What is the Circular Economy?
A circular economy (CE) is a closed-loop economic system in which raw materials, components, and products lose as little value as possible, renewable energy sources are utilised and renewable system thinking is emphasised(1).
CE definitions, typically fall into one of two categories: raw materials or system change:
- Raw materials emphasises reduction (less use of raw materials), reuse (maximum reuse of goods and components), and recycling (high quality reuse of raw materials), whereas
- Closed cycles, renewable energy and system thinking are central to system change
Large volumes of waste materials can be generated during construction activities, which must afterwards be disposed of. Furthermore, as a building reaches the end of its life, it may be deconstructed or demolished, resulting in substantial end-of-life waste. Although there are more options for reusing and recycling materials, as well as reducing the amount of waste produced in the first place, a significant amount of waste is still disposed of in landfills. The building industry in the United Kingdom is the largest user of resources, consuming around 400 million tonnes of material each year(2). Construction and destruction of buildings account for 32% of landfill waste, while 13% of materials brought to construction sites are transported to landfill without being utilised(2).
On July 30th 2020, in response to rising awareness of this issue, the UK government released its ‘Circular Economy Package: Policy Statement’ (CEP), which presents a redesigned legislative framework that defines waste reduction activities and establishes a long-term waste management and recycling path that is ambitious and achievable with aims to progress the construction industry away from the traditional economic practice of the linear economy and towards the progressive and sustainable circular economy. Many of the themes and provisions are related to areas of resource and waste policy in which the UK is already active, either through existing measures or ongoing activity to fulfil pledges made in their individual domestic waste policies(3).
Addressing at a Local Authority Level?
At a local level, the Mayor of London released the ‘Design for a Circular Economy’ Primer in 2020 to help organisations in the built environment sector understand how to incorporate circular economy principles, as outlined in the Circular Economy Package: Policy Statement, into their projects and design processes across London. The Primer emphasises that the benefits of adopting a circular economy approach in the built environment sector will be substantial for London. According to the London Waste and Recycling Board (LWARB), by 2036, London could gain between £3 billion and £5 billion in growth, as well as 12,000 new jobs, if circular economy concepts are fully applied(4).
The primer sets out 4 core principles by which the construction industry must adhere to for a circular approach to be achieved. They are as follows:
Following these principles will allow for new builds and refurbishment projects to become more sustainable and economically viable, as developers will benefit from material optimisation and waste minimisation while lowering material and disposal costs.
The Fit-Out Problem
Circular strategies, such as the Mayor of London’s primer, are focused on new-build and refurbishment projects, however it doesn’t encapsulate the complete built environment. When it comes to addressing the process of leasing in the context of office and retail buildings, there is a ‘circularity’ gap. Figure 3 perfectly shows this gap since even if a new/refurbished building is designed to implement all of the core circular principles, if the building has a typical lease length of 5 years, over a 60 year lifespan in an office/retail context there will be potentially 11 new fitouts and would result in contributing an estimated 800,000kg of CO2 over its lifecycle.
The issue related to retail and office fitouts is two-fold. Firstly, the current ‘norm’ follows two main categorisations to fitting out a commercial building ready for lease: Category A (Cat A) and Category B (Cat B) fitouts, both of which are altered to some extent or entirely replaced every time a new tenant occupies the space, especially in the case of Cat B fitouts. Secondly, the issue of ever-increasing recurrent office/retail fitout turnover as a result of shorter lease terms.
Cat A fitouts are the foundational elements of an interior space’s design. This type of fit out includes the installation of a building’s mechanical and electrical services. Internal finishing walls, reception spaces, and lift lobbies are all included in a Cat A project. A Cat A fitout room will be completely vacant except for the most essential functional elements, making it easier to lease to occupiers who want to design their own office/retail space. Cat A spaces are the blank canvas of the design and construction world, with raised metal floors, painted perimeter walls, and a grid ceiling with fitted lighting. Lighting, air conditioning, toilets, raised access flooring, grid ceilings, and basic fire detection systems are all common features.
