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analysis / facts / forecast


A slowdown in the office market combined with an increasingly prominent sustainability agenda is
creating opportunities for refurbishment specialists. Simon Rawlinson and Max Wilkes of Davis
Langdon discuss how to maximise a building’s value with a well-targeted refurbishment programme


Commercial development is development density and consents can also be obtained  Sustainability The reuse of the
concerned with optimising the massing, parking allocations and, without an additional section 106 building fabric and
capital value of property assets. with older buildings, style and requirement for housing improvements to the building’s
Development is a high-risk character. Refurbishment contributions and the like. performance in use mean that the
business, involving a large overall environmental impact of a
investments, long project refurbishment is likely to be
durations and a highly cyclical lower than for a new-build.
pattern of supply and demand. High-profile refurbishment
Total redevelopment is usually schemes in London, such as
the preferred option in a rising 125 Broad Street and 55 Baker
market, as this makes the best Street, as well as projects in all
use of a site and provides a major cities, show how reuse
product tailored to market options continue to make
expectations. However, for some financial sense.
projects, either timing or site In summary, the timing of lease
constraints such as historic expiries and the evolving needs of
building status or the existing tenants mean that there will
planning consent can mean that a always be a demand for
refurbishment provides a better attractive, efficient space, even in
balance of risk and return. a downturn. With the introduction
Even in an office market as of energy performance
uncertain as the present one, certificates from 2008 onwards,
tenants still need space. In occupiers are expected to become
responding to this, refurbishment even more aware of their energy
projects have several advantages consumption, prompting further
over new build. These include: investment in existing buildings
 Speed to market Simplified to maintain their value.
planning, reduced demolition and Refurbishment options involve
the ability to reuse elements of uncertainty but overall carry a
the existing building can provide smaller development risk, which
considerable programme can be mitigated further by
advantages. varying the scope of the
 Cash flow and tenant refurbishment investment in
retention Many city-centre response to market demand. For
schemes mix office, retail and developers, consultants and
sometimes residential uses, each contractors with the skills,
with different lease terms. uncertain market conditions will
Refurbishment options often create further opportunities to
allow retail to be retained while deliver value-adding solutions.
upper floor space is reconfigured. This cost model is concerned
 Cost Avoidance of total with large projects that involve
demolition and the the reconfiguration and extension
reconstruction of major elements of floorplates and services to
of the building fabric should provide the highest standard of
result in capital cost savings of at accommodation. Many of the
least 20%, even on major projects. issues raised, however, also
 Retention of the value drivers apply to smaller-scale
of the original building These The interior of the Unilever House in central London, complete with this striking refurbishments.
may include permitted atrium. Opposite: The exterior. The architect was Kohn Pedersen Fox


economics / cost model / 73


74 / economics / cost model


Refurbishment projects face the result, its potential for rental Minor refurbishment to the formation of new service
twin challenges of delivering uplift The object of a minor risers and the remodelling of
space that meets the expectations  Its layout and potential for refurbishment is to extend reception areas and the like.
of the letting market while extension or floorplate economic life by about five years.
responding to the opportunities optimisation Investment is usually focused on Major refurbishment
of the building. The utility and  The benefits of scale and common areas and involves Major refurbishments aim to
value of most buildings decline massing based on the original essential repairs only. deliver top-grade space while
as their systems and fabric age. planning consent relative to Increasingly stringent Building maintaining the building’s
Changing ways of working, which new-build options Regulations discourage anything advantages, such as a beneficial
are based on higher occupational  Architectural features that but minimal improvements to planning consent or a distinctive
densities and which demand differentiate the building from a building services owing to facade. Where there are
reconfigured floorplates and new-build offering requirements for “consequential opportunities to improve aspects
enhanced environmental control,  The physical constraints that improvements”. of performance, a building's
further accelerate obsolescence. limit the extent to which the future value and usefulness can
The scope of a refurbishment client’s vision can be delivered. Medium refurbishment be improved. Constraints
will largely determine the degree For buildings offering limited Medium refurbishment projects imposed by the structure or
of value uplift that can be potential for sustained uplift in generally have an investment building fabric may limit the
achieved and the extent to which value, a small refurbishment timeframe of 15 years. They scope of a major refurbishment,
a building’s life can be extended. might provide an opportunity to usually involve a full update of where the aim must be to secure
Although the potential of a enhance rental income ahead of a the existing building services and levels of performance equivalent
building may be easy to see, comprehensive redevelopment. A finishes but stop short of major to new build.
getting the right outcome more extensive refurbishment structural alterations. Since the A comprehensive development
requires a combination of will close off the opportunity for introduction of Part L 2006, the behind retained facades might
creativity, experience and graft. redevelopment for more than work will probably involve some also be considered as an
The actual scope of work will be 15 years, so a developer should improvements to fabric alternative to a refurbishment
determined by a number of evaluate its options. The options performance such as window proposal, and may deliver higher
factors, including: available are minor, medium and films or secondary glazing. value, particularly if the building
 A building’s location, and as a major refurbishment. Structural changes will be limited has listed status.


