The average cost of refurbishing industrial stock to achieve an Energy Performance Certificate (EPC) ‘A+’ rating is 21% higher than a standard refurbishment, according to research from Hollis, an independent real estate consultant specialising in environmental, social and governance (ESG) refurbishments.

Using data from 13 projects, Hollis reveals that a standard industrial refurbishment costs £27.60/sq ft, while an EPC ‘A+’ refurbishment costs £33.57/sq ft.

However, the company says higher costs can easily be recouped once an EPC ‘A+’ refurbishment has been completed.

“As well as being good for the environment, it’s important to note that there’s also a green premium in terms of asset value and yields,” says Hollis director Mark Smith.

He adds that green buildings have a rental and asset value premium of up to 25%, while yields are increasing by the same amount.

“The vacancy periods tend to be reduced in green buildings, and asset and rental values also tend to increase,” Smith says. “Green buildings also form a key part of investor criteria. ESG is at the top of everybody’s agenda, so there’s likely to be more instances where investors are demanding that the asset is a green development.”

The fact that 39% of carbon emissions come from the construction and building industry underpins this demand, he adds.

Another Hollis director, Carl Sablon, points to the cost benefits of refurbishment over rebuilding. “We recently refurbished a scheme that the client [initially] looked to demolish and rebuild, but financially this proved to be a challenge,” he says. “We spent £65/sq ft on this refurbishment, whereas demolishing and rebuilding would have cost around twice that.