The Time is now: Sustainability Measures for Building Retrofit Projects

“The Greenest Building is the one That Already Exists.”
-Carl Elefante, former President of the American Institute of Architects

While much of sustainability in CRE is focused on new Net Zero Carbon buildings, there is a crucial need – and significant opportunity – to decarbonize / retrofit our existing buildings.

Now more than ever, the real estate industry is being called upon to reduce global carbon emissions. The 2015 Paris Treaty set aggressive goals to mitigate climate change, including limiting the increase in the global average temperature to 1.5C. While it is widely understood that the goals set forth in the treaty will be difficult to achieve, it is critical that the CRE industry continue to move in the right direction – and at a more aggressive pace – toward carbon neutrality.

Recent grim economic news and market fluctuations may have caused developers to consider setting aside ESG and sustainability initiatives to finalize their projects. However, there is an encouraging path forward, particularly for retrofit projects. According to the Office of Energy Efficiency and Renewable Energy, “Energy-efficiency retrofits can reduce the operational costs, particularly in older buildings, as well as help to attract tenants and gain a market edge.”

According to Bloomberg, “Retrofitting represents one of the best opportunities to improve the environment in our cities. Two-thirds of the buildings that exist today will still be standing in 2050, and since buildings account for as much as 70% of a city’s carbon emissions, the opportunity to retrofit existing real estate is vast.”

The Case for Retrofitting – Key Factors

The Financial Risk of Inaction

The economy has been on a roller coaster ride, labor costs have risen, and supply chain and labor shortages persist, making it a challenging environment for CRE projects. However, the negative impact of failing to decarbonize existing real estate assets will be greater than taking action, for several reasons:

Short-Term Investment, Long-Term Gain

Updating existing buildings through lighting, water efficiency, HVAC, solar and roof upgrades can bring vast energy savings, and tax credits, which are being awarded at the state and national levels through enactments, such as the IRA (Inflation Reduction Act).

While Embodied Carbon (CO2 emissions), as well as the upfront investment in these measures are a consideration, the long -term savings and impact on the environment outweigh those considerations.

Retrofit projects fall into three categories: Deep retrofit on a whole building, deep retrofit on MEP equipment; light retrofit – all of which have significant long-term benefits for the environment, as well as climate change goals. JLL reports that the “carbon impact of a new build, depending on asset type, size, and location, can be up to 1,500 kg of CO2 per square meter. Emissions from retrofits, depending on their depth and extent, are typically below 500 kg of CO2 per square meter, potentially generating just one third of the CO2.”

Time is of the Essence

We already know that at the current pace of decarbonization, we will be unable to meet the goals set forth in the Paris Treaty. However, with collaboration, further education, and investment into the right technology, we can continue to make progress in the retrofit of existing buildings – and at a more rapid pace. JLL calculates that “in mature cities, about 80% of office buildings which exist today will still be in-use in 2050, meaning existing stock will have to be retrofitted at a rate of between 3.0%-3.5% per year if the net zero target is to be met. However, current retrofit rates in the Global North are only around 1.0%.”

In spite of these statistics, some CRE professionals continue to wait to decarbonize. However, time is of the essence to take action because:

  • Prices will likely continue to rise.
  • Material shortages may persist.
  • Existing assets could depreciate in value.

A Financing Solution for Retrofit Projects – C-PACE

C-PACE (Commercial Property Assessed Clean Energy) financing is a creative financing mechanism that funds sustainability measures in retrofit (and new) commercial real estate projects. Even in a rising rate environment, C-PACE offers a fixed-rate, long-term, low-cost option to replace more expensive forms of capital and help property owners carry out retrofit projects.

Recent Nuveen Green Capital Retrofit Project: TIAA Headquarters, New York, NY

Last year, Nuveen Green Capital funded $28M in C-PACE financing toward the retrofit of our parent company, TIAA’s LEED Gold-certified, state-of-the-art office headquarters at 730 Third Avenue in New York City. The extensive sustainability measures included a retrofit of the building’s lighting, roof insulation, and windows. In addition to the significant energy savings, the C-PACE financed measures will help the building owner avoid nearly $100K in annual fines under Local Law 97.

To learn more about retrofitting and to get started, contact the experts at Nuveen Green Capital at: 203.875.9500 or email:!

Saving Energy (and Retrofitting!) is Smart Business.