Organisations change much faster than their through this form of alteration, which should spaces does not allow the insertion of new
buildings. As well as providing the also improve the daylighting of internal columns.
opportunity to free up space and to provide spaces. This work involves a high degree of  The extension of floorplates at the
an up-to-date environment, a refurbishment uncertainty and can be complex to perimeter. This option is typically adopted on
should focus on producing flexible workspace sequence. towers or shallow-plan buildings where there
on floorplates that suit modern approaches to  Rationalisation of vertical circulation and is no opportunity to increase floor area by the
team-based, open-plan office work. With service cores. The removal of circulation rationalisation of the core, and where the
refurbishment, the challenge for the space and services from the main office facade is due to be upgraded as part of the
developer’s team is to overcome the effects of floors helps to open out floorplates and can refurbishment. Floorplate extension has
building-related constraint while making the create opportunities for new features such as been a big feature of projects such as
most of a building’s qualities both internally atriums that will improve circulation around 99 Bishopsgate and 125 Broad Street in the
and externally. the floorplate as well as between floors. Core City of London.
For major refurbishment projects, the need rationalisation will also enable floorplates to  Vertical extension. This might involve the
to reconfigure floor space to provide be configured for multiple tenancy. This addition of new office or residential space, or
relatively column-free floorplates, typically work involves major changes to a building’s be limited to the formation of plant rooms
with a depth of 15-18m is likely to require load-bearing structure. and plant platforms for a modern,
major structural alterations. However, the  The infill of lightwells and courtyards. high-capacity building services installation.
combined benefits of rental uplift for Adding new space through infill can be a key  Alterations to facades to improve thermal
better-quality space and an increase in aspect of floorplate rationalisation but will performance and daylighting. Works to
lettable floor area can, given the right succeed only if the additional space is bright facades can be constrained by planning
location, make these schemes particularly and of good quality. Infill can provide space issues, party walls and so on. As part of a
valuable to investors. for new cores, although an internal atrium project to deliver modern floor space, the
Depending on the age of the building, the may need to be retained to provide priority of introducing natural daylight into a
scope of alterations can comprise: daylighting and to facilitate stack ventilation deeper space, which contributes to lower
 Insertion of a new framed structure to on larger floorplates. Infill schemes may also operational lighting costs, must be balanced
replace load-bearing masonry, opening up require a significant degree of structural against the need to provide a high degree of
floors and increasing usable floor area. A lot intervention if, for example, planning consent thermal performance under the Building
of space can be freed up in older buildings or the continued occupation of ground-floor Regulations.


