

This article was produced in collaboration between re:sustain and Studio B. Bisnow news staff was not involved in the production of this content.

Studio B is Bisnow’s in-house content and design studio. To learn more about how Studio B can help your team, reach out to studio@bisnow.com.