By Robert Kroon

Executive Summary

This report provides a comprehensive analysis of recent (2021-2025) successful commercial office retrofit projects across key U.S. metropolitan areas: Atlanta, San Francisco, Los Angeles, Chicago, and New York. It explicitly excludes office-to-residential or other primary use conversions, focusing solely on the modernization of existing office stock to meet evolving market demands.

The core objective is to demonstrate how strategic retrofits are not merely maintenance exercises but powerful drivers of enhanced occupancy, significant financial gains, and long-term asset value, thereby presenting a compelling argument for their increased pursuit to satisfy the projected demand for Class A space through 2031.

The commercial office market is undergoing a profound transformation, characterized by a pronounced "flight to quality." While overall vacancy rates remain elevated in many urban centers, premium Class A and "Trophy" assets are demonstrating resilience and even growth. This bifurcation underscores a critical market reality: obsolete, undifferentiated office space is struggling, while modernized, experience-centric environments are commanding tenant interest and higher rents.

Successful retrofits are strategically repositioning older assets to capture this premium demand, offering a sustainable and often more cost-effective alternative to new construction. These projects consistently highlight common success factors, including visionary design, advanced energy and smart building technologies, and a deep commitment to tenant experience and well-being. By embracing these strategies, developers and investors can unlock substantial value, mitigate "stranded asset" risks, and proactively address the impending supply gap for high-quality office space.

The Evolving Commercial Office Landscape: A New Paradigm for Class A Space

The post-pandemic era has fundamentally transformed the commercial office market, creating a new standard in which the quality and functionality of spaces are crucial. Hybrid work models and changing employee expectations have increased the demand for highly amenitized, technologically advanced, and sustainably operated environments. As a result, there is a noticeable divide in market performance.

Post-Pandemic Shifts in Office Demand and Utilization Patterns

The COVID-19 pandemic significantly accelerated remote work arrangements, a shift equivalent to 40 years of pre-pandemic growth, which consequently depressed demand for physical office space. This rapid change approximately doubled vacancy rates and negatively impacted rents and market values, particularly for Class B and C buildings.1 The initial widespread adoption of remote work led many to question the long-term viability of traditional office models.

However, recent market data indicates a stabilization and nascent recovery. National office occupancy has reached its highest level since the onset of the pandemic, averaging 61.3% of the weekly pre-pandemic occupancy on peak days.3 In key urban centers like New York City, weekly occupancy averages nearly 70%, with premier Class A buildings frequently exceeding 90% on peak days.3

This suggests that while remote work has found its place, the office still serves a vital function. The global office utilization rate further supports this trend, increasing to 54% in 2025 from 49% in 2024, with improvements observed across North America, EMEA, APAC, and Latin America.4 This consistent, albeit gradual, increase in utilization signals a return to the office, albeit under new terms.

Many organizations are strategically re-evaluating and reimagining their workspace footprints. A significant 73% of respondents in recent surveys identify portfolio optimization as a primary objective, with 55% actively reducing their overall real estate footprint.4 This often entails consolidating space while simultaneously investing in upgrading the remaining square footage.

The observed trends indicate that the initial disruption caused by remote work has largely plateaued, and a "new normal" of hybrid work is firmly establishing itself.5 This is not a complete abandonment of the office, but rather a fundamental re-evaluation of its purpose. The increased utilization rates and concerted efforts toward portfolio optimization underscore that companies are seeking less overall space, but the space they do lease must offer demonstrably higher quality and utility.

This dynamic is a primary driver of the "flight to quality" phenomenon, making strategic retrofits of existing, well-located assets particularly attractive and necessary. The negative absorption seen in Class B and C properties is not indicative of a total market collapse, but rather a strategic reallocation of demand towards superior products, a need that well-executed retrofits are uniquely positioned to fulfill.

The Widening Bifurcation between Class A/Trophy Assets and Older, Undifferentiated Stock

A pronounced bifurcation has emerged in the commercial office market, with Class A and "Trophy" assets outperforming older, undifferentiated stock. In Atlanta, for instance, the office market exhibits "Class A Strength Offset by Class B Weakness".7

Class A properties recorded robust positive absorption of 359,653 square feet in Q2 2025, while Class B assets experienced a significant decline of -345,092 square feet, highlighting the persistent disparity between premium and secondary office spaces.7

San Francisco presents a similar narrative. Despite an overall office vacancy rate of nearly 37% at the end of 2024 8, Trophy buildings in the city maintained a significantly lower vacancy rate of just 15.3% in Q1 2025.9 This stark contrast emphasizes that a granular understanding of market segmentation is crucial for identifying areas of growth and resilience. New York City's office market further reinforces this trend.

Occupied space in 5-star properties—representing the top quintile of Class A space—increased by approximately 11.5 million square feet since Q4 2019, even as the rest of the market saw a decline of 43 million square feet.1 Over the past five years, Manhattan's trophy buildings experienced a 19% increase in occupied square footage, in sharp contrast to a 9% decrease in non-trophy buildings.6

This "flight to quality" is more than a mere preference; it represents an economic imperative for businesses striving to attract and retain top talent in a highly competitive labor market. Companies are increasingly leveraging their office space as a strategic asset to foster collaboration, enhance productivity, and promote employee well-being.10 This strategic shift generates a strong and sustained demand for Class A and Trophy spaces.

Consequently, investing in retrofits becomes a direct and responsive strategy to address a proven market need, rather than a speculative venture. When the office transforms from a mere workspace into a destination that justifies a commute and actively encourages collaboration, its quality becomes paramount. Companies are demonstrating a willingness to pay a premium or consolidate their footprint for a superior environment.4

This market behavior implies that older, undifferentiated buildings, lacking modern amenities, advanced environmental controls, and flexible layouts, are increasingly becoming economically obsolete, facing the risk of being categorized as "stranded assets".12 Retrofitting offers a direct and effective pathway to transform these properties into competitive, high-value assets that meet the new, elevated standards of Class A space.

The Strategic Role of Retrofits in Repositioning Assets and Capturing Premium Demand

Retrofitting existing office space to achieve Grade A, best-in-class standards has emerged as a clear and dominant trend. This strategic imperative is driven by the critical need to comply with evolving Minimum Energy Efficiency Standards (MEES), reduce escalating operational costs, and, most importantly, attract the modern tenants who prioritize high-quality environments.13

A key advantage of retrofitting is the ability to reuse the original building structure. This approach allows for compliance with contemporary standards of energy efficiency, functionality, and sustainability without incurring the substantial expense and environmental impact associated with full demolition and new construction. Critically, it also significantly reduces the embodied carbon footprint of the project, aligning with broader environmental objectives.13 Evidence strongly suggests that enhanced amenities and superior sustainability credentials directly correlate with increased lease lengths, reduced void periods, and ultimately, compressed yields.13

Retrofits thus provide a multi-faceted strategic advantage. They are inherently environmentally responsible, embodying the principle that "the greenest building is the one already built".15 They are economically viable, offering pathways to reduced operational costs and increased asset value. Furthermore, they are highly responsive to current market demands, effectively meeting tenant expectations for quality, experience, and sustainability.