economics / cost model / 75


Dealing with an existing building items during the construction process method may have to be adapted to as part of a condition-based design
introduces many sources of  The resolution of issues with take account of changes in response process, well-defined responsibilities
uncertainty affecting the scope of the neighbouring buildings such as party to existing conditions. Ideally, the for risks and quick responses by all
work, cost and programme. Every or boundary walls. working method is developed with the members of the team in
project is different, but the main In addition to the risks associated input of the structural engineer. seeking proven solutions to problems.
sources of risk include: with the physical fabric, refurbishment Other key planning and management Realistic clients can make a great
 Availability of details of the original projects may also face challenges in issues include the scale of temporary contribution to driving a project
design and construction, including the relation to site occupiers – in particular, works and the amount of protection forward, recognising that it may not
presence of unrecorded alterations ground-floor retail – or complex liaison required, the logistics of working be possible to achieve the levels of
 Condition of the building, together with neighbouring users. Good within the existing structure and the certainty of a new-build scheme, while
with uncertainty about the quality of management of these relationships by varied workface conditions that need being prepared to support the
the original construction and the the client can make a huge difference to be taken into account when project team with prompt
effects of settlement, wear and tear in securing co-operation. preparing method statements and decision-making and additional
 Predictability of the effects of There are also heightened general short-term programmes. resources when necessary.
demolition, alteration and temporary safety risks in working on existing A characteristic of refurbishment is In order to minimise the impact of
works on the progress of the works buildings. that if risk situations such as unexpected, yet inevitable, events,
and on the retained fabric For contractors, the ability to plan structural weakness or the clients can help by appointing settled
 Limits on the ability to complete and sequence a construction unexpected presence of asbestos project teams which are capable of
investigation works ahead of programme that balances appear, they must be dealt with. Risk responding decisively to change. In
possession of the site, together with safety and stability with buildability avoidance is not usually an option. refurbishment, approach and attitude
the need for the project team to be and speed of construction is a critical The best mitigation options involve in adversity are as important as
able to respond quickly to discovery skill – particularly as the chosen thorough investigation technical capacity.


The costs of refurbishment are driven by the

design and condition of the building,
constraints on the design and construction
solutions adopted, and construction, as well
as by the scope of work required to meet the
project objectives. All projects are unique,
and as a result, cost ranges are much
broader than for new build. Furthermore,
substantial allowances for additional costs
associated with design development and risk
should ideally be retained in project budgets
until a late stage in the programme, to take
into account the potential for further
changes in scope based on better knowledge
of the building.

Extent of refurbishment Indicative cost

(£/m2 gifa)
Minor refurbishment 300–825
Medium refurbishment 825–1,450
Major refurbishment* 1,450–2,100-plus
*includes category A fit-out.
Costs current at 2Q08 for central London location

Unilever’s new circulation spaces maximise daylighting


76 / economics / cost model


Offices at 180 Portland Street by Great Portland Estates cover 80,000ft2 on five floors. Below right: Unilever’s office space has good access to sunlight

The installation of modern performance certificates means riser capacity, plant-room space, potential intensity of use and
building services is essential to that these buildings may be less limits on floor or ceiling loads, the stability of specified comfort
successful refurbishment – attractive to tenants than other, and so on. conditions.
particularly on schemes where more efficient refurbishments.  Practicality of distributing air The use of displacement
there are limits to the extent to The challenges that building ducts and wet services across ventilation with static cooling,
which the thermal performance services engineers are required office floors. together with high-efficiency
of the envelope can be improved. to address on a refurbishment  Availability and size of floor boilers and chillers, can make a
High-quality services will ensure scheme include: and ceiling voids for services big contribution to reducing
that the building can compete on  Upgrading the performance of distribution. in-use carbon emissions. Other
equal terms with new space, the building fabric to provide Engineers have a wide range of measures include high-efficiency
while delivering improvements improved thermal insulation, available options, ranging from luminaires with daylight
over the original system in terms reduced air infiltration and all air displacement systems dimming control, together with
of efficiency, emissions and control of glare, while based on central air treatment, the use of simple ventilation
running costs. optimising the use of natural to active systems such as fan ductwork routes designed to
Increasingly stringent light in office space. Many older coil units or a below-floor Hiross minimise pressure drops.
requirements under the Building buildings have only a low unit, to static cooling Another area where
Regulations have amplified the proportion of glazing, which installations based on chilled refurbishment can score is the
challenges for major reduces the need for measures ceilings or higher-capacity minimisation of demolition
refurbishment projects, which such as solar-control louvres. chilled beams. waste and embodied carbon
are required to provide a level of  Providing fresh air supply and Displacement systems are emissions through the reuse of
performance and carbon cooling to meet modern office popular as they provide clients elements of the existing
emissions reduction equivalent standards. Limited availability with the opportunity to specify building. Sorting of demolition
to new-build space. Although the of riser space for ducts may uninterrupted ceilings – which waste also reduces impacts.
refurbishment of older buildings require alternative approaches can be an attractive and Major refurbishments can save
can sometimes obtain waivers to providing fresh air. cost-effective feature in an in the region of 30-40% of their
from the Building Regulations  Resolution of physical existing building. The final embodied carbon footprint
on grounds of practicality, the constraints related to slab-to- system selection will have against a comparable new-build
introduction of the energy slab and floor-to-ceiling heights, implications for the building’s scheme.


