Shattering the Blueprint: The Radical Reinvention of Building Retrofits After 2020

 

By Robert Kroon

Executive Summary

This image embodies transformation, reflecting a strong theme in commercial real estate. The industrial chic design, featuring exposed brick and ductwork, honors the building's history while welcoming a modern future. Such adaptable spaces cater to diverse tenants and work styles, crucial in today's dynamic market. Retrofits like these offer great potential for integrating technologies such as fault-managed power, fostering intelligent and flexible environments.

The principles guiding the retrofitting of older buildings have undergone a fundamental and likely permanent transformation. The pre-pandemic paradigm, a disciplined but narrow pursuit of cost reduction through energy efficiency and compliance with preservation mandates, has been supplanted by a far more complex and holistic strategy.

In the post-pandemic world, the drivers for retrofitting are now centered on creating tangible value through occupant health, ensuring operational resilience against a new spectrum of threats, and adapting to profound shifts in market demand for flexibility. This report analyzes this paradigm shift, detailing how the convergence of public health crises, technological innovation, and evolving work dynamics has created a new, integrated approach to modernizing the existing building stock.

The core thesis of this analysis is that building retrofits have evolved from a discretionary capital expense, justified by simple payback on energy savings, into a core strategic imperative for asset survival and value creation. The COVID-19 pandemic served as a powerful catalyst, elevating the concept of the 'healthy building' from a niche amenity to a non-negotiable market expectation.

This has fundamentally altered design priorities, placing an unprecedented focus on ventilation, advanced filtration, air disinfection, and touchless technologies. This new focus, however, creates a direct tension with pre-pandemic energy conservation goals, creating an "energy penalty" that necessitates the adoption of more sophisticated and efficient building systems.

Simultaneously, the widespread adoption of hybrid work has triggered an office vacancy crisis, rendering vast portfolios of older commercial buildings functionally obsolete. This has made adaptive reuse—particularly the conversion of offices to residential or mixed-use properties—a critical strategy for urban revitalization and portfolio survival.

In the post-pandemic world, the drivers for retrofitting are now centered on creating tangible value through occupant health, ensuring operational resilience against a new spectrum of threats, and adapting to profound shifts in market demand for flexibility.

These conversions, however, present significant architectural and engineering challenges, particularly regarding the deep floor plates and centralized systems of mid-20th-century office towers.

This confluence of challenges has been met by the emergence of a new ecosystem of foundational technologies. Innovations such as Fault-Managed Power (FMP), building-scale DC microgrids, and intelligent, integrated Building Management Systems (BMS) are the critical enablers for achieving modern health and resilience goals in a cost-effective manner. These systems are not merely incremental improvements; they represent a paradigm shift in how power and data are distributed and managed within a building, making complex retrofits technically and financially viable.

Finally, tenant demand has irrevocably shifted. The traditional long-term lease is ceding ground to a "Workspace-as-a-Service" model, where corporations seek flexibility, shorter terms, and amenity-rich, experience-driven environments. This requires landlords to retrofit buildings not just as static shells, but as dynamic, manageable platforms for service delivery. This shift is also geographic, with demand surging in suburban and lifestyle markets, opening new frontiers for retrofit and reuse projects outside of traditional central business districts.

For building owners, investors, and policymakers, the implications are profound. The business case for retrofitting is no longer a simple calculation of energy savings. It is a complex equation that must weigh tenant wellness and productivity, mitigate risks from grid instability and future regulations, and ensure an asset's relevance in a rapidly changing market. Deep, integrated retrofits are the key to navigating this new landscape and ensuring the long-term value and competitiveness of the world's existing buildings

 

Table 1: Comparative Analysis of Retrofit Drivers: Pre- vs. Post-Pandemic

 

 

Section 1: The Pre-Pandemic Retrofit Paradigm: A Focus on Efficiency and Preservation

Before the global shifts of the 2020s, the conversation surrounding the retrofitting of older buildings was largely defined by a set of well-established, though often competing, priorities. The primary drivers were the quantifiable pursuit of energy efficiency, the legal and cultural mandate for historic preservation, and the regional necessity of seismic safety.

This paradigm treated retrofitting as a series of discrete, problem-solving interventions, each with its own rationale, funding stream, and set of technical experts. The overarching goal was to optimize existing assets within a relatively stable market, focusing on cost reduction and compliance. This pre-pandemic landscape provides a critical baseline against which the radical changes of recent years can be measured.

 

1.1 The Primacy of Energy Efficiency: Mandates, Audits, and Returns

Before a building becomes a truly Agile Workplace, the groundwork must be laid. This is what that essential first step looks like. Strategic upgrades to the building envelope, HVAC, and lighting aren't just about modernization—they are critical for creating an energy-efficient, comfortable, and future-proofed environment.

In the two decades leading up to 2020, energy efficiency was the undisputed king of retrofit drivers. Commercial and institutional buildings were widely recognized as enormous consumers of energy, accounting for approximately 40% of global energy consumption and a substantial portion of related carbon dioxide emissions.[1] This high consumption profile made them a primary target for energy conservation efforts, driven by both economic incentives and emerging regulatory pressures.

The business case for an "energy retrofit" was clear, direct, and financially quantifiable. Success was measured by a straightforward set of metrics: the reduction in a building's Energy Use Intensity (EUI), the simple payback period on the capital investment, and the Internal Rate of Return (IRR) calculated almost exclusively from projected energy cost savings.[2]

Flagship projects, such as the comprehensive retrofit of the Empire State Building, which projected a 38% reduction in energy use, served as powerful exemplars of what was possible, motivating building owners with the promise of significant operational savings.[1]

The methodology for these projects was well-defined. It typically began with an energy audit to benchmark a building's performance and identify areas of inefficiency.[4] From this, a list of Energy Conservation Measures (ECMs) was developed. These commonly included:

  • Lighting Upgrades: Replacing older fluorescent or incandescent lighting with more efficient Light-Emitting Diodes (LEDs) was often the lowest-hanging fruit, offering rapid paybacks of less than two years in many cases.[3]

  • Building Envelope Improvements: Enhancing the thermal performance of the building's shell through measures like adding insulation (e.g., glass wool, polyisocyanurate), replacing single-pane windows with double- or triple-glazed units, and installing shading systems to reduce solar heat gain.[4]