This powerful combination positions retrofits as an indispensable tool for asset repositioning, enabling property owners to transform depreciating or obsolete properties into highly desirable, future-proofed investments. This directly addresses the "flight to quality" phenomenon that defines the contemporary commercial real estate market.

The convergence of rising tenant expectations for amenities, flexibility, and sustainability, coupled with increasing regulatory pressures for energy efficiency and decarbonization, and the inherent economic benefits of reuse (such as lower embodied carbon and potentially faster project delivery compared to new construction), collectively form a compelling argument for the widespread adoption of retrofits. This is not merely about cosmetic upgrades; it represents a fundamental re-engineering of a building's performance and market appeal to ensure its competitiveness and profitability in a rapidly evolving market landscape.

Defining "Success" in Modern Office Retrofits: Beyond Traditional Metrics

The definition of "success" for office retrofits has evolved significantly, extending far beyond traditional financial returns to encompass a broader spectrum of performance indicators. Key Performance Indicators (KPIs) now play a pivotal role in science-based decision-making, emphasizing both the direct and indirect benefits of building retrofits.16

Traditional metrics such as project completion rate, cost variance, customer satisfaction score, net profit margin, and repeat business rate remain foundational for assessing project execution and immediate financial health.17 However, the scope has broadened. For commercial buildings, well-targeted retrofits have demonstrated the capacity to reduce energy use by 30% or more, often achieving relatively short payback periods.15 This operational efficiency directly contributes to long-term financial viability.

Furthermore, space utilization metrics have become indispensable for workplace leaders. These metrics provide critical insights into how much space is genuinely needed, what types of spaces are most frequently used, and how to design a more effective workplace.18 By quantifying employee behavior through metrics like space utilization rate and peak utilization rate, companies can make data-driven decisions that inform architectural design, office layout, and even amenity provision.18 Beyond space, system-level KPIs offer granular insights into building performance, covering energy use, peak demand, load shape, occupant thermal and visual comfort, ventilation, and water use, with applicability across various building types.19

The expanded understanding of "success" for office retrofits now critically includes environmental performance, particularly decarbonization, and social impact, focusing on occupant well-being and talent attraction, alongside operational efficiency derived from smart building data. This holistic perspective is paramount for achieving long-term value creation, especially as Environmental, Social, and Governance (ESG) factors increasingly influence commercial real estate valuations and tenant decision-making.

Historically, a renovation's success might have been judged solely on increased rent and occupancy. However, with heightened global awareness of climate change, a growing emphasis on employee well-being, and the persistent drive for operational cost reduction, a truly successful retrofit must deliver on multiple fronts. This necessitates the integration of advanced energy efficiency measures, smart building technologies, and human-centric design principles, which collectively drive financial success through reduced operating costs, enhanced tenant satisfaction, and increased asset value.

The KPIs used to gauge success are no longer exclusively financial; they are environmental, social, and operational, reflecting a more complex and interconnected value proposition in the modern real estate market.

Metrics for Measuring Retrofit Success: Occupancy, Financial, and Performance Gains

Measuring the success of commercial office retrofits requires a multi-dimensional approach that transcends traditional financial indicators to encompass operational efficiency, environmental performance, and occupant experience. These integrated metrics provide a holistic view of a project's impact and its long-term value proposition.

Occupancy & Utilization Metrics

The ultimate validation of a retrofit's success is its demonstrable ability to attract new tenants and retain existing ones. A prime example is SL Green's One Madison Avenue in New York City, which achieved 78.1% leased occupancy by July 2025.20 This achievement is particularly notable given the current market conditions, attracting major firms such as IBM, Franklin Templeton, and Sigma Computing, thereby signaling strong market confidence in the upgraded space.20

Similarly, the Transamerica Pyramid Center in San Francisco, following its renovation, reached 85% occupancy by the end of 2024.8 This performance significantly outpaced the broader downtown San Francisco market, which recorded a nearly 37% vacancy rate at the close of 2024.8

Beyond mere occupancy, understanding how space is actually utilized post-retrofit is critical, especially in the context of hybrid work environments. Space utilization rates, which measure the percentage of occupied space relative to total capacity, are invaluable for identifying underutilized areas and informing future design decisions.18 Workplace leaders are increasingly relying on utilization data to effectively plan hybrid programs, with a notable 90% indicating intentions to increase seat-sharing ratios.18 JLL's internal office retrofit in Los Angeles exemplifies this strategic approach, where the firm consolidated its footprint from 26,000 square feet to 14,000 square feet, showcasing effective space optimization driven by utilization insights.10

Furthermore, lease lengths and renewal trends serve as robust indicators of tenant satisfaction and their long-term confidence in the retrofitted environment. Longer lease terms and high renewal rates directly reflect a building's ability to meet evolving tenant needs and provide a superior workplace experience. For instance, the Metro Atlanta Chamber (MAC) renewed its lease at 191 Peachtree Tower through July 2037.25 This long-term commitment by a prominent organization underscores the perceived value and enduring appeal of the retrofitted asset.

The prevailing shift towards hybrid work models means that traditional, raw occupancy numbers alone are insufficient to fully gauge a retrofit's success. Metrics such as "peak space utilization rate" and "weekly/long-term space utilization patterns" 18 have become paramount for optimizing office layouts and ensuring that the space genuinely fulfills the dynamic needs of employees.

Successful retrofits do not merely fill vacant space; they create functional and desirable environments that actively support modern work styles, leading directly to enhanced tenant satisfaction and more enduring commitments. In a hybrid work paradigm, employees commute to the office for specific purposes, such as collaboration, team building, or access to specialized resources.

If a retrofitted space does not effectively support these activities, it may remain underutilized, even if technically leased. Therefore, measuring space utilization is as essential as measuring occupancy. High utilization rates, coupled with extended lease terms, provide compelling evidence that a retrofit has successfully transformed a space into a highly valued and productive environment, directly impacting tenant retention and securing long-term rental income.

