Damien Clifford is a partner and co-owner of EthosEQ, a chartered quantity surveying practice<\/i><\/b><\/p>\n
I see the commercial realities of delivering sustainable buildings every day. The industry is being asked to meet ambitious Minimum Energy Efficiency Standards (MEES) and energy performance certificate (EPC) targets at a time when almost every other factor \u2013 financial, regulatory and resource-based \u2013 is working against viability.<\/span><\/p>\n \u201cThe gap between policy aspiration and financial feasibility is where many projects fall\u201d<\/span><\/p><\/blockquote>\n The principle behind MEES and tighter EPC targets is sound; few in the industry disagree with the drive to cut carbon and upgrade outdated building stock. But the financial and delivery realities are now so stretched that even well-intentioned schemes are falling by the wayside.<\/span><\/p>\n Over the past two years, a combination of factors has been steadily eroding project viability. The cost of borrowing remains stubbornly high. Construction inflation, though off its 2022 peak, is still running at levels that squeeze contingency and return. The planning process in many London boroughs and elsewhere continues to be slow and risk-laden, particularly for heritage assets or projects seeking to enhance height or massing. Meanwhile, building regulation upgrades, especially those tied to Part L and energy performance, continue to add both design complexity and cost.<\/span><\/p>\n Add in a skills shortage across trades and design, and the result is predictable: projects stall before they even reach site.<\/span><\/p>\n For landlords of secondary office stock, especially those facing EPC C or B upgrade requirements by 2027-30, this is becoming a tipping point. Many are discovering that what\u2019s needed to achieve compliance is not a light-touch CAT A refurbishment, but something approaching a comprehensive CAT A plus base-build refurb, often including full mechanical, electrical and plumbing replacement, roof and facade works, and core upgrades to meet Part L and comfort standards.<\/span><\/p>\n These schemes are now benchmarking at around \u00a3180 to \u00a3250 per square foot in central London. That covers plant replacement, new risers, upgraded cores and common areas \u2013 effectively a full repositioning. By contrast, a straightforward CAT A refresh, retaining the landlord plant and structure, sits nearer \u00a3120 to \u00a3150 per square foot, but that scope rarely achieves the EPC uplift required.<\/span><\/p>\n For many investors, particularly those with 1980s or 1990s assets, the numbers simply don\u2019t add up.\u00a0<\/span><\/p>\n Add a softening rental market, tenant incentives and higher financing costs, and the payback horizon stretches beyond what lenders will tolerate.<\/span><\/p>\n From a cost consultant\u2019s standpoint, this gap between policy aspiration and financial feasibility is where many projects fall. The yield shift caused by higher interest rates, coupled with rising construction costs, leaves little headroom. In too many feasibility studies we prepare, the numbers don\u2019t stack up, even before finance or contingency are added.<\/span><\/p>\n The result is a growing pool of stranded buildings: assets that are technically refurbishable, but economically unviable under current conditions. Developers delay, contractors face gaps in workload and consultants find themselves re-running appraisals for projects that never move forward. It\u2019s an unsustainable pattern in what should be a growth sector.<\/span><\/p>\n This isn\u2019t a plea to dilute environmental targets. It\u2019s a call for practical alignment between policy and economics. The government could stimulate movement by introducing targeted fiscal incentives, for example, enhanced capital allowances for low-carbon retrofit or VAT relief on works that deliver measurable EPC improvement. Fast-track planning for sustainability-led refurbishment would also make a tangible difference.<\/span><\/p>\n The will, skill and technology all exist within our industry. What\u2019s missing is an economic framework that makes retrofit viable. Until that changes, too many well-located offices will sit idle, neither fit for modern tenants nor capable of meeting tomorrow\u2019s energy standards. And net zero will remain frustratingly out of reach.<\/span><\/p>\n","protected":false},"excerpt":{"rendered":" Damien Clifford is a partner and co-owner of EthosEQ, a chartered quantity surveying practice I see the commercial realities of delivering sustainable buildings every day. The industry is being asked to meet ambitious Minimum Energy Efficiency Standards (MEES) and energy performance certificate (EPC) targets at a time when almost every other factor \u2013 financial, regulatory …<\/p>\n","protected":false},"author":1,"featured_media":531153,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"ep_exclude_from_search":false,"footnotes":""},"categories":[567,556],"tags":[],"class_list":["post-531323","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-opinion","category-sustainability"],"yoast_head":"\nScant headroom<\/span><\/h3>\n