  • HVAC Modernization: Upgrading aging boilers, chillers, and air handling units to newer, more efficient models, and implementing better control strategies.[5]

Regulatory frameworks began to reinforce these market drivers. While many historic buildings traditionally enjoyed exemptions from strict energy codes, cities started to push for greater accountability. A prime example was New York City's Local Law 97, which introduced emissions caps for large buildings, including many historic structures, and mandated energy benchmarking. This signaled a significant policy shift away from blanket exemptions and toward requiring all buildings to contribute to sustainability goals.[6]

 

1.2 The Balancing Act: Historic Preservation vs. Modernization

A defining characteristic of the pre-pandemic era was the inherent tension between the goals of energy modernization and historic preservation. Many older buildings, particularly those with historic designations, feature unique architectural elements—such as hand-crafted woodwork, ornate masonry, and decorative ironwork—that are irreplaceable and culturally significant.[6] The chnallenge was that many standard ECMs, designed for modern construction, threatened to compromise this historic fabric. Forcing high-performance insulation into delicate wall cavities or replacing original windows with modern units could cause irreversible damage.[6]

This conflict led to a more nuanced regulatory and design approach. Rather than imposing rigid, one-size-fits-all prescriptive codes, jurisdictions began to adopt performance-based codes. These codes set a target for energy performance but allowed designers and owners the flexibility to determine how to achieve it. This approach was far more suitable for historic properties, enabling tailored solutions that could improve energy efficiency while respecting the building's unique character.[6]

To address the economic barriers, a web of financial incentives was established. Programs like the federal Historic Preservation Fund (HPF), which is funded by energy royalties, provide grants for conservation, compatible reuse, and safety upgrades.[9] Many states and municipalities offered their historic tax credits and grants, often tying them to energy efficiency improvements. These financial tools were crucial in making it feasible for property owners to undertake sensitive retrofits that achieved the dual goals of preservation and modernization.[6]

 

1.3 Foundational Resilience: Seismic Safety and Structural Integrity

Buildings should be retrofitted not just to avoid collapse, but to be re-occupiable and functional.

Alongside energy and preservation, the third major driver for deep retrofits, particularly in seismically active regions, was structural resilience. The primary goal of a "seismic retrofit" was to strengthen a building to withstand earthquakes, with the core objectives being life safety (preventing collapse) and damage limitation.8 This was especially critical for older building typologies known to be vulnerable, such as those with unreinforced masonry or non-ductile concrete construction.[8]

Techniques for seismic retrofitting were well-established and included methods like reinforcing columns with concrete or steel jackets, adding new structural elements like shear walls or bracing systems, and, in more advanced applications, implementing base isolation systems that decouple the building from ground motion.[12]

Even before the pandemic, the thinking around resilience was beginning to evolve beyond mere survival. Experts and organizations such as the National Institute of Standards and Technology (NIST) advocate for a shift to "functional recovery".

This concept proposed that buildings should be retrofitted not just to avoid collapse, but to be re-occupiable and functional within a specified, acceptable timeframe following a major earthquake.[14] This forward-thinking idea, which considered the economic and social disruption of long-term displacement, was a clear precursor to the broader, post-pandemic focus on operational resilience. However, at the time, it remained a specialized concern, not yet a mainstream driver for the majority of building retrofits.

A critical takeaway from the pre-pandemic era is the highly fragmented and siloed nature of the retrofit process. An owner would typically commission an "energy retrofit," a "seismic retrofit," or a "historic preservation project" as distinct, often uncoordinated, initiatives. The teams of experts—energy consultants, structural engineers, and preservation architects—frequently worked in parallel rather than as an integrated unit. This approach was born from a system of competing priorities.

The language of the time, which spoke of "balancing" preservation with efficiency, revealed a mindset of managing conflicts and making trade-offs, rather than pursuing a unified strategy for holistic value creation.[6] A retrofit focused solely on maximizing energy savings could inadvertently damage historic fabric, while a project centered only on preservation might ignore glaring energy inefficiencies. This fragmentation often led to sub-optimal outcomes and set the stage for the paradigm shift to come, where integration would become the central organizing principle.

 

Section 2: The Pandemic Inflection Point: The Ascendancy of the Healthy Building

The COVID-19 pandemic was more than a global health crisis; it was a profound inflection point for the built environment. It fundamentally and permanently altered the public's perception of indoor spaces, transforming the concept of a 'healthy building' from a desirable amenity into a market-defining necessity.[15] The collective, global experience of lockdowns and the widespread understanding of airborne virus transmission forged a new, non-negotiable expectation for safety and well-being within the buildings where people live, work, and learn. This shift catalyzed a rapid evolution in building science, operational protocols, and technology adoption, placing Indoor Air Quality (IAQ) at the very center of the retrofitting conversation.

 

2.1 From Amenity to Necessity: IAQ and the Science of Airborne Transmission

The pandemic thrust the science of building ventilation into the public consciousness. The realization that SARS-CoV-2 could be transmitted via microscopic aerosols, which can linger and travel in the air in poorly ventilated indoor environments, made building operations a matter of public health.18 Suddenly, factors like air change rates, filtration efficiency, and humidity levels were no longer abstract engineering terms but critical tools in the fight against disease transmission.

This new awareness created an immediate and powerful demand for retrofits focused on improving IAQ. The primary goal shifted to diluting and removing potential pathogens from indoor air. This was not a minor adjustment; it was a sea change in priorities. Research emerged suggesting that enhancing a building's IAQ could be as effective in reducing aerosol transmission of viruses as vaccinating 50-60% of the population, framing building performance as a frontline public health intervention.19 This spurred building owners and operators to re-evaluate their systems, moving beyond minimum code compliance to actively manage and optimize their indoor environments for health.[15]

 

2.2 Codifying Health: The Evolution of ASHRAE Standards and the Emergence of Standard 241

The introduction of Standard 241 marked a potential return to the health-focused ventilation principles of the early 20th century.