Financial Performance Metrics

The financial gains derived from commercial office retrofits are increasingly intertwined with long-term sustainability and operational efficiency. While precise Return on Investment (ROI) figures for large-scale office retrofits can be complex to quantify universally, empirical data demonstrate that commercial building retrofits can achieve energy use reductions of 30% or more, often with relatively short payback periods.15 For example, even targeted lighting upgrades can yield substantial annual savings, as evidenced by King GMC Auto saving $40,000 annually and Crossroads Church saving $70,578 annually through such improvements.27

Operational cost savings, particularly in energy and maintenance, are a direct and tangible benefit of energy efficiency upgrades. Improvements to HVAC systems, lighting infrastructure, and the building envelope directly translate into reduced ongoing operating expenses.15 A compelling illustration is the State of Illinois's projection to save over $900 million over thirty years by avoiding deferred maintenance and high operating expenses at the James R. Thompson Center, a direct result of Google's extensive renovation of the property.29

Furthermore, renovation work has been consistently shown to positively influence an office building's value. This appreciation is often driven by a decrease in vacancy rates and an increase in achievable rents.31 Sustainable retrofitting, in particular, can drive significant value creation through reduced operating costs, enhanced asset value, and improved occupancy rates, frequently leading to what is termed "green-premiums" on rental incomes.14

A critical financial benefit of retrofits is the mitigation of "stranded asset" risk. Older, inefficient buildings face a growing threat of becoming economically obsolete due to declining tenant demand and increasingly stringent regulatory requirements.12 Retrofits serve as a direct and effective strategy to counteract this risk, transforming these properties into high-performing, competitive assets that align with modern market demands.14

JLL estimates that Commercial Real Estate (CRE) owners will require nearly US$2 trillion in debt financing over the next two decades, specifically for retrofitting office properties and addressing the existing supply gap for quality space, underscoring the significant financial imperative and opportunity in this sector.12 The ability to secure innovative financing mechanisms, such as Commercial Property Assessed Clean Energy (C-PACE) financing 12, further highlights the recognized financial viability and environmental benefits inherent in these projects.

The financial gains from retrofits are increasingly predicated on long-term sustainability and operational efficiency. The "green premium" on rents and the enhanced asset value are not merely superficial benefits; they are rooted in the tangible advantages of lower operating costs, compliance with evolving regulatory frameworks (such as New York City's Local Law 97 34), and the creation of healthier, more productive environments for tenants.

The market's increasing valuation of efficiency and sustainability means that buildings that consume less energy, offer superior indoor air quality, and provide modern amenities will naturally command higher rents and attract more stable, long-term tenants. This directly translates to increased net operating income and, consequently, a higher overall asset valuation. Moreover, by bringing older buildings into compliance with new energy regulations, retrofits effectively prevent them from becoming financially unviable or "stranded assets," thereby preserving and enhancing portfolio value.

Environmental, Social, and Governance (ESG) Metrics

Environmental, Social, and Governance (ESG) factors have transitioned from being merely desirable attributes to fundamental drivers of retrofit success and market competitiveness. Decarbonization efforts, often mandated by regulations such as New York City's Local Law 97, are compelling property owners to undertake deep energy retrofits.34 These retrofits are crucial for achieving ambitious energy saving goals.19

For instance, New York City has set targets to reduce greenhouse gas emissions from city-owned buildings by 40% by 2025 and 80% by 2050, with deep energy retrofits identified as a key strategy to achieve these objectives.36 The NYC Retrofit Accelerator program alone is projected to cut one million metric tons of CO2 and generate $360 million in annual utility bill reductions by 2025.37

Simultaneously, a significant focus has been placed on improving Indoor Air Quality (IAQ) and enhancing occupant well-being, which represents a critical social component of ESG. The integration of smart building technologies, such as CO2 sensors and demand-controlled ventilation (DCV), plays a vital role in monitoring and improving air quality, while also enabling the early detection of faulty equipment.15

Retrofits are increasingly designed to create environments that actively promote employee welfare, incorporating amenities such as dedicated nap rooms, full-service kitchens, and accessible outdoor seating areas.39 A notable example is One Madison Avenue, which features a state-of-the-art HVAC system designed to circulate 100% fresh air, directly contributing to a healthier indoor environment.24

Furthermore, sustainability certifications and compliance with environmental standards are becoming paramount. Retrofits enable facilities to preserve functional elements while strategically improving underperforming systems, aligning with broader objectives such as cost savings, regulatory compliance, enhanced resilience, and overall ESG performance.15 For example, the Cooper Carry Atlanta office retrofit specifically aimed to achieve the highest level of LEED certification, demonstrating a commitment to environmental stewardship and high-performance design.40

The increasing importance of ESG factors means they are no longer merely "nice-to-haves" but are fundamental drivers of retrofit success and market competitiveness. Decarbonization efforts, spurred by stringent regulations like Local Law 97 in NYC, are necessitating deep energy retrofits.34 Concurrently, the emphasis on occupant well-being—encompassing factors like IAQ, thermal comfort, and a rich suite of amenities—directly influences a company's ability to attract and retain talent, making it a critical social dimension of ESG.

As regulatory requirements become stricter and corporate sustainability objectives gain importance, buildings that do not comply with these changing standards may face financial penalties or become less appealing to a growing number of environmentally conscious tenants.. Retrofits that strategically integrate advanced energy efficiency measures and smart building technologies directly address these environmental and social imperatives, making the building more attractive to tenants and contributing to corporate ESG targets. This, in turn, significantly enhances the building's marketability and long-term financial viability.

Case Studies: Exemplary Commercial Office Retrofits (2021-2025)

The following case studies illustrate successful commercial office retrofits across major U.S. cities, demonstrating how strategic investments in existing assets can yield significant occupancy and financial gains, and serve as models for future development. These projects highlight the "flight to quality" and the evolving demands of Class A tenants.

Atlanta: 191 Peachtree Tower

Project Background and Strategic Rationale:

Retrofit Spot Light

191 Peachtree Tower, a 50-story postmodern skyscraper completed in 1990 and designed by renowned architects Philip Johnson and John Burgee, stands as a high-profile, iconic landmark in downtown Atlanta.41 Recognizing its enduring architectural significance and strategic location, the current owners, Banyan Street Capital and Oaktree Capital Management, initiated a substantial renovation in 2025.

This proactive investment aims to strategically reposition the asset and capitalize on emerging signs of a rebounding downtown office market.41 The overarching strategic rationale is to ensure the building maintains its status as "the most accessible luxury office experience in Atlanta" 41, thereby attracting and retaining high-caliber tenants.

Scope of Renovation and Key Architectural/Design Firms:

The comprehensive renovation focuses on enhancing key common areas and introducing modern amenities. This includes a significant redesign of the seven-story main atrium and lobby, with particular attention to improving the integration of the space with the connected Ritz-Carlton hotel and its ground-level restaurants, Alma Cocina and Land of a Thousand Hills.41 The upgrades extend to new facades, integrated seating, and modern lighting throughout these public areas.