Cat B fitouts define interior spaces, covering everything from the construction of distinct rooms to the selection of wall art. Floorplans are created, finishes are selected, and branding is installed throughout the area, giving clients a unique end result. These include the addition of:
- Partitions and doors
- Floor finishes
- Specialist lighting and facilities
- Cafés, tea points and kitchen areas
- Branded material and décor
The initial issue here is that whenever a new tenant takes over from a prior occupant, they will often need to remodel the office/retail space according to their company’s specifications, which in most cases differ from company to company. This usually results in a high rate of material turnover, as old materials and designs are removed and replaced with new ones. This process is both extremely wasteful and can have a considerable impact on a buildings embodied carbon. This approach closely resembles a linear economic model, based on “take-make-dispose”, which is both inefficient and environmentally harmful.
The apparent ever-decreasing timescale by which material turnover occurs further exacerbates the issue. Savills produced a research article in August 2020 that discussed the adverse effects of COVID-19 on the retail industry and the growing demand for alternative leasing options. The article highlights that lease lengths have decreased significantly in recent years, with a threefold increase in leases of two years or less between 2018 and 2020. Leases of 6–10 years accounted for 55% of deals in 2016, however by 2022, 90% of new leases are expected to be shorter than 5 years. The average lease length requested by retailers is 5.5 years, with businesses eager to lock in 10-year deals.
What needs to be done – The option of Cat C?
With the main issues with traditional Cat A and Cat B fitouts being the removal of materials and branding every time a new tenant leases the fitout space as it is both relatively carbon intensive (See Figure 3), and increasing in frequency (See Savills article ref 5), it would be appropriate to consider an alternative option. As a result, the idea of a Category ‘Circular’ (Cat C) fitout is proposed as a concept.
Cat C fitouts are expected to be comparable to Cat B fitouts in terms of what is included in the scope of the fitout, with the exception of any brand-specific material/décor, and will be completely constructed, provided and maintained by the landlord. The key benefit is that at the end of the lease term, there will be no need for excessive strip-out, installation of new building services or extensive remodelling/renovation as this Cat C model will break that cycle. However, in order for Cat C fitouts to be truly ‘Circular,” not only must it reduce the frequency of fitouts but consideration should be given towards the environmental impact of materials and their methods of installation. The materials used by the landlord to supply the fitout must be sourced in a sustainable and ethical manner, and if the materials can sequester carbon (i.e. timber), the embodied carbon footprint of the office/retail fitout will also be reduced. Cat C fitouts should also be constructed to be easily dismantled when the turnover period occurs, allowing the materials to be quickly recycled or reused for subsequent fitouts.
Figure 4, shows a graph that compares the estimated lifetime carbon impact of typical Cat A & Cat B fitouts vs the proposed Cat C fitout’s estimated turnover over a 60 year lifetime for both fit-out types, with the traditional fitout types predicted to produce roughly 800,000kgCO2e whilst the Cat C fitout only produces roughly 200,000kgCO2e. The turnover period for a typical lease has been considered to be 5 years based on the information supplied in the Savills article. The Cat C option, on the other hand, is predicted to have a 15-year lifespan following heavy usage of materials and building services. On that basis they produce 1/3 of the total lifetime carbon of the typical Cat A & Cat B fitouts.
The building and construction industry has begun a shift towards implementing circular strategies/practices in new and refurbished buildings, such as those highlighted in this article from the UK government and the London Mayor. These aim to shift from traditional lineal economic processes, and the ‘take-make-dispose’ ideology, and toward a more sustainable and environmentally conscious circular economy. This shift must take account of the ‘fit-out’ problem discussed in this article, as a building well-designed with circularity principles in mind, will not achieve true circularity if it then goes onto to implement a traditional Cat A/Cat-B fit-out cycle, and the carbon problems that entail.
By embracing the ‘Cat-C’ fit-out as proposed in this article; building owners, landlords, tenants and the industry can begin to understand, assess and reduce life-cycle emissions of buildings in-use and embed fundamental principles of circularity into their fit-out and subsequent operation.