Industry standard-setting bodies, most notably the American Society of Heating, Refrigerating and Air-Conditioning Engineers (ASHRAE), responded with unprecedented speed. In the early months of the pandemic, ASHRAE issued clear guidance stating that airborne transmission of SARS-CoV-2 was significant and that HVAC systems were a critical tool for control.[22] They advised against the energy-saving measure of disabling HVAC systems, noting that proper ventilation and filtration could reduce airborne concentrations of the virus.[22]

This rapid response culminated in the landmark publication of ASHRAE Standard 241, "Control of Infectious Aerosols," in June 2023.[23] This standard was revolutionary. It moved beyond general IAQ principles to establish the first-ever code-enforceable requirements specifically for reducing the risk of disease transmission in non-healthcare buildings. Standard 241 introduced a new vocabulary and a new set of tools for building owners, engineers, and facility managers, including:

  • Infection Risk Management Mode (IRMM): This concept provides an "on/off switch" for pandemic preparedness. It defines two modes of operation: a "Normal Mode" for everyday use and an IRMM that can be activated during periods of elevated risk, as identified by public health authorities. In IRMM, a building's systems are ramped up to provide a higher level of protection.[23]

  • Equivalent Clean Airflow Rate (ECA): Moving beyond simple ventilation rates, the ECA is a performance-based metric that quantifies the total pathogen-free air being delivered to a space. It is the sum of three components: the clean air from outdoor ventilation, the clean air from filtration (e.g., passing through a MERV-13 filter), and the clean air resulting from air-cleaning technologies like Ultraviolet Germicidal Irradiation (UVGI).[23] This flexible, performance-based approach allows designers to use a combination of strategies to meet a required safety target.

  • Building Readiness Plan (BRP): Standard 241 requires the creation of a formal BRP, a comprehensive document that details a building's specific systems, operational protocols, and maintenance schedules for infection control. This plan ensures that strategies are not just designed but are also properly implemented, documented, and maintained over the life of the building.[23]

The introduction of Standard 241 marked a potential return to the health-focused ventilation principles of the early 20th century. For decades, ventilation rates had been progressively lowered to conserve energy, a trend that began in the 1970s. Some experts now argue for a return to higher historical standards, such as 30 cubic feet per minute (cfm) per person, to prioritize occupant health, a target that the ECA framework helps to achieve through a combination of ventilation and cleaning.[25]

 

2.3 Beyond HVAC: Touchless Technology and the Hygienic Environment

The pandemic-driven focus on health extended beyond the air to the surfaces people touch. The need to minimize contact with shared surfaces, which were perceived as vectors for germ transmission, accelerated the adoption of touchless technologies from a "luxury" or "convenience" item to an absolute necessity in commercial buildings.[26]

This trend has had a direct impact on retrofit projects. Buildings are now routinely being upgraded with a suite of touchless solutions designed to create a more hygienic and frictionless experience for occupants. These technologies include:

  • Contactless Access: Mobile phone-based credentials, facial recognition, and gesture-based sensors for doors, turnstiles, and elevators.[26]

  • Automated Restrooms: Sensor-activated faucets, soap dispensers, toilets, and hand dryers.[26]

  • Voice Control: Voice-activated elevators and other building controls.[26]

  • Touch-Free Services: Mobile apps and QR codes for orderig food, managing visitor access, and controlling room environments.[26]

The rapid integration of these technologies was driven by a clear demand from tenants and their employees for a visibly safer and more modern workplace. This has become a standard feature in today's commercial spaces, fundamentally altering the design of entryways, lobbies, elevators, and amenity areas.[27]

 

2.4 Certifying Wellness: The Growing Influence of WELL and Fitwel

The "healthy building" movement has been further defined and validated by the rising prominence of third-party certification systems, particularly the WELL Building Standard and, to a lesser extent, Fitwel.[30] These rating systems provide a structured framework and a marketable credential for buildings that prioritize occupant health.

The WELL Building Standard, developed by the International WELL Building Institute (IWBI), is distinct from energy-focused standards like LEED. WELL is a performance-based system centered explicitly on human health and wellness, using medical and scientific research to establish its criteria.[31] It evaluates buildings across ten key concepts: Air, Water, Nourishment, Light, Movement, Thermal Comfort, Sound, Materials, Mind, and Community.[31]

In the post-pandemic landscape, achieving a WELL certification has become a powerful tool for landlords. It serves as a tangible, third-party-verified signal to the market that a building meets a high standard of health and safety. This can directly translate into increased property value, faster leasing, and higher tenant satisfaction, providing a clear financial incentive for owners to invest in the comprehensive, health-focused retrofits required to meet the standard's rigorous requirements.[31]

The ascendancy of the healthy building has introduced a fundamental tension into the world of retrofitting. The new, non-negotiable requirements for health—such as increasing the intake of outdoor air, running ventilation systems for longer hours, and pushing air through denser MERV-13 or higher-rated filters—are in direct opposition to the pre-pandemic goal of maximizing energy efficiency.[32] Each of these health-promoting measures consumes significantly more energy, creating an "energy penalty" that complicates the traditional ROI calculation for a retrofit.

This paradox, however, has become a powerful driver of innovation. It is no longer sufficient to simply "ventilate more." The challenge now is to provide healthier air without incurring prohibitive energy costs. This conflict has created a compelling business case for adopting more advanced and efficient technologies, such as Energy Recovery Ventilators (ERVs), which capture heat from exhaust air, and the next-generation power systems discussed later in this report, which can generate and deliver power more efficiently to offset the increased load from new HVAC operations.[32]

Furthermore, the nature of healthy building improvements has changed how retrofits are valued. Unlike energy efficiency, which is largely invisible to an occupant, many features of a healthy building are tangible and experiential. An employee can see touchless entry points, feel the effects of proper humidification, and observe real-time IAQ data displayed on monitors in the lobby.19 This "visibility of health," combined with marketable certifications like WELL, has transformed building health into a powerful branding tool. It allows landlords to compete not just on cost and location, but on the quality of the indoor environment they provide. This shifts the financial justification for a retrofit away from a pure focus on backend operational savings and toward front-end revenue generation through enhanced asset positioning, tenant attraction, and retention.