Additionally, the owners plan to add approximately 24,000 square feet of speculative office suites on the 22nd floor, offering ready-to-occupy, high-quality spaces.41 For the first time in the building's history, naming and signage rights for its iconic double crown are being offered, a move designed to enhance visibility and revenue.41

Local architecture firm Cooper Carry was commissioned for the redesign, with Anita Summers, a principal at Cooper Carry's Johnson Studio, emphasizing that the design plan "enhances the space to serve more tenants and guests, while preserving the features that make 191 Peachtree such a distinctive and inspiring place to work".41 Notably, Cooper Carry itself is a long-standing tenant within the building, occupying 50,208 square feet.40 Construction commenced in summer 2025 and is slated for completion by spring 2026.41

Occupancy and Leasing Performance:

As of June 2025, 191 Peachtree Tower is 64% leased, with Hall Booth Smith, a law firm, being its largest tenant occupying 77,362 square feet.41 Historical data indicates that the building's occupancy rates had previously fluctuated, dropping to as low as 20% in the early 2000s before rebounding to over 80%.43

The current renovation is strategically aimed at solidifying and further increasing the present 64% leasing performance. Evidence of this strategy's early success includes Banyan Street Capital securing over 40,000 square feet in office leases in January 2024, attracting a mix of law firms and non-profit organizations. Two of the three speculative suites on the 40th floor were leased quickly, demonstrating demand for pre-built, high-quality spaces.44 A significant vote of confidence came from the Metro Atlanta Chamber (MAC), which renewed its lease on the 34th floor through July 2037, signaling a long-term commitment to the location and the building's future.25

Financial and Market Impact:

The owners' decision to "invest back into the asset" 44 signifies a substantial financial commitment aimed at securing long-term value. Zac Gruber, President of Banyan's Office Division, reported "positive tailwinds in the leasing market," with an observable increase in tours and proposal activity, alongside renewed tenant interest in downtown Atlanta.41

Banyan's proactive speculative suite program has proven particularly effective, contributing "as much as 30% of the new leasing absorption in submarkets where we are most aggressive," clearly demonstrating the strategy's payoff at 191 Peachtree.44 The property is further characterized as "one of the best capitalized office properties in downtown with material term left on our loan and ample reserves built up to deal with future leasing" 44, positioning it strongly for future market dynamics.

The retrofit of 191 Peachtree is a proactive and strategic investment in a trophy asset situated within a submarket that has faced recent challenges. The explicit focus on enhancing the tenant experience through upgraded common areas and the provision of speculative suites directly addresses the pervasive "flight to quality" trend. The long-term lease renewal by a prominent organization like the Metro Atlanta Chamber and the rapid leasing of speculative suites are strong indicators that these targeted retrofits are yielding positive results in a competitive environment, thereby justifying the significant financial outlay.

The historical fluctuation in occupancy rates, from a low of 20% to a peak over 80% and a current 64%, underscores the dynamic nature of market recovery and the continuous necessity of investment to maintain Class A status and attract new tenants, especially after the departure of some high-profile occupants.41

The explicit goal of the renovation is to maintain the building's "luxury office experience" 41 and capitalize on "positive tailwinds".41 The market's positive response, evidenced by the long-term renewal and quick leasing of new spaces, suggests that even in a high-vacancy market, high-quality, modernized space in iconic buildings can attract and retain tenants, leading to increased occupancy and secure long-term revenue streams.

San Francisco: Transamerica Pyramid Center

***Transamerica Pyramid Center, San Francisco***

Project Background and Strategic Rationale:

The Transamerica Pyramid Center, a landmark complex encompassing the iconic 48-story Transamerica Pyramid (completed in 1972), Two Transamerica, Three Transamerica, and the renowned Redwood Park, is undergoing a significant redevelopment.45 This ambitious project aims to infuse "new lease of life" into this highly recognizable landmark and simultaneously expand and upgrade its adjacent buildings to contemporary, high-design office standards.45 The strategic rationale behind this extensive retrofit is to revitalize the entire site, transforming it into a vibrant new destination within the Financial District.

The vision is to reimagine the office environment as a "living space," with a profound emphasis on comfort, hospitality, and flexibility for both tenants and guests.45 This initiative is a direct response to, and a prime example of, the broader trend where "Trophy Buildings" continue to attract tenants despite the prevailing high overall office vacancy rates in San Francisco.9

Scope of Renovation and Key Architectural/Design Firms:

The comprehensive redevelopment, led by Foster + Partners, includes critical structural strengthening measures to enhance seismic safety, a paramount concern in San Francisco.46 The project also involves upgrading the adjacent Three Transamerica building, revitalizing and restoring the historic Redwood Park, and strategically integrating all three buildings through a series of ground-level interventions.45 The reimagined office space is designed to offer hospitality-grade amenities, including an exclusive on-site private members club (CORE), dedicated wellness floors, a sophisticated lounge, and state-of-the-art conferencing facilities, all boasting panoramic city views.45

Furthermore, the ground level will feature carefully curated retail, cafes, and restaurants, enhancing the overall tenant and visitor experience. Olson Steel played a crucial role in the structural strengthening, specifically retrofitting the spire cross bracing and reinforcing columns to ensure seismic resilience.46

Occupancy and Leasing Performance:

The Transamerica Pyramid, which officially reopened in September 2024, achieved an impressive 85% occupancy by the end of 2024.8 This achievement stands in stark contrast to the challenging market conditions in downtown San Francisco, where the overall office vacancy rate was nearly 37% at the close of 2024.8

Trophy buildings, a distinct subset of Class A properties that includes the Transamerica Pyramid, are demonstrating significant positive momentum, with a notably lower vacancy rate of just 15.3% as of Q1 2025.9 This performance underscores the strong demand for premium, high-quality office environments, even in a broader market characterized by elevated vacancies.

Financial and Market Impact:

Michael Shvo's substantial $1 billion investment in the plaza highlights the significant financial commitment underpinning this ambitious retrofit.8 While the investment is considerable, Trophy buildings are proving highly attractive to tenants, partly due to significantly lower rents compared to pre-pandemic levels.

In Q1 2025, Trophy rents ranged from $60 to $80 per square foot, a notable reduction from over $100 per square foot in Q4 2019.9 This adjustment has made premium office space accessible to a wider range of businesses, from large corporations to smaller firms seeking a prestigious downtown address.

