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Conversion, Reversibility and the Circular Economy: 10 key ideas worth remembering

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In order to face the growing number of challenges that our world is currently facing, whether that be environmental, social or demographic, the real estate sector must constantly strive to reinvent itself and adjust to new ways of functioning. Throughout its latest Buzzwords, BNP Paribas Real Estate attempts to decrypt some of these challenges, explaining how, conversion, reversibility and the circular economy can be applied to the real estate sector, and contribute to the (re)construction of cities that are more sustainable and thus more resilient.

Cities must now accommodate an expanding population

Cities are becoming increasingly populated and this trend is only set to continue. According to the UN (United Nations), one third of the population will be living in cities by 2050, equal to 2.5 billion more people . [1] This presents a real challenge for cities who face housing and land shortages. 

The environmental impact of the real estate sector

In order to accommodate expanding urban populations, our cities must now rethink how they operate, particularly because environmental and biodiversity requirements mean that green spaces must be preserved and greenhouse gases reduced. Indeed, the building sector in France generates 23% of greenhouse gases, and must now reach net-zero by 2050, in line with The Paris Agreement. [2]

What new challenges await real estate?

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City housing under strain

Across Europe, many cities are now confronted with a lack of housing and land scarcity. Cities such as Paris or London are unable to expand further. In France for example, requests for new housing have reached 500,000 units a year. [3]

Property Developers are the first port of call for constructing the city of tomorrow

The real estate industry, and in particular Property Developers, are needed in order to support cities and local authorities in the construction of the sustainable and resilient cities of tomorrow. According to BNP Paribas Real Estate, the restructuring and conversion of buildings,  reversible construction that anticipates their changing uses and the ever-increasing integration of the circular economy, are the keys for creating real estate projects that are more environmentally conscious. 

The value of converting offices to housing

According to the ORIE (Regional Observatory for Commercial Real Estate), [4] the average lifespan of an office building is 15 years. Between the first trimester of 2020 and the first trimester of 2022, 1,000,000 m2 of office space were added to the market as a result of the substantial rise in remote working, as reported by the research department of BNP Paribas Real Estate. Even if the conversion of offices into housing remains minor for the moment, the impact of the context which we find ourselves, is likely to further develop this trend. 

Major conversion projects developed by BNP Paribas Real Estate

At a time where land is increasingly sort after, both tertiary and industrial buildings, which become obsolete, are of growing interest and in need of being preserved. Transformation and conversion projects are increasingly present in Europe and BNP Paribas Real Estate is a key actor in this field. The company has for example converted the Grands Moulin de Paris (The Great Mills of Paris) into offices, remodeled an office building in Covent Garden in London into upmarket flats, renovated a historical building in Milan making it into housing (Horti), or more recently adapted an old Renault factory, transforming it into a modern, multi-functional and inclusive office building. 
 

A BNP Paribas Real Estate think tank dedicated to the sourcing of obsolete assets

Within the Property Development team of BNP Paribas Real Estate, a think tank dedicated to identifying and examining the potential for assets to be converted, has been established. The team uses a land monitoring tool which is able to identify tertiary assets of more than 5,000 m2 within distance of public transport, essential criteria for residential buildings. 

The circular economy as a means to reducing real estate emissions

Whilst the building and construction industry accounts for 33% of waste within the EU , less than 1% of the 42 million tons of waste and rubble produced each year are recycled . As resources across the world become more and more limited, the circular economy is a natural response to combatting in some way the problem, whilst at the same time helping to reduce carbon emissions. The restoration programme of the 185 Charles-de-Gaulle building in Neuilly-sur-Seine, on the outskirts of Paris that was led by BNP Paribas REIM pour the SCPI Accès Valeur Pierre fund, is an example of the recycling of materials being used within a circular economy approach. 

BNP Paribas Real Estate partners with Booster du Réemploi (Recycling Booster)

Le Booster du Réemploi (Recycling Booster) initiative brings together 35 real estate actors, including BNP Paribas Real Estate who have committed to reducing the carbon footprint of the industry by 20-30% by way of the recycling of materials. A dedicated database, Looping, has as such been created which allows for users to see the availability and demand for various materials, something which was until now hard to come across.   

Reversible buildings and understanding changing interactions

The idea of a reversible building is now becoming more present in calls for projects. As society moves faster than the life of a building, buildings can quickly become obsolete. Reversible construction therefore helps to ensure the resilience of real estate projects. By better anticipating the different ways in which a building can be used, and thinking about each square metre, a building is given the chance to shift from an office building to housing, commerce and back again, without major renovation work. Cachan Pluriels is one such project taken on by BNP Paribas Real Estate, which will integrate the  innovative use of reversible spaces. 

 

[1] https://www.un.org/en/desa/around-25-billion-more-people-will-be-living-cities-2050-projects-new-un-report

[2] Ministry of the Ecological Transition and Regional Cohesion, and Ministry of the Energy Transition (ecologie.gouv.fr – 11 may 2021)

[3] FPI 2021 (fpifrance.fr)

[4] ORIE [Regional Observatory of Commercial Properties] (orie.asso.fr) – February 2016

[5] Global Status Report « Towards a zero-emissions, efficient and resilient building and construction sector », Global Alliance for Buildings and Construction (GBAC), International Energy Agency (IEA), United Nations Environment Programme

[6] Le Moniteur, 02/10/2020 (www.lemoniteur.fr)