 

Table 2: Key Post-Pandemic Ventilation & IAQ Recommendations (ASHRAE, CDC)

 

Section 3: The Great Repurposing: Adaptive Reuse in a Post-Office World

The pandemic did not create the trend of underutilized office space, but it dramatically accelerated it

The pandemic did not create the trend of underutilized office space, but it dramatically accelerated it, solidifying hybrid work as a permanent fixture of the global economy.[37] The result is a historic "office glut," with vacancy rates soaring and demand for traditional, long-term office leases plummeting, especially for older, less-amenitized Class B and C buildings.[39]

This surplus of commercial space has collided with another pressing urban crisis: a severe and persistent shortage of housing in many cities.[10] This confluence of factors has transformed adaptive reuse from a niche practice into a mainstream, critical strategy for urban revitalization, portfolio survival, and sustainable development. The conversion of obsolete office buildings into new uses, primarily residential, is now a central theme in the post-pandemic retrofitting landscape.

 

3.1 Drivers of Conversion: Vacancy, Housing Demand, and Embodied Carbon

The motivations for office-to-residential (O2R) conversions are multifaceted, blending market necessity with social and environmental benefits.

  • Market and Economic Drivers: The most powerful driver is the stark reality of the market. With office attendance stabilizing at levels significantly below pre-pandemic norms, property owners are faced with the prospect of long-term vacancy and declining asset values.[40] Adaptive reuse offers a vital alternative, allowing owners to pivot their assets to meet the strong and unmet demand for urban housing, thereby creating a new revenue stream and revitalizing the property's long-term value.[10] For cities, these conversions help diversify downtown cores, bringing in residents who support local businesses beyond the 9-to-5 workday and broadening the municipal tax base.[10]

  • Housing and Social Drivers: In a nation grappling with a housing affordability crisis, O2R conversions represent a significant opportunity to increase housing supply without needing to build from the ground up.[10] This can be particularly impactful when policies are in place to ensure a portion of the converted units are designated as affordable housing, helping to address critical social needs and potentially furthering fair housing goals by allowing more people to live near job centers.[10]

  • Environmental Drivers: From a sustainability perspective, adaptive reuse is a powerful tool for decarbonization. The process of demolishing a building and constructing a new one generates massive amounts of embodied carbon—the emissions associated with manufacturing, transporting, and installing building materials. By preserving the existing structural shell and foundation of a building, an adaptive reuse project avoids the majority of these emissions, making it an inherently more sustainable approach to development.[10]

 

3.2 The Deep Floor Plate Dilemma: Overcoming Architectural Hurdles

 
 

Deep Floor Plates:

A Significant, But Not Dominant, Feature of Commercial Real Estate

An estimated 30-40% of commercial real estate buildings, primarily concentrated in the office sector, are likely to have deep floor plates. This estimation is based on an analysis of building age, class, and prevailing architectural trends, as precise market-wide statistics on floor plate depth are not readily available. The prevalence of deep floor plates is a tale of two eras in commercial construction, with a notable shift in design philosophy over the past several decades.

A "deep floor plate" refers to a building layout where the core—containing elevators, restrooms, and mechanical systems—is a significant distance from the exterior walls. This design makes it challenging for natural light and air to penetrate the entire floor, a key consideration in today's wellness-focused and energy-conscious building designs. While there is no universal standard, floor plates exceeding 25,000 to 30,000 square feet are often categorized as deep, particularly in modern office buildings.

The current commercial real estate landscape is a mix of older and newer building stock, which directly impacts the distribution of deep floor plates. A considerable portion of U.S. commercial buildings, with an average age of approximately 53 years, were constructed before the widespread adoption of advanced HVAC and lighting systems. These older buildings, often categorized as Class B and C properties, were designed with shallower floor plates out of necessity to maximize natural light and ventilation for occupants. It is estimated that roughly 46% of all commercial buildings were built before 1980, a period when shallower designs were the norm.

The latter half of the 20th century and into the 21st century saw a significant shift in design trends. The rise of the open-plan office and advancements in building technology enabled the construction of buildings with much larger and deeper floor plates. These designs were seen as more efficient for accommodating a higher density of workers. This trend is most prominent in Class A office buildings, which are typically newer and command higher rents.

Despite the compelling drivers, converting an office building into a residential one is a complex and challenging undertaking, fraught with architectural and engineering hurdles. The most significant of these is the "deep floor plate" characteristic of many office buildings constructed after World War II.[42]

Office floor plates are designed to be large and expansive to accommodate open-plan layouts, cubicle farms, and interior offices. This design leaves a substantial amount of floor area in the building's core, far from any windows. For residential use, this is a critical flaw. Building codes and market expectations demand that living spaces, and especially bedrooms, have access to natural light and fresh air via operable windows.[43] This creates "dark space" in the center of the floor plate that is unusable for conventional apartments.

Architects and developers have devised several creative, though often costly, solutions to this problem:

  • Carving out Voids: One of the most effective but expensive solutions is to remove a portion of the building's core, creating a central atrium or light well that extends down through the floors. This introduces a new "exterior" wall, allowing for the creation of inward-facing apartments with access to light and air.[43]

  • Creative Unit Layouts: Another approach is to design very long, narrow "bowling alley" apartments that stretch from the building's core to the exterior window wall. While this utilizes the space, such layouts can be less desirable to tenants.[45]

  • Repurposing Dark Space: The unusable core space can be repurposed for building amenities that do not require windows, such as fitness centers, movie theaters, tenant storage lockers, or coworking lounges.[44]

Beyond the floor plate, conversions face other major systems challenges. Office buildings are designed with centralized plumbing and HVAC systems, typically featuring large, shared restrooms on each floor. A residential conversion requires a complete overhaul to provide individual kitchens, bathrooms, and climate controls for every apartment unit. This involves extensive and invasive work to run new plumbing risers, waste lines, and electrical wiring throughout the existing structure, which can be particularly difficult and costly in buildings with concrete floor slabs.[42]

 

3.3 Policy and Incentives: Public Sector Tools for Facilitating Reuse

Recognizing both the potential benefits and the significant challenges of O2R conversions, many city and state governments are actively creating policies and incentives to make these projects more financially viable.[10] These public sector tools are designed to help developers close the "feasibility gap"—the difference between the high cost of conversion and the eventual market value of the residential units.