However, the appeal of these buildings extends beyond reduced rent; the comprehensive suite of amenities and hospitality-driven offerings are key drivers of their success.9 The redevelopment of what might otherwise be considered low-value space is also anticipated to increase the value of the remaining office building stock across the city and contribute to higher property and sales tax revenues for San Francisco.47

The Transamerica Pyramid Center serves as a compelling illustration of how strategic investment in iconic, well-located assets, combined with comprehensive retrofits—including essential seismic upgrades in a high-risk region like San Francisco 48—can create a premium product that defies broader market downturns. The high occupancy rate achieved post-retrofit, despite a challenging market, clearly indicates that tenants are willing to prioritize quality, experience, and safety, even if it means securing space at a reduced, yet still premium, rental rate.

This strategic approach leverages the building's inherent brand equity and transforms it into a modern, highly competitive "Trophy" asset. The significant headwinds faced by San Francisco's office market, characterized by high vacancy rates, make the Transamerica Pyramid's high occupancy post-retrofit a powerful testament to the dominance of the "flight to quality" trend.8

Tenants are prioritizing buildings that offer superior amenities, cutting-edge design, and enhanced safety features. The adjusted, yet still premium, rents act as an incentive, but the fundamental value proposition lies in the modernized, experience-rich environment. This project demonstrates that even in a distressed market, meticulously executed retrofits of prime assets can achieve remarkable success.

Chicago: James R. Thompson Center (Google Renovation)

Project Background and Strategic Rationale:

The James R. Thompson Center, an iconic 17-story postmodern building designed by Helmut Jahn, was formerly a state-owned government building situated in Chicago's Loop business district.41 For many years, the building was perceived as inefficient and burdened by a backlog of maintenance needs amounting to hundreds of millions of dollars.50 Its sale and subsequent renovation by Google represent a transformative public-private partnership.

The strategic rationale for the State of Illinois was to divest a costly asset and consolidate various leases, thereby achieving significant long-term savings.29 For Google, the acquisition provided an opportunity to establish a substantial new presence in the Central Loop and create a flagship Chicago headquarters.29

Scope of Renovation and Key Architectural/Design Firms:

The extensive overhaul of the Thompson Center involves a dramatic transformation of its exterior, replacing the original salmon and light blue facade with a new, glassy, and transparent look.50 The renovation plans also include the creation of a large outdoor plaza and a soaring atrium designed to house new restaurants, retail establishments, and various other amenities.50 Helmut Jahn's firm, the original architect, is serving as both the design architect and architect of record for Google's ambitious project.41

The renovation's primary objective is to transform the James R. Thompson Center into a state-of-the-art Class A office building.30 Construction commenced in 2024 50 and is anticipated to be completed in 2027 50, although some sources suggest a completion as early as 2026.53 A crucial aspect of the project is that the CTA station, which is integrated into the building, will remain operational throughout the construction period, minimizing disruption to public transit.52

Anticipated Occupancy and Financial Gains:

Google intends to occupy the building immediately upon the completion of the renovation.29 While the precise number of employees Google will house in the building remains undisclosed, the company had over 1,800 employees in its Fulton Market district offices when the deal was finalized.30

Google is also considering leasing portions of the upper floors, potentially up to 400,000 square feet, to other office tenants, which would allow for future expansion as needed.50 The financial benefits for the State of Illinois are substantial: the state received $105 million for the purchase (comprising $30 million in cash and the transfer of a $75 million property at 115 S. LaSalle Street) and is projected to save over $900 million in taxpayer money over the next thirty years by avoiding a significant backlog of deferred maintenance and consolidating various private Loop leases.29

Catalytic Impact on the Downtown Loop Market:

The renovation of the Thompson Center is widely regarded as a pivotal development that is "driving the narrative in the central Loop" and is expected to "reinvigorate this important, economic center".29 City officials and developers anticipate that the influx of new residents from nearby office-to-residential conversions, coupled with thousands of Google employees arriving in the Loop, will significantly boost overall office demand and stimulate the growth of new restaurants, retail, and neighborhood amenities, thereby restoring the pre-pandemic vibrancy to the area.50

The Thompson Center retrofit stands as a powerful testament to how a strategic public-private partnership can transform a challenging, high-cost, and underperforming public asset into a catalytic private sector investment. The substantial financial savings realized by the state, combined with Google's commitment to establishing a major new headquarters, underscore the immense value proposition inherent in such retrofits for both public and private entities.

This project goes beyond a single building; it serves as a crucial anchor for revitalizing an entire urban district, illustrating the significant ripple effect that successful, high-profile retrofits can create.The Thompson Center had long been a financial drain on state resources.29 Google's commitment to a complete renovation, transforming it into a Class A office building 30, not only alleviates this burden—saving over $900 million for taxpayers 29—but also injects significant economic vitality into the Loop.50

This creates a positive feedback loop: Google's prominent presence is expected to attract other businesses and amenities, consequently increasing demand for surrounding office space. This project powerfully exemplifies how retrofits can deliver a win-win scenario for public finance and broader urban revitalization, extending benefits far beyond the immediate property.

Los Angeles: JLL's Downtown LA Office & Gensler LA Transformation (Internal Retrofits)

Project Background and Strategic Rationale:

The internal office renovations undertaken by leading firms such as JLL and Gensler in Los Angeles, while not speculative market retrofits for external tenants, serve as invaluable case studies. These projects offer critical insights into the evolving demands of modern Class A tenants and exemplify best practices in contemporary office design. Both JLL and Gensler initiated these transformations driven by the imperative to adapt to prevailing hybrid work patterns, enhance the overall employee experience, and optimize space utilization within their corporate footprints.4

Scope of Renovation and Key Architectural/Design Firms:

Gensler LA Transformation: Gensler's renovation of its own office at 500 South Figueroa Street was conceived to better support a "renewed work-lifestyle" for its employees.54 The design ethos centered on creating a "hospitality-infused experience," offering a diverse array of work settings complemented by frictionless technology tools.54

The new layout incorporates ergonomic seating, focused work pods for concentration, soft seating booths for informal collaboration, versatile sit/stand desks, and communal worktables. Specialized spaces include client-ready conference rooms with advanced technology, flexible cabins, single-person focus rooms, larger "Den" spaces for social or collaborative use, and a dedicated "Reading Room" designed as a call- and talk-free zone. The office also prominently features artwork created by local Los Angeles artists throughout its huddle and conference rooms.54

New York City: One Madison Avenue

Project Background and Strategic Rationale:

One Madison Avenue stands as an ambitious adaptive reuse project in Manhattan, meticulously transforming an existing building into a premier Class A office tower. This complex undertaking also thoughtfully respects its historic neighbor, the landmarked Napoleon LeBrun–designed Metropolitan Life Insurance Company Tower.34

The strategic rationale behind this extensive retrofit was multifaceted: to capitalize on the building's prime location overlooking Madison Square Park and, crucially, to meet the stringent emissions targets mandated by New York City's Local Law 97.34 The project is widely recognized as the "most ambitious adaptive reuse project in New York City" 23, setting a new benchmark for urban revitalization.