economics / cost model / 77


The cost breakdown is based on the major the creation of fully Location factors
refurbishment of a five-storey, city-centre building, open-plan, grade A office floors, specified to The cost breakdown should be adjusted by the
originally built as apartments, with retained modern standards, with raised floors and an following location factors for schemes in regions
ground-floor retail and leisure tenants. The scope underfloor Hiross air-conditioning system. The outside central London:
of the work is focused on structural alterations. works also include the upgrading of external walls
The building, dating from the early 20th century, and windows to improve performance, Inner London 1.00
was constructed in load-bearing masonry, construction of a large, roof-level plant platform, Outer London 0.94
arranged around internal light wells. The cellular and the creation of a distinctive, high-quality South-east England 0.92
office space was heavily interrupted by cores, reception space. South-west England 0.88
chimneys and load-bearing cross-walls. The rates in the breakdown are related East Midlands 0.85
Demolitions, alterations and structural works are to a competitively tendered lump-sum design-and- West Midlands 0.85
very extensive, but little work is needed to upgrade build contract with contractor’s designed portions. East Anglia 0.88
the external facade. Rates relate to the second quarter of 2008, based Yorkshire and Humberside 0.88
The scope of the refurbishment includes the on a central London location. Demolitions are North-west England 0.83
insertion of a new load-bearing frame and included, as are the costs of variations related to Northern England 0.91
construction of new cores in existing lightwells. the building fabric. External works, tenant fit-out, Scotland 0.92
The removal of the load-bearing structure enables professional fees and VAT are excluded. Wales 0.87
Northern Ireland 0.69


78 / economics / cost model


£ £/m2 GIFA % £ £/m2 GIFA %

Demolition and alterations 3,163,300 265.82 17.57 Secondary glazing to existing windows, including blinds: 1,000m2 @ £190
Allowance for strip-out: item @ £500,000 Allowance for renovations to existing windows and glazed doors, including
Allowance for general demolition works, services strip-out, asbestos removal, replacement ironmongery: item @ £250,000
temporary propping: item @ £560,000 Plant area louvres: 560m2 @ £300
Alterations to existing lightwell walls, including blocking up and enlarging existing Allowance for temporary hoardings to retail units, 4m high: 480m2 @ £40
openings, work to windows, etc: item @ £340,000
Breaking out local areas of existing load-bearing masonry, temporary support, Internal walls and partitions 82,900 6.97 0.46
forming new padstones, disposal: item @ £100,000 Reinforced concrete walls to lift pit, 100mm-thick: 28m2 @ £120
Demolish load-bearing walls and chimneys and adjacent upper-floor structure, 150mm-thick blockwork walls: 930m2 @ £50
temporary support, padstones, new steel structure: item @ £600,000 Additional masonry in core walls and infill to voids: item @ £33,000
Propping load-bearing wall structure to allow insertion of structural steel: item @
£150,000 Internal doors 285,800 24.02 1.59
Demolish existing non-load-bearing walls, disposal: 1,860m2 @ £35 MDF-faced non-fire-rated doors, ironmongery (average rate per leaf): 175 nr @
Break out floor slabs in isolated areas: 1,035m2 @ £120 £850
Localised breaking out of slabs to insert structural steel: 800 nr @ £340 Laminated-faced, 30-minute fire-rated doors, ironmongery (average rate per leaf):
Infill existing slabs where structure removed: 1,600m2 @ £260 70 nr @ £1,100
Alterations to pavement lights to form ventilation openings, waterproofing: Glass doors, 30-minute fire-rated doors, ironmongery, single-leaf only: 20 nr @
item @ £36,000 £3,000