These tools generally fall into two categories:

  1. Easing Local Processes: This involves removing regulatory barriers. Cities can create special zoning districts where O2R conversions are permitted "by-right," eliminating the need for a lengthy and uncertain public approval process. They can also streamline permitting, offer variances on requirements like parking minimums, and adapt building codes to be more flexible for conversion projects.[10]

  2. Providing Financial Support: This involves direct and indirect subsidies to lower the project cost. Common financial tools include property tax abatements, low-interest loans, and direct grants. Federal and state Historic Preservation Tax Credits are particularly powerful incentives for converting older, historically significant buildings.[10]

 

3.4 Case Studies in Transformation

Across the country, cities are putting these strategies into practice, yielding successful examples of transformation.

  • Chicago, Illinois: The city's "LaSalle Reimagined" initiative is a targeted effort to revitalize a traditional office corridor by supporting the conversion of historic office buildings into residential use. The program aims to create 1,600 new housing units, with a significant portion dedicated to mixed-income households, thereby diversifying the downtown area both in its use and its population.[10]

  • Alexandria, Virginia: With a long history of encouraging adaptive reuse, Alexandria has intensified its efforts post-pandemic. Leveraging supportive policies and a fiscal analysis that confirmed the benefits of residential development, the city has facilitated 15 office-to-residential conversion projects, demonstrating a sustained and successful strategy.[46]

  • Hialeah, Florida: A case study from the height of the pandemic shows the conversion of a distressed, hurricane-damaged hotel into a 251-unit mixed-use project. The developer successfully navigated the local zoning process to obtain a special use permit, repurposing the blighted property into much-needed housing and retail, serving as a model for repositioning distressed assets.[48]

Regarding Fault-Managed Power: The problem of conversion (the high cost and difficulty of re-wiring) creates the demand for the solution (advanced power distribution technology)

The significant challenges inherent in adaptive reuse projects create a powerful, market-driven need for the very technologies that are defining the next generation of retrofits. The process of converting a building designed for one purpose into another exposes the limitations and high costs of traditional construction methods. For instance, the requirement to run entirely new electrical systems to serve dozens of individual apartments within an existing concrete structure is a major cost driver.[42]

Traditional methods, which involve installing extensive metal conduit and new electrical panels, are not only expensive but also highly disruptive and labor-intensive.[49] This is precisely the problem that new technologies like Fault-Managed Power (FMP) are designed to solve. As FMP eliminates the need for conduit and can be installed more quickly by lower-cost technicians, it dramatically reduces the cost, time, and complexity of the electrical overhaul required in a conversion.[49]

In this way, the economic and technical viability of many adaptive reuse projects is directly enabled by the availability of these new systems. The problem of conversion (the high cost and difficulty of re-wiring) creates the demand for the solution (advanced power distribution technology). This establishes a crucial causal link between the trend of adaptive reuse and the adoption of the technologies detailed in the following section.

 

Table 3: Challenges and Solutions in Office-to-Residential Adaptive Reuse

 

Section 4: Foundational Technologies for the Next-Generation Retrofit

The ambitious goals of the post-pandemic retrofit—creating buildings that are simultaneously healthier, more resilient, and more flexible—cannot be achieved with the technologies of the past. The increased energy demands of enhanced ventilation, the complexity of rewiring for adaptive reuse, and the need for operational continuity during grid disruptions all require a new technological foundation. A symbiotic ecosystem of innovations in power distribution, energy management, and workplace design has emerged to meet this challenge. These technologies are not just incremental improvements; they are paradigm-shifting solutions that make the modern, integrated retrofit both technically possible and financially viable.

 

4.1 The Resilience Imperative: Integrating Microgrids and DC Power for Energy Independence

The concept of building resilience has expanded dramatically. While the pre-pandemic focus was primarily on structural integrity against events like earthquakes, the post-pandemic definition encompasses operational resilience: the ability of a building to maintain essential functions and a safe, healthy environment during a wide range of disruptions, including utility power outages, extreme weather events, and public health emergencies.[51]

The cornerstone of this new resilience strategy is the building-scale microgrid. A microgrid is a localized, self-contained electrical network that integrates distributed energy resources (DERs), such as rooftop solar panels and battery energy storage systems, with the building's loads.[50] It can operate in two modes: connected to the main utility grid during normal times, or disconnected in a self-sufficient "island mode" during a power outage.[53] This ability to "island" is what provides true energy resilience, ensuring that critical systems—like HVAC for ventilation, lighting for safety, and power for data networks—remain operational even when the surrounding grid is down.[54]

The integration of Direct Current (DC) power within these microgrids is a critical parallel innovation that drives efficiency. A significant portion of modern building components are natively DC, including solar photovoltaics (PV), battery storage, LED lighting, computers, IoT sensors, and electric vehicle (EV) chargers. In a traditional Alternating Current (AC) building, power undergoes multiple, inefficient conversions (e.g., from DC solar panels to an AC inverter, then back to DC for a laptop charger), with energy lost at each step.[54] A DC microgrid eliminates many of these conversion losses by creating a direct DC pathway from generation to storage to load. This can improve overall system efficiency by a range of 2% to over 10%, reducing operational costs and maximizing the use of on-site renewable energy.[54]

 

4.2 A Paradigm Shift in Power: Fault-Managed Power (FMP) as a Retrofit Game-Changer

Perhaps the most disruptive and enabling technology for retrofits is Fault-Managed Power (FMP). Also known as Class 4 power, FMP was officially recognized in the 2023 National Electrical Code (NEC) under the new Article 726, signaling its maturation into a mainstream technology.[49] FMP systems use a transmitter to convert standard AC power into high-voltage DC, which is then sent over cabling in tiny, controlled "packets" or "pulses" of energy. A receiver at the other end converts this power back into the specific voltage needed by the end device.[57]

Fault-Managed Power was officially recognized in the 2023 National Electrical Code (NEC) under the new Article 726, signaling its maturation into a mainstream technology.