Scope of Renovation and Key Architectural/Design Firms:

The KPF design team, in close collaboration with structural engineers Severud Associates and the client, SL Green (the same acclaimed team responsible for the successful One Vanderbilt project), executed a comprehensive renovation. This involved meticulously renovating the Alabama limestone-clad podium of the existing structure, inserting an entirely new core, and constructing a new Class A office tower directly atop the revitalized base.34

The structural engineering feat included selectively reinforcing existing columns and ingeniously transferring the weight of the new tower via an exposed steel truss.34 The project also incorporated new elevator banks and significantly improved building systems throughout.

The amenities, meticulously designed by Rockwell Group and Vocon, are extensive and high-end, featuring Le Jardin Sur Madison, a spectacular, unique event space and rooftop garden; La Tête d'Or by Daniel Boulud, a premium dining experience; The Commons tenant lounge; Chelsea Piers Fitness; and a curated selection of retail offerings including Sweetgreen, Alidoro, and Los Tacos No. 1.22 Environmental performance was a key consideration, with the building boasting a state-of-the-art HVAC system that circulates 100% fresh air and massive floor-to-ceiling windows designed to maximize natural daylight.24 Notably, the project was completed three months ahead of its ambitious schedule.34

Occupancy and Leasing Performance:

As of July 16, 2025, One Madison Avenue has achieved a robust 78.1% leased occupancy, following the recent signing of a 64,077 square foot lease with Sigma Computing.20 The building's tenant roster includes a prestigious array of major companies, such as IBM, Franklin Templeton, Coinbase, Flutter Entertainment, and Palo Alto Networks.22

SL Green has demonstrated strong leasing momentum across its Manhattan portfolio, having signed 1.26 million square feet of Manhattan office leases in the first half of 2025, with an additional 1.0 million square feet currently in the pipeline for advanced discussions.22 This accelerated leasing activity in Midtown South, particularly for One Madison Avenue, indicates strong market acceptance and demand for the property's high-quality offerings.22

Financial and Market Impact:

Architectural Record lauded One Madison Avenue as an "adaptive reuse success story" and a potential "road map for the effective repositioning of similar properties across the metropolis".34 The building's strong leasing performance and its ability to attract a diverse and prestigious group of tenants unequivocally demonstrate significant financial gains and robust market validation for the extensive retrofit investment.22 This project exemplifies how a comprehensive retrofit can deliver exceptional performance across economic, environmental, and cultural dimensions.34

One Madison Avenue serves as a benchmark for complex, large-scale urban retrofits that effectively create new Class A inventory from existing structures. Its success, characterized by high occupancy rates and a prestigious tenant roster, is directly attributable to its ability to integrate cutting-edge design, advanced building systems (particularly for air quality and energy efficiency), and a comprehensive suite of amenities.

The project's strict adherence to New York City's Local Law 97 emissions targets 34 further underscores the increasing importance of regulatory compliance as a critical driver of both financial viability and market appeal in dense urban environments. New York City's office market is highly competitive, marked by a pronounced "flight to quality".6 One Madison Avenue's ability to achieve high occupancy and attract major tech and finance tenants, despite being an "adaptive reuse" project, powerfully demonstrates that deep retrofits can indeed create highly desirable Class A space.

The project's success is rooted in its holistic approach: leveraging its prime location, integrating advanced technology (such as its 100% fresh air HVAC system and abundant natural daylighting), offering extensive amenities, and proactively meeting stringent sustainability mandates. This makes it a compelling model for future investments seeking to capture premium demand in competitive urban markets.

***Table: Key Commercial Office Retrofit Case Studies (2021-2025)***

Commonalities Among Successful Retrofit Projects

The analysis of recent successful commercial office retrofits across major U.S. cities reveals several compelling commonalities. These recurring themes provide a strategic blueprint for future investments aimed at repositioning assets to meet the escalating demand for Class A space.

Visionary Design and Architectural Excellence

A distinguishing feature of the successful retrofits is the involvement of well-respected, often iconic, architectural and design firms. Cooper Carry in Atlanta 41, Foster + Partners in San Francisco 45, Helmut Jahn's firm in Chicago 41, Gensler in Los Angeles 10, and KPF in New York City 34 are all prominent names in the industry. This consistent engagement of top-tier talent underscores a fundamental understanding that high-quality design is paramount. These firms are not merely executing cosmetic upgrades; they are reimagining the building's functionality, aesthetics, and overall experience.

For instance, Cooper Carry's redesign of 191 Peachtree aims to enhance the space while preserving its distinctive features.41 Foster + Partners' work on the Transamerica Pyramid is giving a "new lease of life" to a recognizable landmark.45 Helmut Jahn's firm is transforming the Thompson Center with a new glassy exterior and a soaring atrium.50 This commitment to visionary design ensures that the retrofitted properties not only meet contemporary standards but also possess a unique identity and enduring appeal, differentiating them in a competitive market.

Advanced Energy and Smart Building Upgrades

A critical commonality among successful retrofits is the comprehensive integration of advanced energy efficiency measures and smart building technologies. These upgrades are not just about compliance; they are about optimizing operational costs, enhancing occupant comfort, and meeting stringent sustainability targets.

Common interventions include sophisticated HVAC systems, energy-efficient lighting, Building Automation Systems (BAS) upgrades, and demand-controlled ventilation (DCV) tied to CO2 sensors.15 More advanced systems feature air handlers with variable frequency drives (VFDs) and energy recovery ventilators.15

The focus on decarbonization is evident, with initiatives like New York's RetrofitNY Program supporting scalable solutions for electrification and decarbonization.13 One Madison Avenue, for example, boasts a state-of-the-art HVAC system that circulates 100% fresh air, alongside massive floor-to-ceiling windows for abundant natural daylight.24 These technical upgrades directly address operational efficiency, reduce the environmental footprint, and contribute to a healthier indoor environment, all of which are increasingly valued by modern tenants.