Substructure 257,900 21.67 1.43 Wall finishes 529,600 44.50 2.44

Alterations to drainage: item @ £65,000 Reception finishes, stone cladding and timber panels: item @ £140,000
Underpinning existing structure: item @ £80,000 Lobby finishes, timber panels: 90m2 @ £400
New core foundations, including breaking through existing slabs, excavation, Plasterboard lining to existing perimeter walls and window reveals, skim coat:
disposal, 1,000mm-deep reinforced concrete raft foundation: 170m2 @ £570 6,400m2 @ £30
New basement slab to cores, 150mm thick: 200m2 @ £80 Column casings; skim coat: 1,000m2 @ £60
Emulsion paint to existing perimeter walls, lightwell walls, columns: 7,400m2 @ £4
Frame and upper floors 3,053,400 256.59 16.96 Dust sealer to basement and ground-floor walls: 2,000m2 @ £6
Structural steelwork generally; UB and UC sections, erection, fire protection: Allowances for enhanced finishes: item @ £60,000
470t @ £2,500
Extra over for erection within existing structure, including connection details, Floor finishes 138,800 11.66 0.77
splicing, etc: 470t @ £2,000 Stone and composite floor tiling, average rate: 280m2 @ £200
130mm-thick reinforced concrete slab on permanent formwork, including Extra for lightweight concrete infill: 100m2 @ £300
reinforcement as infill to stair cores and lightwells: 1,090m2 @ £110 Rubber and vinyl tiles including skirtings, screeds, average rate: 290m2 @ £80
Alterations to retained upper-floor structure, strengthening and sealing on both Carpet tiles including skirtings, screeds: 160m2 @ £60
sides in structural plywood: 7,350m @ £100
Entrance mats: item @ £10,000
Fire barriers to risers with open-mesh plant platforms: 250m2 @ £190 Allowance for floor sealers: item @ £10,000
Allowance for the testing and replacement of existing eye-bolts: item @ £36,000
Ceiling finishes 359,900 30.24 2.00
Roof 1,233,000 103.61 6.85 Plasterboard suspended ceiling: 795m2 @ £40
Allowance for repairs to existing roof: item @ £340,000 2 layers of plasterboard as ceiling lining: 795m2 @ £40
Roof-level steelwork, erection, fire protection: 78t @ £2,000 1 layer of plasterboard ceiling to offices areas including skim coat: 7,350m2 @ £30
Insitu concrete roof slab; metal deck and insitu concrete, including upstand and Paint finish: 8,940m2 @ £4
works to existing parapet: 280m2 @ £170 Allowance for feature ceilings in landlord’s areas: item @ £40,000
Single-ply roof membrane, including insulation, paving slabs: 320m2 @ £160
Open mesh flooring to plant deck: 440m2 @ £150 Furniture and fittings 179,200 15.06 1.00
Mansard roof, including rafters, slate tiles, flashings, etc: 1,190m2 @ £280 Reception desk: item @ £35,000
Allowance for new aluminium rainwater goods; detailing to existing building: item @ Allowance for additional furniture in landlord’s areas: item @ £15,600
£125,000 Fitting out to WCs, including vanity units, towel rails etc: 31 nr @ £2,600
Sheet cladding to new lightwell: 400m2 @ £160 Signage – directory and statutory: item @ £30,000
Access ladders, latchway, stairs to platforms and galvanized roof balustrading: Fire extinguisher cabinets: item @ £18,000
item @ £50,000
Sanitary fittings 100,500 8.45 0.56
Stairs 184,000 15.46 1.02 WCs, basins and sundry fittings: 31 nr @ £2,750
Main steel internal staircases; handrails and balustrades (rate per flight): 18 nr @ Extra for fittings for disabled toilets: 11 nr @ £950
£8,000 Cleaners’ sink and taps: 6 nr @ £800
Additional stairs, balustrades and handrails: item @ £40,000
Disposal installations 123,000 10.34 0.68
External walls, windows and doors 1,177,200 98.92 6.54 Waste, soil and vent pipework: 10,250m2 @ £8
Allowance for repairs and cleaning to existing facade, including upgrade to Rainwater installation: 10,250m2 @ £4
insulation: item @ £410,000
New glazed office entrance screens: item @ £140,000 Hot and cold water installations 82,000 6.89 0.44