The system's intelligence lies in its continuous monitoring. The transmitter sends hundreds of these energy packets per second and verifies that each one has been safely received. If any fault is detected—such as a short circuit, a damaged cable, or even accidental human contact—the system intelligently stops the flow of power within milliseconds, before a dangerous amount of energy can be released.58 This makes FMP a revolutionary technology for retrofitting existing buildings for several key reasons:

  1. Installation Cost and Simplicity: Because the system is inherently safe and limits fault energy, FMP cabling does not require the expensive, rigid metal conduit mandated for traditional high-voltage wiring. Instead, it can be installed in simple, low-cost pathways like cable trays or J-hooks, similar to data cabling.[57] This drastically reduces material and labor costs. Some estimates show FMP installation costs at around $12-$15 per linear foot, compared to nearly $40 per foot for a traditional conduit run in a complex environment like a stadium.[49]

  2. Labor Requirements: The safety profile of FMP allows it to be installed by lower-cost, more widely available low-voltage or IT technicians, rather than requiring licensed, high-cost electricians for every part of the run.[57] This addresses skilled labor shortages and significantly accelerates project timelines.

  3. Flexibility and Reach: FMP systems can deliver substantial amounts of power (e.g., up to 600W per copper pair) over very long distances (up to 2 kilometers), far surpassing the 100-meter limitation of technologies like Power over Ethernet (PoE).[49] This enables a centralized power architecture where a single transmitter in a main communications room can power devices across an entire floor or even an entire building, simplifying infrastructure and reducing the need for distributed electrical closets.

  4. Ideal for Modern Loads: FMP is the perfect backbone to power the new generation of devices essential for a modern retrofit, including high-power PoE lighting, advanced ventilation controls, distributed antenna systems for 5G cellular coverage, the dense networks of IoT sensors required for a smart building, and battery-powered agile furniture.[49]

FMP is particularly transformative for adaptive reuse and historic preservation projects. The ability to "sneak" thin, flexible cables through tight spaces in old buildings without the need for destructive and costly conduit installation makes it a game-changing solution for bringing modern power infrastructure to legacy structures.[49]

 

4.3 Untethering the Workplace: Mobile Furniture and the Truly Agile Office

The final frontier of flexibility in retrofits extends to the furniture itself. To support the dynamic, ever-changing needs of hybrid teams, office design is rapidly moving toward "agile" furniture: mobile, height-adjustable desks, lightweight tables, rolling whiteboards, and modular privacy pods, all equipped with casters to allow for easy reconfiguration by the users themselves.62

An August Berres Campfire Desk: Battery-powered, supporting four simultaneous users.

The primary constraint on this flexibility has always been the need to connect to power and data, tethering workstations to fixed floor boxes or power poles. The ultimate evolution of this trend, now emerging in the market, is battery-powered furniture. At least one US manufacturer, August Berres, has developed a completely untethered, height-adjustable table on wheels that is powered by an integrated battery, capable of staying charged for a full day of use.[65]

This innovation, while still in its early stages, points toward a future where workspaces can be truly fluid. By eliminating the last physical tie to the building's infrastructure, battery-powered furniture enables maximum spatial adaptability, allowing teams to reconfigure their environment on demand without any constraints.

An August Berres Respond! desk. Battery power for USB-C and AC connections.

This collection of technologies—microgrids, DC power, FMP, and mobile furniture—forms a powerful, interconnected ecosystem. The desire for a healthy, resilient building, as detailed in Section 2, creates the demand for more power-hungry devices and complex controls. This, in turn, creates the "energy penalty" and "installation complexity" problems. A DC microgrid helps solve the energy penalty by providing efficient, resilient, and often cheaper on-site power.[50]

FMP then solves the installation complexity problem by providing a safe, cost-effective, and flexible method to distribute that power throughout the building to the very devices that the healthy building concept requires.[49]

Finally, integrating this power infrastructure with an advanced Building Management System (BMS) creates an intelligent, self-regulating platform. The BMS can monitor IAQ levels, the FMP system can report granular power consumption data for each device, and the microgrid controller can optimize on-site generation and battery storage based on both building needs and real-time utility grid pricing.[53]

In this way, the "why" of the modern retrofit (health and resilience) is made economically and technically achievable by the "how" of this integrated technology stack.

Table 4: Technology Comparison: Traditional AC vs. Fault-Managed Power (FMP) for Retrofits

 

Section 5: The Workplace as a Service: Aligning Retrofits with New Models of Demand

The technological and health-related shifts in retrofitting are not happening in a vacuum; they are a direct response to a seismic upheaval in corporate real estate strategy. The post-pandemic era has accelerated the demise of the traditional office model, characterized by long-term leases for centralized headquarters. In its place, a new paradigm has emerged: "Workspace-as-a-Service." Companies now demand flexibility, scalability, and experience-rich environments, procuring office space much like they procure cloud computing—on demand and as needed. This fundamental change in tenant behavior is reshaping the geography of demand and forcing building owners to retrofit their properties not as static assets to be leased, but as dynamic platforms for service delivery.

 

5.1 The End of the Long-Term Lease?: The Rise of the Subscription Workplace

Global demand for flex space will expand from $34.75 billion in 2023 to nearly $97 billion by 2030.

The rigid, 10-to-15-year office lease is becoming an anachronism in a world defined by economic uncertainty and hybrid work. CFOs and corporate real estate managers are increasingly prioritizing agility, leading to a dramatic surge in demand for shorter lease terms and more flexible space solutions.[40]

The median lease duration has fallen from a pre-pandemic average of six to eight years to just three to four years, while demand for very short-term leases (less than two years) has skyrocketed.[40]

This trend has fueled explosive growth in the flexible and coworking workspace sector. Global demand for flex space is now significantly higher than it was before the pandemic, with projections indicating the market will expand from $34.75 billion in 2023 to nearly $97 billion by 2030.[40]

This is no longer a niche market for startups and freelancers. Large enterprises are now major consumers of flexible space, adopting "core-and-flex" strategies. In this model, a company maintains a smaller, long-term "core" headquarters for brand identity and key collaborative functions, while utilizing a "flex" portfolio of on-demand spaces for project teams, regional hubs for remote workers, and entry into new markets.[69]

This shift mirrors the broader subscription economy, where access is valued over ownership. Just as businesses moved from buying software licenses to subscribing to Software-as-a-Service (SaaS) like Adobe Creative Cloud [70], they are now moving from owning long-term lease liabilities to subscribing to Workspace-as-a-Service. For building owners, this means they are no longer just landlords; they are service providers competing on the quality, convenience, and flexibility of their offerings.[69]

 

5.2 From CBD to Suburb: How Hybrid Work is Reshaping Real Estate Demand

Underutilized office or retail buildings in suburban locations are now prime candidates for conversion into modern, flexible workspaces.