Tenant-Centric Experience and Amenity-Rich Environments

The paradigm shift in office demand mandates that successful retrofits prioritize the tenant experience, transforming traditional workspaces into vibrant, amenity-rich environments. A consistent theme across these projects is the creation of "hospitality-infused" designs that offer diverse work settings and frictionless technology.54 This includes flexible layouts with unassigned seating, private spaces for focused work or confidential calls, and a variety of collaborative zones like soft seating booths, communal tables, and "huddle rooms".4

Beyond the workspace itself, there is a strong emphasis on comprehensive amenities that support employee well-being and foster a sense of community. This often includes enhanced food and beverage offerings, such as premium cafes and restaurants integrated into the building.22 Many retrofits incorporate wellness components, such as fitness centers, outdoor spaces like loggias or rooftop gardens, and even dedicated "nap rooms" or relaxation areas.10 The Transamerica Pyramid Center, for instance, features a private members club and dedicated wellness floors.45 The James R. Thompson Center will include a soaring atrium with restaurants and retail.50 These amenity enhancements are crucial for attracting and retaining talent, making the office a desirable destination rather than just a place of work.

Flexibility and Support for Hybrid Work Models

In response to the widespread adoption of hybrid work, successful retrofits are designed with inherent flexibility to accommodate diverse work styles and fluctuating occupancy patterns. This involves moving away from traditional assigned seating to more agile, unassigned arrangements.10 The creation of varied "space typologies" allows employees to choose environments best suited for their tasks, whether it's a focused work pod, a collaborative meeting room, or a casual lounge area.54

JLL's internal office retrofit, for example, consolidated its footprint while introducing private spaces and an outdoor loggia, demonstrating how strategic space optimization can support hybrid models.10 Gensler's transformation of its own LA office serves as a "prototype for the future of work," emphasizing choice-based flexibility and integrated technology to support a wide range of work modes.54 This adaptability ensures that the retrofitted space remains relevant and efficient as work patterns continue to evolve.

Data-Driven Decision Making and Performance Monitoring

Modern retrofits increasingly leverage data to inform design, optimize operations, and measure success. Comprehensive energy audits are a foundational step, revealing inefficiencies in lighting, HVAC, and building envelope systems, and identifying opportunities for load reduction.15 Beyond energy, space utilization metrics are crucial for understanding actual occupancy patterns, informing decisions on office layout, and even influencing real estate portfolio strategies.4

The NYC Retrofit Accelerator, for instance, uses extensive datasets from building energy benchmarking to identify and prioritize upgrade opportunities.37 This data-driven approach allows for targeted interventions, measurable improvements, and continuous optimization of building performance, contributing directly to both financial gains and tenant satisfaction.

Strategic Location and Leveraging Iconic Status

Many of the highlighted successful retrofits are situated in prime, often central, urban locations and involve buildings with iconic or historic architectural significance. 191 Peachtree Tower boasts an "iconic double crown" in downtown Atlanta.41 The Transamerica Pyramid is a "recognizable landmark" in San Francisco's Financial District.45 Chicago's James R. Thompson Center is a "quirkiest," "iconic" structure in the heart of the Loop.50 One Madison Avenue is in a "prime location" overlooking Madison Square Park in Manhattan.23

Retrofitting these strategically located, well-known buildings allows developers to leverage existing brand equity and architectural heritage. This approach often makes these properties highly desirable to tenants seeking a prestigious address and a unique, character-rich environment that new construction cannot replicate. The inherent value of location and established identity provides a strong foundation for retrofit success.

Financial Incentives and Public-Private Partnerships

The scale and complexity of deep retrofits often benefit from, or necessitate, various forms of financial incentives and strategic partnerships. The James R. Thompson Center renovation in Chicago is a prime example of a successful public-private partnership, where the State of Illinois divested a costly asset to Google, resulting in significant taxpayer savings and a catalytic private investment in the Loop.29

Emerging financing mechanisms like Commercial Property Assessed Clean Energy (C-PACE) are also gaining traction, providing long-term, fixed-rate loans for energy efficiency and clean energy upgrades.12 Additionally, cities like New York and San Francisco are implementing tax incentives and streamlined approval processes for retrofits, recognizing their broader urban benefits.1 These financial and governmental supports can significantly improve the economic viability of retrofit projects, encouraging investment in older building stock.

The Persuasive Argument: Why Retrofits are Essential for Meeting Class A Demand (2025-2031)

The confluence of evolving tenant demands, persistent market bifurcation, and limited new construction pipelines creates a compelling and urgent case for prioritizing commercial office retrofits to meet the projected demand for Class A space between now and 2031. Retrofits are not merely a viable option; they are a strategic imperative for long-term portfolio health and urban vitality.

Persistent "Flight to Quality" and Market Bifurcation

Market data consistently demonstrates a pronounced "flight to quality" across major U.S. cities. While overall office vacancy rates remain elevated, Class A and "Trophy" assets are exhibiting resilience and even growth, while older, undifferentiated Class B and C properties continue to struggle with high vacancies and negative absorption.1 For example, Atlanta's Class A properties saw robust positive absorption in Q2 2025, while Class B declined.7 San Francisco's Trophy buildings boast significantly lower vacancy rates (15.3% in Q1 2025) compared to the city's overall 37% vacancy.8 New York City's 5-star properties have seen occupied space grow by 11.5 million square feet since Q4 2019, contrasting sharply with a 43 million square foot decline in the rest of the market.1

This trend is not cyclical but structural, driven by a fundamental shift in how companies view and utilize their office space. The office is no longer just a cost center but a strategic asset for talent attraction, collaboration, and culture. Consequently, only best-in-class, experience-centric environments will command premium rents and high occupancy. Retrofits provide the most direct and sustainable pathway to transform existing assets into this coveted Class A inventory.

Limited New Construction Pipeline

The current construction pipeline for new office space is significantly constrained across many major markets. In Atlanta, for instance, no new office space was delivered in Q2 2025, and the construction pipeline remained stable but markedly down (565,367 sq. ft.) from previous years (1.57 million sq. ft. in Q2 2024).7 Chicago's post-2000 office properties have shown sustained strength, but positive absorption has slowed due to limited availability and a constrained construction pipeline.62

Similarly, New York City has seen few new office building projects, contributing to the growing interest in adaptive reuse.2 This limited new supply, coupled with the ongoing demand for high-quality space, means that retrofits are essential to bridge the impending supply gap for Class A inventory. Relying solely on new construction will be insufficient to meet the market's evolving needs between now and 2031.

