Cities must embrace the radical retrofit of buildings to meet future challenges

As cities continue to grow, the pressure on infrastructure, resources and the environment is intensifying. A new global study warns that urban centres must move beyond new construction and reimagine the buildings they already have. Retrofitting – enhancing and upgrading existing structures -is emerging as a key strategy to cut emissions, improve energy performance and boost urban liveability. The Radical Retrofit report by Economist Impact, supported by JLL, argues that making cities more sustainable and resilient will depend on retrofits that improve safety, health and accessibility, while also driving economic value. Though still in its early stages, the movement is gaining traction across global cities such as Singapore, New York, Paris and Dubai. Yet the pace must accelerate dramatically from today’s retrofit rate of 1 percent per year to at least 3 percent to align with net-zero goals.

The report outlines how the business case for retrofitting is becoming more compelling. Nearly 70 percent of surveyed organisations reported a shift in their operations toward retrofitting in the past three years, with 82 percent anticipating further growth. In developed nations, where most buildings that will stand in 2050 already exist, the need is particularly urgent.

Financial returns may take time, the report notes, but retrofitted properties are increasingly valued for their lower operational costs, higher tenant retention and ability to attract talent. In commercial real estate, demand is being driven as much by market forces and tenant expectations as by policy. Energy-efficient, well-designed workspaces are now seen as essential for business resilience and employee wellbeing.

Policy and partnerships as key enablers

Government action is highlighted as the strongest catalyst for progress. Cities like Washington, D.C. and Tokyo are leading the way with performance mandates and cap-and-trade programmes that make retrofitting mandatory. Singapore’s building regulations and New York’s Local Law 97 also set high standards that spur private-sector compliance.

Public incentives, planning policies that prioritise reuse, and financial tools such as energy performance contracts and green bonds are helping bridge the gap. The report calls for a blend of mandates and incentives, alongside better measurement of outcomes that go beyond energy-capturing benefits such as resilience, tenant health, and economic vibrancy.

Barriers remain—but they’re surmountable

Despite the momentum, progress is being held back by familiar challenges. Chief among them are high upfront costs, uncertain payback periods, and misaligned incentives between landlords and tenants. Nearly two-thirds of surveyed organisations cited owner hesitancy as the top barrier. Investor interest is also lagging, though this is beginning to change.

The report notes that many buildings, especially those with multiple owners, face legal and technical hurdles that complicate upgrades. The retrofitting of heritage buildings adds further complexity. Crucially, a shortage of skilled workers is emerging as a hidden bottleneck. The report calls for education reform, upskilling programmes and the integration of retrofitting into architectural and engineering curricula.

Retrofit for wellbeing and productivity

Retrofitting isn’t only about energy savings. It’s about creating better spaces to live and work. Upgrades that improve insulation, daylight, air quality and access have been shown to reduce health risks and boost productivity. Almost half of respondents prioritised tenant wellbeing in retrofit plans, while 43 percent cited improved employee experience.

As workplace expectations shift, retrofits are being used to introduce biophilic design, collaborative spaces and wellness features such as meditation rooms and quiet zones. Retrofitting, the report concludes, allows for “intentional placemaking” that supports community and flexibility.

A blueprint for the future

The report identifies six key pathways to accelerate retrofitting over the next five years: building awareness, embedding retrofits in urban policy, measuring broader impacts, unlocking new finance models, leveraging technology, and closing the retrofit skills gap.

Artificial intelligence and smart building technologies are already playing a growing role in optimising retrofit outcomes, but adoption is uneven. Cross-sector collaboration between developers, policymakers, investors and tech providers will be essential.

Ultimately, retrofitting must be seen not as a cost but as a strategic investment in a more liveable and resilient urban future. As cities face mounting pressures from climate change and demographic shifts, the buildings of yesterday may hold the key to tomorrow’s solutions.

You can find our own special supplement on retrofit created by BVN here.