The new model of work is not just flexible in time, but also in place. The geography of office demand is undergoing a significant decentralization.

While major Central Business Districts (CBDs) remain vital hubs for high-level collaboration and corporate presence, the daily commute to a single downtown headquarters is no longer the default for millions of workers. This has led to a massive surge in demand for high-quality, professional workspace in suburban markets and "lifestyle cities".[68]

The data on this geographic shift is stark. Across the U.S. and Canada, overall demand for flexible workspace is up 19% from pre-pandemic levels, while supply has only grown by 8%.[68] This gap is even more pronounced in specific markets that have benefited from the migration of remote workers:

  • In Miami, demand has surged by an incredible 153%, while supply has decreased slightly.[68]

  • In Raleigh, North Carolina, demand has jumped 144% against a 14% increase in supply.[68]

  • Even in established tech hubs like Seattle, demand growth of 57% has far outpaced supply growth of 8%.[68]

This trend extends to the suburbs of major metropolitan areas. In the New York City region, for example, demand for flex space grew by 38% in Fairfield County, Connecticut, and 33% in Morris County, New Jersey, between 2019 and 2024.68 This is clear evidence of companies implementing "hub-home-spoke" models, where employees can access a network of locations, including professional workspaces much closer to their homes.[72]

For the retrofitting industry, this means that the opportunities are no longer concentrated in downtown office towers. Underutilized office or retail buildings in suburban locations are now prime candidates for conversion into modern, flexible workspaces to meet this new, decentralized demand.

 

5.3 Designing for Flex: Creating Amenity-Rich, Experience-Driven Environments

To compete in the Workspace-as-a-Service market, building owners must retrofit their properties to offer far more than just empty floor space. The modern tenant, whether a large corporation or an individual member, expects a high-quality, hospitality-like experience that fosters productivity, collaboration, and well-being.[67]

Retrofits must now focus on creating a diverse ecosystem of spaces within a single building to support different work modes. This includes:

  • Private, acoustically-sound offices for focused work.

  • Open, collaborative coworking areas.

  • High-tech meeting rooms with advanced AV equipment to ensure "presence equity" between in-person and remote participants.[73]

  • Spacious event areas and lounges for community building.

  • Wellness amenities, such as fitness centers, quiet rooms, and access to natural light.[67]

Technology is the critical enabler of this experience. A successful flexible workspace requires a seamless digital layer that includes online booking platforms for desks and rooms, mobile app-based building access and service requests, and robust, high-speed Wi-Fi.[67] The physical retrofit of the building—its power, data, and HVAC systems—must be designed from the ground up to support this essential digital infrastructure.

The fundamental shift from leasing static space to providing a dynamic service has profound implications for how a building is designed and operated. This transformation elevates the landlord-tenant relationship from a passive, long-term contract to an active, ongoing partnership.

In the old model, a landlord's primary responsibility often concluded once the tenant fit-out was complete. The building was a relatively fixed asset. In the new service-oriented model, the landlord is a continuous provider, responsible for the experience within the space, which is constantly changing based on utilization and user feedback.[67]

This new role demands that the building's underlying systems be designed for continuous management, monitoring, and adaptation. It is no longer sufficient to have basic, disparate controls. This elevates the importance of a sophisticated, integrated Building Management System (BMS).

An advanced BMS, such as Schneider Electric's EcoStruxure platform, becomes the "operating system" for the entire service offering.[53] It allows the landlord (or flex space operator) to monitor real-time space utilization, dynamically manage energy consumption based on occupancy, control access and security, and provide data-driven insights back to tenants to help them optimize their own workplace strategies. Therefore, the business model shift from a simple lease to a comprehensive service directly drives the technological requirement for an advanced, integrated BMS. The retrofit must create not just a collection of physical spaces, but a manageable, data-rich, and adaptable platform for high-quality service delivery.

Table 5: Post-Pandemic Flexible Workspace Market Growth (Select U.S. & Canada Markets)

 

Section 6: Synthesis and Strategic Recommendations

The landscape of building retrofitting has been irrevocably altered. The pre-pandemic calculus, a straightforward equation of capital cost versus energy savings, has been rendered obsolete. It has been replaced by a complex, multi-variable model where the drivers of value are as much about human well-being, operational continuity, and market adaptability as they are about kilowatt-hours. The siloed projects of the past—an energy upgrade here, a seismic brace there—are giving way to a new, integrated paradigm. This new approach recognizes that a building is a complex system where health, resilience, efficiency, and flexibility are not competing priorities to be balanced, but interconnected attributes of a high-performing, future-proof asset.

 

6.1 Recalculating ROI: A Holistic Business Case for the Modern Retrofit

The financial justification for a major retrofit can no longer be based on a narrow Return on Investment (ROI) derived solely from reduced utility bills. The modern business case is a holistic one that must account for a new and more potent set of value drivers and risk mitigation factors.

New Value Drivers:

  • Tenant Attraction, Retention, and Premium Rents: In a market flooded with vacant space, buildings that are demonstrably healthy, resilient, and flexible command a significant competitive advantage. Features like superior IAQ, WELL certification, on-site power generation, and adaptable floor plans are powerful marketing tools that can lead to higher occupancy rates, faster lease-up periods, and the ability to command premium rents from tenants who value these attributes.[3]

  • Enhanced Occupant Productivity and Well-being: A growing body of evidence links healthy building features—such as improved air quality, access to natural light, and proper thermal comfort—to measurable improvements in occupant cognitive function, reduced absenteeism, and overall well-being.[19] For corporate tenants, this translates into a more productive and engaged workforce, making the building itself a tool for attracting and retaining talent.

