The cost to upgrade the world’s obsolete buildings could top $1tn (£790bn), according to the latest research from JLL.
The agent has put a cost of between $933bn and $1.2tn on upgrading the 4.5bn sq ft of global commercial real estate that it reckons will need “substantial investment to remain viable in the near term”.
In its latest Opportunity through Obsolescence report the agent said proactive engagement to retrofit and update existing assets will be key to unlocking opportunities for value creation.
JLL analysis suggests that 44% of projected obsolescence is likely to be in the US given higher levels of structural vacancy, with 34% in Europe.
“The commercial real estate landscape is at a turning point as property owners and cities look to establish long-term viability of existing buildings and districts, in the face of evolving experiential and spatial preferences, increasing regulatory pressures, climate risk and changes in real estate demand,” said Cynthia Kantor, chief executive of project and development services, at JLL. “By proactively assessing and addressing outdated and at-risk buildings, owners can unlock significant value, create a more sustainable, resilient built environment and drive future returns.”
Phil Ryan, research director at JLL, added: “The full potential of existing assets, both those nearing the end and earlier in their lifecycle, can only be realised through collaboration between stakeholders and by considering how various levels of obsolescence interact.
“Owners and cities should assess how their portfolios holistically fit into their respective built environments and how a variety of factors contribute to their ability to respond to changing locational preferences and new sustainability and development regulations to create future value.”
Photo by David Skyrius/Pexels
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