Value in Being Green: Decarbonization efforts to stimulate the retrofit market

By Craig DiLouie | Oct 13, 2023
To achieve the environmental goals of the 2016 Paris Agreement signed by nearly 200 nations, the pace of retrofits in the Global North will need to triple from around 1% to 3% or more per year, according to commercial real estate services firm Jones Lang LaSalle (JLL), Chicago. 




To achieve the environmental goals of the 2016 Paris Agreement signed by nearly 200 nations, the pace of retrofits in the Global North will need to triple from around 1% to 3% or more per year, according to commercial real estate services firm Jones Lang LaSalle (JLL), Chicago. JLL’s 2022 report, “Retrofitting Buildings to be Future-Fit,” makes the case to act now.

The Paris Agreement called for limiting global warming to an increase of 1.5°C above pre-industrial levels. This would entail reducing carbon emissions by about half by 2030 and reaching net zero by 2050. Overall, “net zero” means achieving a balance between greenhouse gas emissions and what is absorbed from the atmosphere.

For economies, this entails reducing emissions and offsetting the remainder. For commercial buildings, it entails maximizing operational efficiencies, electrifying heat, sourcing off-site local renewable energy and setting up on-site renewables, with offsetting as a last resort.

Buildings and carbon emissions

Buildings are of interest as they account for an estimated 39% of global energy-related carbon emissions. This is the sum of 11% from construction and materials and 28% from operational emissions energy needed to heat, cool, light and power them, according to the World Green Building Council.

Buildings provide a major vector for reducing carbon emissions—existing buildings in particular, as the majority of commercial buildings (about 80%) that are predicted to be standing in 2050 have already been built.

In the United States, various state and local governments have begun implementing building performance standard-based policies. These may include energy reporting and carbon caps, with fines for building owners who exceed them. A notable example is New York City, where Local Law 97 takes effect in 2024. The law sets carbon caps for buildings over 25,000 square feet and imposes fines for exceeding them. The caps become stricter in 2030 to drive buildings toward net-zero emissions by 2050.

Policies such as these alter the market for retrofits by presenting financial risks, including penalties and negative effects on property valuation. In New York, building owners can invest in energy efficiency, buy offsets or renewable energy credits or pay an annual fine based on emissions. According to advocacy group ALIGN, Local Law 97 will create more than 40,000 green jobs and expand the annual local retrofit market to $20 billion.

The JLL report encouraged commercial property owners to become early adopters of converting existing buildings into net-zero assets. This conversion involves deep energy efficiency retrofits and other decarbonization measures packaged in a comprehensive, holistic approach focused on overall value transcending direct return on investment.

Maximize success

Early adopters of net-zero buildings can benefit regarding price, liquidity, debt and attracting and retaining tenants at higher rents, which impacts net operating income, according to the JLL report. 

In another JLL publication, its “2022 Future of Work Survey,” about three-fourths of respondents said their organizations would be willing to pay more to lease a building with leading sustainability credentials, and about one-fifth reported they have already done so. Early adopters further mitigate the financial risk of inaction such as rising energy costs and “brown discount,” or steep value depreciation as demand for net-zero properties increases. Because tenant usage is a major factor, JLL identified value in landlord-tenant collaboration, which may create new business models, encourage co-investment and alter current leasing.

To maximize success, building owners should take a holistic, long-term approach that supports occupant needs, health and well-being. The JLL report examined three levels of retrofits from light (optimization of performance) to deep (whole-building retrofits) with recent project examples.

The report identified various building upgrades, which included energy-efficient lighting, solar photovoltaic roof panels, green spaces, smart glass for daylighting, cycle storage, heat pumps, electric vehicle charging and water harvesting. 

For lighting, the report specifically identified LED luminaires, detailed sensor deployment and digital controls that maximize energy savings and can provide data for energy management, reporting and occupant comfort. Delivering these solutions will require a workforce educated about technologies, applications and interactions.

“The technology, systems, processes, and means to reach net zero carbon and beyond exist today, but there is no one singular strategy, technology, or entity that will address the journey and there is also no one-size-fits-all approach,” according to the JLL report. “While the scope and complexity of the challenge is immense, retrofitting existing buildings is the quickest and most cost-effective way to accelerate decarbonization in the built environment.”

As Kermit the Frog opined, it’s not easy being green, but it can offer a great deal of value. Download JLL’s “Retrofitting Buildings to be Future-Fit” at / ParinApril

About The Author

DiLouie, L.C. is a journalist and educator specializing in the lighting industry. Learn more at and





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