Out with the old? Redevelop versus retrofit

From gingerbread houses to hanging stockings from the mantelpiece, cosy homes abound in festive scenes. Nowadays, society is thinking hard about new ways to heat and light the buildings in which we live, work and play, and about whether existing buildings are still fit for purpose. However, it's not so simple as "out with the old and in with the new". When it comes to retrofitting or redeveloping existing building stock, there's a balance to be struck between the impact on operational carbon emissions (the carbon emitted while a building is occupied) and the embodied carbon emissions (the carbon emitted during the non-operational phase of a building, including emissions caused by manufacturing, construction, retrofitting, deconstruction and end-of-life). In many cases it's proving hard to know where this balance lies.

In May this year we posted "Retrofitting to Net Zero – an update on the changes and the challenges in the sector", which considered the challenges of delivering sustainable, and in particular, retrofit developments. Since then, there have been some significant updates which are worth noting.

New RICS Standards Framework Guidance: Whole Life Carbon Assessment (WLCA) for the built environment, 2nd edition

On 1 July 2024, the Royal Institute of Chartered Surveyors (RICS) published the second edition of their Whole Life Carbon Assessment for the built environment (WLCA). The aim of this is to enable the total amount of carbon emitted throughout the life of a building to be measured, including both embodied and operational carbon. By making the "carbon cost of different design choices" visible, RICS hopes that developers, contractors, investors and lenders can help deliver net zero by managing carbon budgets and reducing lifetime emissions in the built environment. This should help with finding the right balance between the benefits of retrofitting versus redevelopment for each building against the backdrop of relevant local and national policies.

UK Net Zero Carbon Buildings Standard

In October, we wrote about the Pilot Version of the UK Net Zero Carbon Buildings Standard (the Standard) which was launched on 24 September 2024. The aim of the Standard is to provide a new single and clear definition of net zero carbon for existing and new buildings in the UK in the specific sectors (namely commercial residential, culture and entertainment, data centres, healthcare, higher education, homes, hotels, offices, retail, schools, science and technology, sport and leisure, and storage and distribution). One of the many interesting points about the new Standard is that it adopts a whole life carbon approach, including both embodied carbon and operational carbon (and it's worth noting here that RICS is one of the organisations involved in its development). 2025 will be a big year for the new Standard – it's expected that the Pilot version will be trialled on real projects from early 2025 with a view to launching Version 1 of the Standard formally later in the year.

M&S Oxford Street store redevelopment – SoS decision

Both of the above were referred to in the Secretary of State's decision letter of 5 December 2024 regarding Marks and Spencer's application to redevelop Orchard House, their flagship Oxford Street store. This long running and controversial application has been much discussed because of the interplay between the impact of the proposals on the historic environment, the vitality and viability of Oxford Street and carbon emissions.

In July 2023, we wrote about the then Secretary of State's, Michael Gove's, refusal of the scheme. This decision was quashed by Mrs Justice Lieven in the High Court on 1 March 2024 and sent back to the Secretary of State for re-determination.

The new Secretary of State has granted consent for the development. On the issue of carbon emissions, Angela Rayner took the view that embodied carbon was a material consideration which weighed against the proposal, but that it carried only moderate weight. She was of the view that:

• the options for retaining the buildings had been adequately explored;
• there is no viable and deliverable alternative;
• there is a compelling justification for demolition and rebuilding; and
• considering both the sustainability credentials of the new building but also the "substantial amount of carbon [that] would go into construction… harm in terms of embodied carbon would flow from either redeveloping or retrofitting the building."

The Secretary of State took the updated RICS Standards Framework Guidance into account as a material consideration, but did not consider that M&S needed to provide an updated WLCA given that the updated guidance didn't include transitional arrangements. She also considered the Pilot UK Net Carbon Buildings Standard, but determined that it wasn't necessary for M&S to update their assessments in line with the Standard given that it is currently only a pilot, that it "has not been subject to consultation or assessment" and that it "has not been adopted for development management purposes." The Secretary of State also considered Westminster City Council's City Plan Partial Review, which was published for consultation in March 2024 and included a new policy prioritising retrofit and refurbishment where appropriate (Policy 43). The Secretary of State decided that these emerging development plan policies carried limited weight.

On the subject of the Westminster City Plan, the council published the final version of its draft City Plan Partial Review on 7 November 2024 and has now submitted it to the Secretary of State for approval. Westminster City Council has maintained a retrofit first approach. Development proposals which involve "substantial" demolition of a multi-storey building will need to demonstrate that they meet the following sequential test (set out here at pages 34 and 35):

1. The existing building(s) are "structurally unsound and unsuitable for safe retention and re-purposing, either partially or in full".
2. If test 1 cannot be met, then "specialised operational and access requirements of proposed uses cannot be delivered by retrofit or deep retrofit options."
3. If test 2 is not met, "the whole life carbon of the proposed development is less than a retrofit or deep retrofit."
4. If test 3 is not met, "additional public benefits beyond the requirements of the Development Plan are substantially greater than a retrofit or deep retrofit."

A Circular Economy Statement must also be submitted for all developments involving any demolition.

What next?

As regards the Secretary of State's decision regarding the M&S Oxford Street development, opponents of the scheme have six weeks from 6 December 2024 to apply to the High Court for leave to bring a statutory review under section 288 of the Town and Country Planning Act 1990. It remains to be seen whether they will do so.

In the meantime, the decision letter is a good example of the difficult balance which needs to be applied between competing considerations – not just between operational and embodied carbon emissions, but also between carbon emissions and compliance with the development plan and other material considerations such as heritage and viability. Given how much depends on the individual circumstances of each development, it's hard to see how local or national planning policy can find easy solutions to this. This has the potential to be a contentious and challenging topic for some time to come, but the M&S decision represents an important and significant step forward in the debate and provides developers with a helpful framework for how these decisions will be made in future.

Come back tomorrow to open the door to Day 14 of our advent calendar which will shine a light on a pro-bono project we're involved with.