Why real estate needs to wake up to the circular economy

The customer experience has become as important as the merchandise, so retailers are looking for ways to roll out the red carpet treatment.

September 30, 2017

Closed loop systems. Cradle to cradle thinking. Take back schemes. Sharing economy…

These are all terms gaining traction in the business community. Yet you wouldn’t be alone in failing to appreciate their relevance to real estate. After all, the sustainability message to real estate professionals has been carbon, carbon, carbon.

Buildings are responsible for 40 percent of the UK’s greenhouse gas emissions, and efforts to tackle this have focused primarily on the operational energy performance of buildings. Yet this is in danger of masking the wider sustainability impacts of an industry that consumes more than 400 million tonnes of material every year and generates a third of all our waste.

The construction industry is the UK’s largest consumer of natural resources, and the biggest producer of waste – which in itself adds a huge embodied carbon burden, not to mention depleting finite resources.

So it’s time for real estate to wake up to this trend that they call the ‘circular economy’. The future won’t look like the past. The availability and price of commodities, resources, and materials will be increasingly volatile. So the traditional linear “take, make, dispose of” model looks increasingly unstable in a resource constrained future. Instead a circular model becomes more appealing: one firm’s waste is another’s resource; resources are kept in use and their value retained; we multiply our efficiency by doing more with less.

So what does the circular economy look like for real estate?

Designing for longevity

Flexible and adaptable design can extend the lifespan of a built asset in response to changing needs and trends. Some buildings are demolished much earlier than their 50-60 year design life, but even demolishing at 60 years should be unnecessary with clever design.

Most buildings will need to work much harder in the future – morphing uses at different times of day or different periods in their lifecycle. That requires us to think up front about zoning and space planning, sub-metering arrangements, provision for changing the building envelope, the possibility of future expansion or extension and designing for different uses.

And, of course, it means designing to be able to retrofit the building’s energy sources – potentially connecting it to decentralized renewable technologies and other future technological innovations.

Resource efficient construction

The aspiration should be to use less and waste less both now and in the future.

Firstly, this means reducing the demand for primary materials needed in construction. Research shows that, on average, structural materials typically only work at 45 percent of their strength capacity. That means we’re potentially using up to twice as much material in our buildings than is absolutely necessary. Instead, by setting a target for the volume or weight of structural material relative to the floor space in the building, we can significantly improve the resource efficiency of real estate.

Secondly, this means reducing the waste generated during construction itself. That requires planning to undertake as much construction off-site as possible. This reduces transport because entire components can be delivered at once, and minimizes the number of on-site errors, which add waste and cause delays.

Designing for disassembly

Designing for deconstruction should also eliminate waste at the end of a building’s life because it requires consideration of how materials and elements can be recovered effectively when maintenance and refurbishment are undertaken and during disassembly/deconstruction.

This is where we need new business models between suppliers and developers or occupiers. Since those paying for the initial materials will not be the same as those potentially benefiting from their recovery at the end of life, some kind of leasing arrangement could be required.

This is now increasingly common for carpet manufacturers, and furniture providers, but obviously a bit more complex when it comes to structural materials. However, with the advent of Business Information Modelling, the relevant information tags for each component in the building should be tracked and available at the time of disassembly.

A new integrated approach

Circular economy thinking in real estate is not rocket science. But it requires a truly integrated approach to the design and construction process and a very strong ethos to be shared among every single stakeholder in the process.

As someone who has integrated these principles into both my own home retrofit, and an office refurbishment, I can vouch for one thing: it requires dogged determination to overcome the fragmented workaround solutions the industry is so reliant on.


Julie Hirigoyen is the CEO of UK Green Building Council, an industry-led network whose mission is to improve radically the sustainability of the built environment. UK-GBC aims to inspire, challenge and empower its members, working with them to identify and adopt the most sustainable, viable solutions.

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