economics / cost model / 79


£ £/m2 GIFA % £ £/m2 GIFA %

Hot and cold water installation; incoming supply, localised water heaters: Fire alarm and smoke detection: 10,250m2 @ £9
10,250m2 @ £8 Intruder alarm: item @ £20,000
Disabled WC alarm system and wheelchair refuge call points: item @ £21,000
Heating air treatment and ventilation 854,800 71.83 4.75 CCTV allowance for six cameras: item @ £15,500
Modular boiler plant, plant room and riser distribution: 10,250m2 @ £28 IT containment and security wireways: item @ £68,000
Chiller, plant room and riser distribution: 10,250m2 @ £19
Air-handling unit and riser ductwork: 10,250m2 @ £32 Specialist installations 164,000 13.78 0.91
Entrance area ventilation and cooling: item @ £21,000 BMS controls: 10,250m2 @ £16
Toilet extract ventilation: item @ £24,000
Builder’s work in connection 420,000 35.29 2.33
Electrical installation 823,500 69.20 4.58 Builder’s work generally: item @ £420,000
New incoming supply: item @ £173,000
LV mains and sub-mains distribution: 10,250m2 @ £24 Preliminaries and contingencies 4,125,900 346.55 22.91
Small power to landlord’s areas: 10,250m2 @ £6 Management costs, site establishment and site supervision. Contractor’s
Electrical supplies to mechanical plant: 10,250m2 @ £8 preliminaries, overheads and profit @ 22%: item @ £3,070,000
Lighting to basement and landlord’s areas: 3,650m2 @ £40 Allowance for design reserve @ 3%: item @ £970,000
Enhanced lighting in reception and other areas: item @ £105,000 Testing and commissioning of building services installations: item @ £60,000
Allowance for capped-off supply to retail units: item @ £10,000
Total construction cost (shell and core) 18,000,000 1,512.60 100.00
Gas installations 12,000 1.01 0.20 (m2 rate based on GIFA)
Incoming gas supply: item @ £12,000

Lift installations 396,000 33.28 2.14

13-person (1,000kg) electric passenger lifts, 1.6m/s: 3 nr @ £132,000

Protective installations 38,500 3.24 0.21

Lightning protection: item @ £14,500
Earthing and bonding: item @ £24,000

Communication installations 216,800 18.22 1.21


£ £/m2 GIFA % £ £/m2 GIFA %

Floor finishes 555,100 54.16 17.59 Small power: 7,350m2 @ £6

Raised access floor: 7,525m @ £40

Allowance for mechanical fixing of pedestals: item @ £30,000 Communications installations 58,800 5.74 1.86
Carpet to raised access floor: 7,525m2 @ £25 Fire alarms: 7,350m2 @ £8
Hardwood skirtings, painted: 1,800m @ £20
Special installations 51,500 5.02 1.63
Furniture and fittings 30,000 2.93 0.95 BMS: 7,350m2 @ £7
Window blinds: item @ £30,000
Preliminaries and contingencies 757,000 73.85 23.92
Heating, air treatment and ventilation 1,021,700 99.68 32.28 Management costs, site establishment and site supervision; contractor’s
Low-temperature hot-water distribution to Hiross units: 7,350m2 @ £11 preliminaries, overheads and profit @ 22%: item @ £530,000
Chilled water distribution to Hiross system, condensate drain: 7,350m2 @ £20 Testing and commissioning of building services installations: item @ £25,000
Hiross under-floor air-conditioning units, return air grilles: 7,350m2 @ £108 Allowance for design reserve and construction contingency @ 7%: item @
Electrical installation 690,900 67.40 21.83
Distribution boards: 7,350m2 @ £4 Total construction cost (cat A fit-out) 3,165,000 308.78 100%
Lighting installation and controls: 7,350m2 @ £18 (m2 rate based on GIFA)
Luminaires, emergency lighting: 7,350m2 @ £66


Thanks to David Happell and Fiona Corcoran of Davis Langdon, Paul Sandilands of Lifschutz Davidson
Sandilands and Neil Smith of ISG InteriorExterior for their assistance in the preparation of this article