Multifaceted Benefits of Retrofits

Pursuing retrofits offers a compelling array of benefits that extend beyond simply modernizing a building:

Enhanced Occupancy and Lease Stability: Successful retrofits directly lead to increased tenant attraction and retention, as evidenced by the high occupancy rates of projects like One Madison Avenue (78.1% leased) and the Transamerica Pyramid Center (85% occupied).8 The ability to secure longer lease terms and higher renewal rates, as seen with the Metro Atlanta Chamber's long-term commitment to 191 Peachtree 26, translates into more stable and predictable revenue streams.
Significant Financial Gains: Retrofits can deliver substantial operational cost savings, particularly through energy efficiency upgrades that reduce energy use by 30% or more with short payback periods.15 These savings directly boost net operating income. Furthermore, renovation work positively increases asset value, often leading to "green premiums" on rental incomes.14 The State of Illinois's projected $900 million in taxpayer savings from the Thompson Center renovation exemplifies the immense financial upside.29
Mitigation of "Stranded Asset" Risk: As regulations tighten and tenant preferences shift, older, inefficient buildings face a significant risk of becoming economically obsolete or "stranded assets".12 Retrofits are the most effective strategy to transform these properties into high-performing, competitive assets, thereby protecting and enhancing portfolio value.14 JLL estimates that nearly US$2 trillion in debt financing will be required over the next two decades to retrofit office properties and close the supply gap, underscoring the financial imperative to avoid stranding risk.12
Sustainability and ESG Alignment: Retrofits are inherently more sustainable than new construction, significantly reducing embodied carbon by reusing existing structures.13 They enable compliance with increasingly stringent environmental regulations, such as NYC's Local Law 97 34, and contribute to corporate ESG goals through reduced GHG emissions and improved indoor air quality.24 This alignment with sustainability mandates and corporate values makes retrofitted buildings highly attractive to a growing segment of tenants.

Policy Support and Financial Innovation

Governments and financial institutions are increasingly recognizing the strategic importance of retrofits. San Francisco is implementing legislation to improve seismic safety and provide clear retrofit standards.48 Los Angeles has expanded its Adaptive Reuse Ordinance, offering faster approvals and more flexibility for older buildings.66 New York City's programs, like the NYC Retrofit Accelerator, provide guidance and incentives for energy efficiency upgrades, aiming for significant CO2 reductions and utility bill savings.37

The M-CORE program in Manhattan supports renovation of office space to create high-quality environments.6 Innovative financing options, such as C-PACE, are emerging as flexible solutions to fund these projects, enhancing the capital stack and lowering costs.12 This growing ecosystem of policy support and financial innovation further de-risks and incentivizes retrofit investments.

Conclusions and Recommendations

The commercial office market is undergoing a fundamental transformation, demanding a strategic pivot from traditional development models. The pervasive "flight to quality" means that only Class A and Trophy assets are consistently attracting and retaining tenants, while older, undifferentiated stock faces escalating vacancy rates and obsolescence. With a limited new construction pipeline, the market cannot solely rely on new builds to meet the future demand for high-quality space between now and 2031.

Key Conclusions:

Retrofits are the primary mechanism to meet Class A demand: The case studies from Atlanta, San Francisco, Chicago, Los Angeles, and New York unequivocally demonstrate that strategic retrofits can successfully transform existing properties into highly desirable, competitive Class A office space. These projects achieve high occupancy, attract prestigious tenants, and generate significant financial returns.
Success is multi-dimensional: Beyond traditional financial metrics, successful retrofits deliver substantial gains in energy efficiency, occupant well-being, and long-term asset value, aligning with critical ESG objectives.
Commonalities provide a blueprint: The recurring themes of visionary design, advanced energy and smart building technologies, tenant-centric amenities, flexibility for hybrid work, data-driven decision-making, and leveraging strategic locations/iconic status offer a clear roadmap for future retrofit projects.
Mitigation of stranded asset risk: Investing in retrofits is a proactive and essential strategy to prevent older buildings from becoming economically obsolete due to changing market demands and increasing regulatory pressures.

Recommendations for Pursuing More Retrofits (2025-2031):

Prioritize Strategic Asset Repositioning: Investors and developers should systematically identify well-located, structurally sound Class B and C assets with potential for Class A transformation. Focus on buildings that can accommodate the common success factors identified in this report, particularly those with existing architectural character or strategic urban integration.
Embrace Holistic Design and Technology Integration: Future retrofit projects must go beyond cosmetic upgrades. Integrate advanced HVAC systems for superior indoor air quality, implement smart building technologies for operational efficiency and data-driven space optimization, and design for maximum flexibility to support evolving hybrid work models. Partner with architectural firms renowned for their visionary and human-centric design approaches.
Invest in Tenant Experience and Amenities: Create environments that are not just functional but are destinations that foster collaboration, well-being, and community. This includes providing diverse work settings, high-quality food and beverage options, wellness facilities, and inviting outdoor spaces. These amenities are crucial for attracting and retaining top-tier talent.
Leverage Public-Private Partnerships and Green Financing: Explore opportunities for collaboration with municipal governments, particularly for large-scale, catalytic projects like the Thompson Center. Actively pursue emerging green financing options, such as C-PACE, and take advantage of local and state incentives designed to promote energy efficiency and sustainable development.
Adopt a Long-Term Value Creation Mindset: View retrofits as a long-term investment in asset resilience and competitive advantage, rather than short-term cost centers. The initial investment in deep retrofits, while significant, is justified by the enhanced asset value, operational cost savings, increased lease lengths, and mitigation of future regulatory and market risks. This approach ensures portfolios are future-proofed against obsolescence and positioned to capture the sustained demand for premium office space.

By strategically embracing and investing in comprehensive retrofits, the commercial real estate sector can effectively address the current market bifurcation, capitalize on the "flight to quality," and sustainably meet the growing demand for Class A office space through 2031 and beyond.

***August Berres Respond! battery-powered, mobile desk.***

About the author:

Bob Kroon is a recognized thought leader and innovator with over four decades of experience in the electro-mechanical and furniture industries. As the CEO and founder of August Berres, he envisions overcoming the limitations of traditional building power by enabling the Agile Workplace through a smart power ecosystem. Bob passionately advocates for technologies such as building microgrids, fault-managed power (FMP), and battery-powered Agile Furniture, which are transforming the design and utilization of commercial spaces. Under his leadership, a suite of innovative solutions has been brought to market, including Respond!, Juce, CampFire, and Wallies. These products empower building owners, architects, and facility managers to easily retrofit buildings for today’s dynamic work environment.

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The Strategic Imperative: Unlocking Value and Meeting Class A Demand Through Commercial Office Retrofits (2021-2031)

Executive Summary

The Evolving Commercial Office Landscape: A New Paradigm for Class A Space

Post-Pandemic Shifts in Office Demand and Utilization Patterns

The Widening Bifurcation between Class A/Trophy Assets and Older, Undifferentiated Stock

The Strategic Role of Retrofits in Repositioning Assets and Capturing Premium Demand

Defining "Success" in Modern Office Retrofits: Beyond Traditional Metrics