Office to housing conversion: estimating life cycle environmental and financial performance

Abstract

Renovating existing building is often touted as having an improved environmental performance as compared to demolition and construction. However, very few studies have quantified the life cycle environmental benefits resulting from such renovations. The aim of this research is to provide a benchmark based on a real and representative case study building to estimate life cycle greenhouse gas emissions and financial costs of redeveloping an office building by considering different scenarios: (1) renovation as an office building; (2) conversion as a residential building; (3) demolition and construction of an office building and (4): demolition and construction of a residential building. Results show that the demolition-construction scenarios are undoubtedly the most environmentally impactful, but the difference between offices and housing is less significant and depends greatly on the assumptions made. On the other hand, from a tax point of view, the demolition-construction scenario is favoured by the real estate industry because it allows for the recovery of VAT in the operation and thus maximizes the value of the real estate asset as well as the financial return. There is also a significant difference between the profitability of a housing and an office project. The latter is favoured by market values. The tendency to favour offices in the European district could be reversed in the current post covid situation and solutions exist to encourage the development of housing projects through office conversion.