The retrofit revolution and evolving energy demand

As we approach the 2050 net-zero target, the conversation around achieving this in the industrial and logistics sector is dominated by a single issue – the need for energy efficient buildings. Here, Paul Davis, co-founder of Nimbus, explores the impact of energy efficient buildings for businesses and the pros and cons of retrofitting.

The conversation around energy efficient buildings in the industrial and logistics sector brings together the new and the old: how new ways of working and technology impact energy consumption and the retrofit potential of existing buildings. 

While 2050 might not feel near, ESG targets are nevertheless a pressing concern for many businesses and continue to drive demand – with plenty of opportunity available to those who understand how to unlock the power of data. 

Market drivers

Despite recent economic challenges, there is still ample occupational demand. While energy efficiency is important for businesses, what is often more pressing is how it will impact their bottom line. 

All businesses understand the impact of optics. In their products, culture and operations – they know the benefits of being viewed as environmentally conscious. However, there’s no getting away from the fact that cost is a greater driving force in the market than legislation. Businesses, especially in the challenging market of recent years, are more focused on this and what savings they can make when investing in property. 

Therefore, investing in environmentally friendlier, more energy efficient buildings will be a must – feeding into reputational gains and cost savings at the same time. So, while government legislation will play a role where there are hard lines, owners and occupiers will always be driven more by what they stand to gain.  

Sustainability may move up and down the political agenda, but in the medium to long term, it’s clear that working towards net zero remains a key market driver. As such, many financial institutions will no longer invest in projects that do not meet green ratings – and the market will always follow what investors want.

The synergy between energy efficiency and market competitiveness will undoubtedly define the property success stories of the future – but this will truly be maximised if the power of data is unlocked. Access to the right information means businesses can make informed decisions about a building’s energy performance and the purchase costs, and understand the connection between them. 

Upgrading buildings

Retrofit has emerged as the hottest buzzword in the property and construction industry and no conversation about energy efficient buildings is complete without looking at existing stock. For the industrial and logistics sector, the topic raises questions due to the naturally energy-inefficient nature of many buildings and warehouses – is retrofitting always the best approach?

Businesses need to consider sustainability when altering a building to achieve a better energy performance certificate (EPC) rating and they must not take actions that have a negative environmental impact elsewhere, just to make marginal EPC rating gains. 

For warehouses, the challenge is often about how to improve the efficiency of a structure that essentially is comprised of four walls and a roof, with an interior designed for a specific use. In these cases, the biggest changes will come from a roof replacement, but a case-by-case approach should be adopted to make sure the right steps are taken.

For example, some older buildings may have dangerous materials such as asbestos cement in their roof, lowering their EPC rating. However, while this asbestos is often woven into materials that can easily be removed, they will inevitably need to be buried in another location. This is a prime example of something that may benefit the EPC rating, but at the expense of the wider environment – it’s simply moving the problem elsewhere. 

This all said, there are many poor-performing buildings that it makes sense to upgrade, both environmentally and financially. If lower-performing assets can be safely retrofitted without any negative impact elsewhere it could be a smarter investment compared to acquiring a high-rated EPC building.

The power of data

Unlocking this type of opportunity, however, requires identifying where these buildings are – and this can only be done using digital tools. These data-based tools can greatly accelerate the identification process and enable users to quickly find both existing and lower-performing buildings and to provide the owners’ contact details so that stakeholders can start the conversations needed.

Taking full advantage of the technological advancements contained in state-of-the-art ‘proptech’ will be critical to making informed decisions on retrofitting that will be pivotal for all stakeholders seeking not just to survive, but thrive, in this transformative era. 

Thanks to the information contained in digital tools such as Nimbus, using data sourced from thousands of national data sets, including Land Registry ownership details, all manner of clients are now empowered to explore the opportunities that retrofit can hold for the property sector.

■   Paul Davis, co-founder of proptech company Nimbus