- Report finds office retrofitting can boost rental income by up to 66%
- Three out of seven retrofit office case studies found to be financially viable without value added elements
- Authors warn of danger of obsolescence in long-term low BER rated commercial buildings
- SCSI calls for review of SEAI retrofit grants and for them to be focused more on insulation and reducing energy consumption
Monday 7th April 2025: A new study by the Society of Chartered Surveyors Ireland (SCSI) outlines for the first time the real costs of retrofitting office buildings in Ireland and the financial challenges and opportunities presented by such projects.
After evaluating seven diverse commercial retrofit case studies encompassing a range of office types and conditions in Dublin a panel of chartered valuation surveyors found that retrofitting would only be financially viable in three cases without value added elements.
However, where viable it was found retrofitting could have a positive impact on rental income with potential increases ranging from 40% to 66%.
The analysis found the remaining four did not meet the required viability threshold when other value add elements were excluded because the retrofit costs exceeded the anticipated increase in the building’s value.
The SCSI’s Real Cost of Retrofitting Offices Report 2025, which was supported by AIB, aims to improve the understanding of the works required to achieve a more energy-efficient and decarbonised building stock.
The SCSI pointed out that this is the first research of its kind and further studies will be needed to ascertain the supports required to enable the delivery of Ireland Net Zero targets in the Commercial Property sector.
Chartered Valuation Surveyor and co-author, Sarah Garry, said the research highlights a significant disparity between the progress in residential and commercial retrofitting.
“While the residential sector is responding more positively to energy upgrade targets, the commercial sector lags considerably. According to the CSO, almost 60% of offices having a Building Energy Ratings (BER) of D1 or lower.”
“Services encompassing mechanical and electrical upgrades which cover lighting, heating and ventilation, often represented the most significant cost component in retrofit projects. The proportion of these costs ranged between 21% and 76%. Our findings indicate that not all significant service investments resulted in an improved BER.”
“Unless owners of poor performing commercial buildings with low BER ratings can find a route to retrofitting they face the risk of their assets becoming stranded and unoccupiable. On the other hand, by retrofitting the property, they can improve income level from the asset – in some cases the increase in rental income ranged between 40% to 66% - increase its capital value and secure its future. In addition to the sustainable benefits there are also many social benefits in preventing vacancy and improving the vibrancy and appeal of the area.”
Chartered Quantity Surveyor and co-author, Anthony Cloonan, said the fact that retrofitting would only be financially viable in three of the seven case studies highlights the scale of the challenge facing property owners.
“Our examination of the seven case studies revealed substantial variations in retrofitting costs, largely influenced by the specific characteristics of each office block and the extent of the upgrade works.”
“The findings also underscore the necessity for tailored case-by-case assessments, the importance of setting clear, strategic objectives for each project and the need to prioritise capital expenditure based on each property’s specific condition. By doing this it should be possible to make the investment cost neutral, at the minimum in most cases.”
Mary Whitelaw, AIB Chief Strategy and Sustainability Officer, said the publication of the report marked an important first step in understanding the financial challenges associated with retrofitting office buildings and would facilitate a more proactive approach to it.
“The UN has estimated that nearly 40% of global carbon dioxide emissions come from real estate. Retrofitting existing buildings reduces the whole life carbon of a structure by not adding to the carbon already embodied in them.”
“Data based analysis of the costs involved in undertaking retrofitting work is a critical enabler of action in this space. This report will lead to a more proactive approach towards retrofitting office buildings. Making our buildings healthier and more efficient is vital in helping us achieve our net zero ambitions and adds significant financial and social value while mitigating against business risks.”
Findings
The report is primarily focused on ‘hard costs’ which are the direct expenses related to the physical work of the retrofit itself. These costs typically cover works such as necessary part demolitions, structural repairs, upgrades to the building’s exterior walls and roofs etc.
The case studies excluded soft costs such as site costs, finance costs and professional fees as well as any value engineering aspects of works such as extensions or additional floors. The viability criteria employed did not include grants due to the lack of uniformity in application.
The first group of offices covers four office buildings in good condition located in Dublin and aged between 20 and 35 years old. It found the cost of retrofits ranged between €225/m2 - €1,814/m2. Despite the strong opinion of improving rental and valuation metrics, only two of the property retrofits were deemed to be financially viable i.e. the estimated uplift in its value would cover the cost of the retrofit.
The next group included two offices in fair condition, situated in Dublin and aged between 25 and 60 years old. Here the cost of retrofits ranged from €917/m2 - €1,154/m2. The analysis suggests potential economies of scale for larger properties when considering cost per square metre. While services remained a key cost factor, upgrades to the external enclosures also played a crucial role in achieving the enhanced BER rating in these cases. A retrofit was viable for one of the buildings.
The third type of building was a 40-year-old building in Dublin in poor condition which incurred a retrofitting cost of €1,462/m2, the third highest among the case studies. This reflected the elevated prices for the external enclosure, services and internal finishes required to meet basic fit out standards. The retrofit was not deemed viable.
Recommendations
The President of the SCSI Kevin Hollingsworth said the research underscores the complex challenges of retrofitting office stock while demonstrating the clear financial advantages achievable through strategic upgrades.
“One of the key takeaways of the report is that all case studies showed an increase in estimated value and improved yield, with only one showing no change in rental expectations. But as the market increasingly prioritises high-performing, sustainable properties and the scrutiny of buildings increases via EU directives, owners who fail to adapt risk being left behind with stranded assets.
“Clearly a ‘do-nothing’ approach presents significant risk. In light of the viability challenges highlighted in this report the SCSI is recommending a review of SEAI grant allocations and thresholds to encourage a greater focus on ‘fabric upgrades. By improving insulation levels in walls, roofs etc, buildings will achieve greater thermal efficiency. We are also recommending that government departments and state agencies encourage an increase in retrofit collaborations between property owners and tenants.”
“While this report analysed retrofitting costs based on vacant possession, not all buildings will be vacant prior to works. As a result, the financial cost of business disruption was not analysed. We are recommending that relevant state agencies develop further guidance and supports for building owners and tenant considering a pathway to retrofitting.”
- The full report is available on request or at http://scsi.ie/commercial-retrofit
