COMMENT Retrofit is a staple part of the built environment’s vocabulary. But with rising obsolescence risk, investor ESG pressure and regulatory change on the horizon, the question now is whether the sector can finally treat it as a credible, scalable investment route, not just a design challenge or a moral imperative.
There’s no shortage of capital looking for a home in London, and although activity in recent years has been more subdued due to economic and political uncertainty, the market is picking up again in 2025 and offices and London are once again in focus.
In the first quarter of this year, £2.9bn was deployed into UK offices, second only to the living sector, with international investors accounting for more than a third of all transactions, rising to 60% once one-off portfolio deals are stripped out, according to JLL. Although that figure is UK-wide, London remains the standout: in JLL’s UK Investor Survey, nearly 80% of institutional respondents rated the city attractive or very attractive compared with other global markets.
Therefore, as interest rates fall and investors look favourably at UK real estate, key to unlocking this capital will be the ability to restore investor confidence in the market. To date, retrofit – its application and its impact on commercial property values – has created a cloud of ambiguity, which is not good for business.
Talk the same language
Earlier this year, we worked with Gensler and a coalition of asset managers, developers, designers and policy leads to identify the key levers needed to propel retrofit as a scalable, investible proposition. The outcome was Retrofit at Scale, a guide that doesn’t argue for more ambition – it assumes that’s already there – but focuses on why deals stall: missing data, inconsistent planning policy, misaligned tax treatment and a lack of shared definitions that make cost and value harder to benchmark.
By launching this guide, we want to enable a joined-up effort to address the five pressure points that repeatedly slow retrofit down, from fractured terminology and opaque data to the absence of a scalable commercial model. None of these issues exist in isolation. But together, they compound risk and blur the investment case.
In JLL’s survey, 51% of respondents identified the financial viability of retrofit as the biggest ESG-related driver in their decision-making. One in three had already pulled out of a deal due to ESG risk. Nearly as many had adjusted their pricing down. The ambition is there and the capital is there but the route to delivery remains unclear.
That’s partly because roles across the system are fragmented. Investors, planners, designers, occupiers – each group is operating to a different timescale and risk lens. When everyone assumes someone else is holding the pen, projects lose direction. And with no shared typology for what counts as retrofit – is it a refresh, a repositioning, a rebuild part-retained? – the whole category becomes harder to value, let alone underwrite.
None of this means retrofit is unworkable. But the sector needs to stop treating it as a special case and instead bring it into the mainstream of investment thinking. That means standardising definitions. Improving cost transparency. Reforming tax rules that still treat retrofit as a discretionary upgrade. And embedding retrofit into appraisal and valuation practice, not as an ESG add-on, but as a core part of risk and return modelling.
Tool up
Policy support is the missing piece. While government capital plans continue to fund housing upgrades, transport infrastructure and public buildings, retrofit for commercial spaces remains overlooked, despite its critical role in urban sustainability and economic productivity. That omission matters, as institutional investors are actively looking for viable retrofit opportunities, but when energy, planning and business departments aren’t pulling in the same direction, projects stall. And when public frameworks don’t align with private-sector intent, capital doesn’t flow.
Regulatory change is also likely to shift the dial. Occupiers are already ranking energy performance and EPC ratings as top priorities, ahead of wellbeing and certification schemes. EPC compliance is expected to tighten further, especially under a government that has adopted a more assertive stance on climate risk. That trendline is clear and investors who don’t get ahead of it could be left exposed. As valuation methods evolve, the gap between retrofit-aligned assets and inefficient stock is only going to widen, especially as regulation, occupier expectations and insurance markets respond.
Retrofit isn’t easy. But the longer it remains stuck in the “too hard” category, the greater the risk of value erosion across London’s ageing commercial stock. If retrofit is going to become a real pipeline, not just a talking point, the market needs better tools and fewer reasons to delay.
For a city like London, where land is constrained and history is embedded in every street, retrofit ought to be a competitive advantage. We need to start treating it like one.
Jace Tyrrell is chief executive at Opportunity London
Image from London Communications Agency
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