Retro-fitting Brussels office stock a major challenge

The issue surrounding the carbon neutrality of the constructions in our cities is complex, with the vast majority of all buildings already existing and therefore not able to be ‘built environmentally-friendly. Real estate advisor JLL has taken a detailed look at what this means for the Brussels office stock. It starts by saying that the Brussels Region is aiming for carbon neutrality by 2050, though looking at the current state of its office stock – and even more acutely its residential stock – it is obvious that there is still a long way to go before achieving this objective.

JLL goes on to say that as more occupiers sign up to net zero or science based targets, more will only accept sustainable buildings as a mean of decarbonising their operations. Since May 2011 the certification of tertiary buildings of more than 500 m² has been mandatory in the event of sale or letting. Ratings range between A (best) and G (worst) based on the assessment by experts. There is no minimum EPC required to be authorised to sell or lease a tertiary building but this may change in the short term. There is already a minimum EPC rating in place for rent indexation of residential properties.

Today, according to data collected from the BREEAM institute and reported by JLL, around 2 million m² of office stock is certified in Brussels, which represents 15% of the total stock. About half of the certified stock has a BREEAM superior or equal to Excellent. As of May 2023, JLL has identified an existing Grade C stock of 7 million m² – of which 4 million m² is in the CBD – without recent or planned renovation. Deducting the assets of the European institutions that would maintain an office function and for which there are reasonable reasons to believe they would be upgraded, the regeneration needs for the CBD could be estimated at around 3 million square meters as a base case. The base case regeneration needs in the Decentralised zone as of today is estimated at 1.3 million square meters, representing the existing Grade C stock. It is likely that a portion will be repositioned in alternative uses, principally residential. Making the same calculation for the Periphery, about 1.5 million square meters is older than 15 years without recent heavy renovation but since the average age of assets in the Periphery is younger than in other markets, a portion is of good quality without the same urgency as for older, CBD or decentralized located assets. Combined, focusing on Grade C assets, close to 6 million square meters of office space needs retrofitting and / or repositioning.

Refurbish or redevelop?

There is no ‘one-size-fits-all’ answer to the question of whether to rebuild or re-use. Retrofitting existing building stock, whenever possible, will be essential to meet market demand for net-zero carbon space given that 80% of buildings that will exist in 2050 have already been built. Huge amounts of energy are emitted during construction, and so re-use is considered the responsible course of action when the embodied carbon implications of new construction are taken into account. The conversation has turned from just focusing on operational (in-use) carbon emissions to understanding the embodied carbon associated with an existing versus a new build. The challenge is to balance these out so that carbon performance can be optimized across the whole life of the building. There are also constraints on the market perceptions of what is feasible or acceptable in areas such as building regulation, occupier requirements and insurance. Last but not least, a retrofitting of an existing building is considerably more complex than a redevelopment to achieve the best energy efficiency. The Brussels Region has made it official that demolition followed by reconstruction will be the exception, while renovation will be the rule. Developers seem to have taken the point as most of the speculative development pipeline in Brussels CBD now consists of heavy refurbishments while in the Periphery the majority of the new projects remain new constructions, including those resulting from the demolition of an existing asset.

The structural office vacancy cannot always be retrofitted to find occupiers if the location is not appropriate. There is a shortage of quality housing in Brussels, so the excess supply of the former can help the under supply of the latter. However there are some areas were residential reconversions of structural office vacancy are not authorised at the planning level.

The size of the task is clearly set out by JLL. From an identified Grade B and C office stock of 11.3 million square meters in the Greater Brussels area, the road to carbon neutrality by 2050 means a yearly replacement of 420,000 m² or 3% of the entire stock every year for the next 27 years…! To achieve this objective, among others more pragmatism is essential with regards to permit delivery processes. In Brussels Region obtaining a permit is a long and cumbersome process, sometimes taking years to materialise.