  • New Revenue Streams: The shift to "Workspace-as-a-Service" allows building owners to move beyond collecting rent to generating direct revenue from a suite of on-demand services. This can include selling coworking memberships, renting out high-tech meeting rooms by the hour, and offering event space, creating a more diversified and resilient income model.[67]

New Risk Mitigation Factors:

  • Regulatory and Compliance Risk: As governments at all levels tighten regulations around carbon emissions (e.g., NYC's Local Law 97) and, increasingly, indoor air quality, proactive retrofitting becomes a crucial risk management tool. Investing in efficiency and health upgrades now helps owners avoid costly fines and mandatory, rushed compliance measures in the future.[3]

  • Asset Obsolescence Risk: In the current market, failure to invest is a decision to fall behind. Buildings that lack modern health features, technological infrastructure, and flexible layouts are becoming functionally obsolete. An un-retrofitted, "boring" building risks being permanently left behind, facing chronic vacancy and a terminal decline in value.[75]

  • Climate and Grid Resilience Risk: As extreme weather events and grid instability become more common, the ability to maintain operations during a power outage is a significant financial advantage. A microgrid is a form of insurance against the high costs of business interruption, data loss, and tenant disruption, providing a quantifiable return in the form of avoided losses.[51]

When these factors are included in the financial analysis, the returns on retrofitting can be extraordinary. Recent analysis shows that carefully planned retrofit programs, even on everyday "boring" commercial properties, can generate Internal Rates of Return (IRR) as high as 92%, far surpassing the returns of purely cosmetic or flagship projects.[75]

 

6.2 The Integrated Retrofit: A Unified Strategy for Health, Resilience, and Flexibility

The central conclusion of this report is that the fragmented, siloed approach to retrofitting is no longer viable. The challenges and opportunities of the post-pandemic world demand a fully integrated retrofit strategy. A single, comprehensive project must be conceived from the outset to concurrently address health, energy, resilience, and market flexibility.

The traditional linear workflow must be replaced by a collaborative, interdisciplinary approach that breaks down the barriers between architects, mechanical and electrical engineers, IT consultants, and corporate real estate strategists.

This requires a fundamental shift in the design and development process. The traditional linear workflow must be replaced by a collaborative, interdisciplinary approach that breaks down the barriers between architects, mechanical and electrical engineers, IT consultants, and corporate real estate strategists. The process should be inverted: it must begin with a deep understanding of the target market's demand for flexibility and experience (Section 5). This understanding should then inform the design of a healthy, resilient, and technologically advanced environment to meet that demand (Sections 2 & 4). Finally, the project team must select the building (or plan the adaptation of an existing one) that can best accommodate this holistic vision (Section 3).

The modern technology stack—anchored by an advanced Building Management System (BMS), a resilient DC Microgrid, a flexible Fault-Managed Power (FMP) distribution system, and agile furnishings—is the essential connective tissue that binds this integrated strategy together. It is the platform that enables a building to be healthy, efficient, resilient, and adaptable.

 

6.3 Recommendations for Stakeholders: Navigating the New Landscape

Navigating this new paradigm requires a change in mindset and strategy from all key stakeholders in the built environment.

For Developers & Building Owners:

Intelligent retrofitting can surpass the performance of many newer buildings.

  • Adopt a Whole-Life Carbon Perspective: When planning a major retrofit, the analysis must go beyond operational energy savings to include the embodied carbon of materials. A whole-life carbon assessment will provide a true picture of the project's environmental impact and should guide decisions, favoring reuse and low-carbon materials.[76]

  • Invest in the Foundational Technology Stack: View the adoption of FMP, DC microgrids, and advanced, integrated BMS platforms not as isolated costs, but as a strategic investment in the building's core infrastructure. This technology stack is the platform upon which future value—through flexibility, data analytics, and new services—will be built.

  • Embrace Flexible Business Models: The market has spoken. To capture tenant demand, owners must offer flexible solutions. This could involve partnering with established coworking operators to manage a portion of the building, or developing in-house flex space offerings to provide a tiered range of products, from single hot desks to enterprise suites.[72]

For Investors & Real Estate Investment Trusts (REITs):

  • Update Due Diligence and Asset Valuation Criteria: Traditional valuation metrics are no longer sufficient. Due diligence must now include a rigorous assessment of an asset's health performance (IAQ metrics, certifications such as WELL), its operational resilience (presence of backup power, microgrid capability), and its technological infrastructure. A low EUI is necessary but not sufficient to define a prime asset.

  • Redirect Capital to Scalable, High-Impact Retrofits: While iconic flagship projects capture headlines, the greatest financial returns and carbon savings are often found in the scalable, systematic retrofitting of the "boring" Class B and C buildings that constitute the majority of the building stock. Capital should be directed toward high-volume, high-impact measures across the portfolio where the highest IRRs can be achieved.[75]

  • Target High-Growth, Undersupplied Markets: The geographic shift in demand is a clear market signal. Investors should prioritize markets—particularly lifestyle cities and key suburban hubs—that exhibit a significant, data-supported gap between the high demand for and low supply of modern, flexible workspace.[68]

For Policymakers & City Planners:

  • Aggressively Facilitate Adaptive Reuse: Cities must act decisively to unlock the potential of underutilized office buildings. This means creating "by-right" zoning for O2R conversions in targeted districts, streamlining permitting processes, and eliminating outdated regulatory hurdles like excessive parking requirements.[10]

  • Incentivize Integrated Retrofits: Public funding and incentive programs should be redesigned to reward holistic projects. Programs modeled on Boston's Healthy and Green Retrofit Pilot, which provides funding for projects that simultaneously address health, decarbonization, and resilience, should be replicated and scaled.[77]

  • Modernize Building Codes for Health and Resilience: Codes should be updated to reflect the new scientific understanding of IAQ and disease transmission, moving toward performance-based standards like ASHRAE 241. Mandating a minimum level of operational resilience for critical facilities should also be a priority.

The era of incremental, single-issue retrofits is over. The buildings that will thrive in the coming decades will be those that are reborn through a deep, integrated transformation—emerging as healthier, smarter, more resilient, and more adaptable than ever before. For those willing to embrace this new phoenix paradigm, the opportunities for value creation and positive urban impact are immense.

 

August Berres is proud to be a participant in intelligent retrofits. Contact us for more information.

 

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