Refurbish, Reposition or Replace?

The UK's office market is at a crossroads. With ageing building stock, rising occupier expectations and increasingly ambitious sustainability targets, owners and developers are facing a critical question: when does it make sense to refurbish or reposition an office, and when is replacement the better option?

That was the focus of a lively discussion at the Willmott Dixon pavilion during UKREiiF, where experts from across the public and private sectors shared their perspectives on the commercial, technical and environmental factors shaping these decisions.

The discussion brought together public and private experts from the built environment to explore a question facing owners and developers across the market; When should an existing office building be refurbished or repositioned, and when is replacement the better option?

I was delighted to join the following panel members to debate this key topic:

• Jane Hunt, interim chief investment officer, Government Property Agency
• Jack Pringle, chair of the board, Royal Institute of British Architects
• Jon Gardiner, director, strategic development leasing advisory, Savills
• Saul Tyler, director and workplace sector lead, Hoare Lea, and head of technical affairs committee, BCO

Refurbishment first, but not by default

The panel agreed that refurbishment is often the starting point.

Why? Around 80% of the buildings that will be standing in 2050 have already been built. Improving these existing assets will play a critical role in not only reducing carbon emissions but meeting the changing needs of occupiers too.

For organisations such as the GPA, retaining and improving existing buildings is already a central part of the strategy. Jane Hunt described the agency's focus on creating a "smaller, better, greener" estate, consolidating space while investing in buildings that can support future workplace requirements.

Yet nobody on the panel suggested that refurbishment should be pursued regardless of circumstance. Questions around location, market conditions and occupier expectations mean the decision is rarely straightforward.

Many older buildings also come with significant challenges. Hybrid working has changed the amount and type of space many occupiers require, which is seldom met by floorplates designed decades ago, while mechanical and electrical systems can often require wholesale replacement at significant cost to ensure the levels energy efficiency and green credentials that many occupiers want.

As Saul Tyler noted, sustainability ambitions and commercial reality must ultimately meet in the same appraisal.

Early engagement changes the conversation

For myself, supporting investors, landlords and occupiers in making decisions with confidence, is a process that needs to start as early as possible.

Throughout the discussion, I returned to the importance of understanding a building before determining its future. Existing buildings inevitably contain unknowns, making early technical advice and collaborative planning particularly valuable.

I would always advocate early engagement and it's important to understand what you can physically do with a building, but it's also about taking a long-term view.

Get that understanding early and better decisions tend to follow.

Jack Pringle reinforced the point from an architectural perspective, highlighting the value of extensive pre-construction investigation. On complex refurbishment projects, investing time upfront can significantly reduce risk later.

Character still counts

Occupier expectations continue to evolve. The panel highlighted factors such as reliable connectivity, end-of-journey facilities and workplace amenities as increasingly expected, rather than viewed as added extras.

Yet there was also recognition that not every successful office building needs to look the same.

Jon Gardiner argued there remains a place for buildings with character and heritage. Refurbishment can often create opportunities that new build developments cannot replicate, preserving features and identities that give a building a distinct sense of place.

For occupiers looking to encourage people back into the workplace, that individuality can become a genuine asset.

The panel acknowledged that not every ageing office building has a future. However, neither should existing stock be dismissed simply because it does not fit a conventional model of prime office space.

Sometimes a building's history is part of its value.

What happens next?

Asked what the market could look like in five years' time, the panel's answers were remarkably consistent.

Jane Hunt expects office quality to continue improving, which was supported by Jack Pringle’s prediction of a “flight to quality”.

Saul Tyler and I highlighted the need for a more efficient planning system if the industry is to maintain a healthy development pipeline.

I also agreed with Jon Gardiner’s view, that flexibility will be one of the defining characteristics of future workplaces.

As businesses continue to evolve, Jon believes occupiers will increasingly expect workplaces that can evolve with them. The ability to support a wider range of activities and reconfigure space without major disruption is likely to become an increasingly important consideration.

Taken together, the discussion painted a picture of an office market that is becoming more challenging, with greater demands from occupiers, landlords, investors and regulators.

Refurbish, reposition or replace? The real challenge is understanding which option gives a building the best chance of succeeding, long after the project has finished.