Landlords and occupiers are trying to make long-term decisions in a market shaped by rising costs, planning uncertainty, changing weather patterns, shorter lease lengths and a widening gap between prime and secondary assets. The flight to quality has sharpened that divide as the best buildings continue to attract demand, while others risk being left behind.

Against this backdrop, retrofit has become both a necessity and a commercial dilemma. The challenge is not simply whether a building should be improved, but how the cost, risk and benefit of that improvement should be shared.

The biggest challenges

Cost remains one of the biggest barriers and landlords are often expected to fund the upfront capital expenditure required to improve a building, while tenants may be the ones who benefit most directly from lower energy bills, reduced operational costs and a better working environment. That imbalance can make retrofit difficult to underwrite, particularly where the rental uplift is uncertain or where lease terms do not provide enough time to generate a clear return on investment, underpinned by rising costs in an uncertain political landscape.

For occupiers it is equally complex. Businesses want efficient, sustainable, well-managed workplaces that support employee experience and their own sustainability goals. However, they also must manage their own cost pressures. Even where retrofit delivers long term savings, the short-term disruption or additional cost can be hard to justify.

Collaboration

This is where alignment between landlord and tenant becomes critical and where property managers have an important role to play. The most successful retrofit strategies are likely to be those that connect development, asset management and occupier priorities from the outset. Rather than treating retrofit as a landlord led capital project or an occupier led operational benefit, the focus needs to shift towards shared value using tools such as cost benefit analysis.

Green leases and service charge mechanisms are already being used to help bridge the gap, but the market remains inconsistent. There is no model that works for every building, owner or occupier, which means relationship management becomes even more important. Open dialogue, transparency around costs and benefits, and a clear understanding of each party’s objectives are essential if operational savings are to become a joint benefit.

The role of the property and asset manager

Ultimately, retrofit is not just a technical exercise. It is an asset value, customer experience and engagement issue. Buildings that are efficient, future proofed and well-operated are more likely to retain occupiers, protect income and support long term value.  

Well delivered buildings, supported by good people and a clear focus on experience, can shift the dial. This is where a structured and clear asset management plan, supported by a proactive managing agent makes the different difference. Open communication and purposeful technology underpinned by engaged and customer focussed people needs to be the minimum expectation to support retrofit projects.

This blog follows the ‘Retrofit split incentive’ Tribe event at CREAAM UK 2026.

Further information

Contact John Redfern

Rethinking regional office sustainability