How the £300BN ‘Retrofit Revolution’ can benefit contractors and subcontractors (Pt 4)


Martin Prince-Parrott

February 24th, 2023
  • blog
  • >
  • how-the-300bn-retrofit-revolution-can-benefit-contractors-and-subcontractors-pt-4


Before we get into the detail, let’s have a brief recap.


The ‘Retrofit Revolution’ refers to the national need to retrofit the majority of existing homes and commercial buildings to EPC B by 2050.

For homes, this means 29 million homes must be retrofitted by 2050 and at least 15 million by 2030 (7 years).

Some regions are moving more quickly, London’s Mayor has declared that he wants London to achieve NetZero by 2030. This means retrofitting 3.6 million existing dwellings in 7 years.

The challenge for London office space is equally as daunting. Deloitte estimates that approximately 15 million sqft of office space will need to be upgraded/retrofitted by 2030.

C-Link’s data suggests that the average cost of a heavy office refurb is between £140sqft to £180/sqft.

This would place the value of the ensuing office upgrade work between £2.1Bn and £2.7Bn (or up to £385 million per year between 2023 and 2030). The good news for construction professionals is that these building owners must conduct these works or their buildings cannot be leased legally. From April 2023 it will be unlawful to let or continue to let a commercial property with an EPC rating of F or G.

It’s a big challenge and a big opportunity.


‘Portfolio Retrofit’ means upgrading the energy efficiency of a portfolio of buildings. They may be all residential, all commercial, all institutional or a mixture.

Organisations with building portfolios tend to be large and institutional in character. Organisations such as Universities, Investment Funds, Housing Associations and Local Councils tend to have large and varied building portfolios.

As we speak building portfolio owners are considering large, high-value retrofit projects. Work will vary but largely speaking they will be looking at:

  • Increasing the thermal efficiency of their buildings. The method for upgrading the fabric of large and small buildings depends on the construction method, structural frame and target energy efficiency levels. Because these portfolio owners are institutional, they will prefer to upgrade their assets to the highest standards possible. Their view of the cost will be affected by whether they intend to sell the assets at some point.
  • Installing solar panels (along with battery storage) so the portfolio can generate a portion of its own energy as well as draw down energy from the grid when it is cheap. On a single building solar panels can useful. However, if solar panels are deployed over acres of rooftop, the energy can not only reduce energy liabilities but become a source of revenue for the portfolio owners. The British solar feed-in tariff has expired but large portfolio owners may choose to sell surplus heat or electricity via Power Purchase Agreements (PPAs) to residential or commercial neighbours. Because contractible energy revenue adds value to building portfolios, portfolio owners have an added incentive to invest.
  • For smaller buildings or individual buildings retrofitting heating systems can be as ‘simple’ as exchanging a gas boiler for a heat pump. However, when looking at heating across a whole portfolio Combined Heat and Power (CHP) and District heating arrangements can make sense. Like portfolio energy generation, portfolio heating can create new revenue opportunities. For contractors, this means larger focussed projects rather than individualised packages of work.
  • For portfolio owners with HVAC-controlled buildings, installing ice thermal storage (often on the roof) to reduce energy costs will be a priority. This upgrade can be particularly powerful because aged HVAC can be as much as 40% less efficient than modern systems.


In practice, most portfolio owners operate a mixture of buildings. As such, their retrofit priorities will be guided by the composition of their portfolio and their mandates (mission).
Portfolios are often dominated by residential buildings, commercial buildings, or owned and operated institutional buildings. But there can also be power plants, airports, and train stations but these are the main types.

  1. Residential Led Portfolios: Residential portfolio owners tend to be Housing Associations, Pension Funds, Local Governments and Universities (Student accommodation). Residential-led portfolios are probably the most tricky to retrofit because the homes tend to be inhabited and retrofitting can lead to significant disruption and even displacement.
    As a result, residential portfolio owners tend to prioritise low disruption (often external works), operating income expansion (works that reduce operating costs and increase rent levels) and visual impact (good-looking homes reflect well on the landlord).
  2. Commercial Led Portfolios: Commercial portfolio owners tend to be Investments Funds, Real Estate Investment Trusts (REITs), and Pension Funds. Commercial-led portfolios are the most valuable and their retrofits tend to be the most expensive to retrofit. This is due to the fact that retrofits at this scale are structural retrofits and they require an interruption in cash flow from the asset. This means that while a commercial asset is being retrofitted it isn’t providing cash flow to service its commercial debt AND it is costly to fund.
    As a result one of the greatest priorities for these owners is speed.
    The other is visual impact. Due to the significant costs involved, these owners don’t just want a ‘like-for-like’ replacement they often want a full upgrade. This is often referred to as ‘repositioning’. In simple terms ‘asset repositioning’ is giving your asset a facelift (internally and externally).
  3. Institutional/Owned + Operated Portfolios: Institutional/Owned and operated portfolio owners tend to be Local or National Governments, Universities, Hospitals and Care homes. Owned and operated portfolios are difficult to retrofit because the managing organisations often find it difficult to sign off large capital-intensive projects. Sometimes this is because of culture, sometimes it’s because of inexperience and sometimes it’s because day-to-day responsibilities are so pressing. The latter is often the case with Housing Associations, especially if they house vulnerable people. The top priorities for these kinds of owners are fast ‘turnkey solutions’ and guarantees of cost.
    Turnkey solutions are attractive to this kind of owner because they tend to be inexperienced at procuring construction and design services.
    Guarantees of cost are essential because they rarely have additional capital available. For these organisations, almost all of their capital is working capital. And it’s highly likely that this class of owner will be caught off guard by the April 2023 changes.


Regulated portfolio owners such as Housing Associations and Local Governments will often operate frameworks for which they tender at set intervals. If a contractor or sub-contractor wanted to be selected for one of these frameworks they would need to enquire and prepare to make the appropriate application. These processes are often transparent and well-signposted on websites and other sources.

For less tightly regulated portfolio owners such as Funds and REITs, direct approaches could work. But friendly introductions would be much more effective. As mentioned in last week’s posts, sub-contractors may be the key to portfolio owner introductions because they often service the buildings of these clients.

Another avenue worth pursuing would third party asset managers/estate managers. Not only will they know the clients but they will likely manage their entire portfolio. The key to using this strategy would the to offer a ‘finders/intro fee’ for successful introductions.


One would assume that any organisation that managed a multi-million-pound portfolio would be aware of legal changes which would render their leases (and cash flow) unlawful. But you would be surprised.

Much like individual building owners these organisations rarely understand how to initiate or execute a large project safely and cost-effectively. This is where Contractors and subcontractors can take the initiative and offer free consultation advice and turnkey retrofit services.

After April 2023, reaching out to building portfolio owners about ‘green retrofit services’ should be like ‘pushing on an open door’.


C-Link is working with leading construction businesses that are taking advantage of this once-in-a-generation opportunity.

If you’d like to discuss how C-Link can help you do the same drop us a note here.

If you’re not ready but if you’re intrigued, why not check out our platform?


Photo by Wonderlane on Unsplash

About Martin Prince-Parrott

Martin is an ESG Real Estate Developer and former Award-Winning Architect. He’s spent the last decade designing and developing a billion-pounds worth of mixed-use institutional-scale real estate. He’s worked with and for market-leading companies such as Gensler, Microsoft, Barratt Homes, Legal & General and Barclays Bank.

  • blog-right

    Video Episode 50

    What do property investors
    ask property developers when they are doing their due diligence?

    thumb video-icon

    Podcast Episode 57

    Return of the swamp

    thumb video-icon
  • Free Resources

    Agile Construction Management

    Download now

Why not also take a look at these…