London, Amsterdam, and Paris lead material reuse for offices

According to Savills, the circular reuse of materials in major cities like London, Amsterdam, and Paris is improving, leading to a reduction in the embodied carbon of office redevelopments.

Savills Material Reuse Maturity Index

Savills' research, part of its "Impacts" thought leadership program, indicates that a more developed local network of companies involved in recovering and trading reclaimed materials could make redevelopment a more carbon-efficient choice in certain cities. To assess this, Savills created the "Material Reuse Maturity Index," which ranks major office markets based on their material circularity. This index considers factors such as material recovery and reuse rates, the presence of companies facilitating the process, and supportive local regulations. London, Amsterdam, and Paris emerged as the leaders in this index.

Despite these advancements, Savills emphasises that retrofitting remains the most effective option for reducing embodied carbon in most office buildings. While both deep retrofits and full redevelopments are costly, redevelopments may offer higher rental income in the long run to offset the initial investment. The firm also notes that in markets with limited premium office space, high-quality deep retrofits can lead to substantial rent increases. For example, successful retrofit projects saw rental growth outperform the average by 57% in Madrid and 67% in New York over four years.

Sarah Brooks, associate director in Savills World Research, commented: “When considering a retrofit against a redevelopment, building owners balance many factors including capital expenditure, length of vacancy, planning risk, exit yields and potential rental increases. While a building optimisation programme or a light-touch retrofit to meet immediate compliance and occupier requirements may cost under 2% of the building’s value for the latter or 3-6% for the former, the costs and risks of other interventions – such as deep retrofit or a full redevelopment - are significantly higher, although the rewards can be greater too.”

Joanna Conceicao, director, Savills Earth, added: “Office owners are faced with an enormous upgrade challenge to get their stock in line with regulatory requirements and market expectations. In many markets, the majority of overall office stock is at risk of non-compliance with upcoming or proposed minimum energy performance standards. Western European markets face a more immediate challenge, reflecting a relatively older stock profile and more stringent legislation on the horizon. Elsewhere, these challenges will rise up the agenda as stock ages and policies evolve. While retrofitting is still the right solution for most existing buildings in terms of whole-life carbon, it’s encouraging that several major cities are advancing circular material economies, which will help close the carbon emissions gap on projects where redevelopment offers the most adaptable and long-term resilient option.”