Nov/06 - Those who are active in the real estate market have no doubt come across the term “retrofit”. The word, that has already informally joined Brazilian vocabulary, has its origins in the Latin word “retro” (move backwards) plus “fit”, which in real estate of course refers to building. In real estate the expression means to add new characteristics and technology to old. Retrofits were first seen in countries where strict conservation policies for historic buildings restricted façade changes but were flexible about adaptations to the internal structures, allowing improvements for their best use.

Regarding buildings in general the expression simply means revitalizing old buildings, improving their use by substituting old internal installations for more modern ones, such as elevators, air conditioning systems, ducting and wiring, automated systems, security, among others. Retrofits have also reached commercial buildings and, especially in São Paulo and Rio de Janeiro, there are several examples.

Two fundamental conditions for the success of a retrofit of a building are also the main causes that inhibit their occurrence: (i) a structure compatible to market requirements; the building must have a clear floor-to-ceiling height of at least 2.6 m (which generally means that the floor-plate to floor-plate distance should be 3.5 m) and good distances between columns, and (ii) a small number of owners (in Brazil strata-ownership is widespread) otherwise decision making becomes impossible as well as the sale to an investor.

Cities such as São Paulo and Rio de Janeiro, as a result of its particular occupational structure, has many old buildings in regions such as Centro (downtown), which, precisely due to the lack of adequate structural dimensions, are being abandoned. The consequences are naturally the loss in value of the property and the neighborhood. The standard of occupation falls, and squatting is not uncommon. To break this cycle, retrofits have presented themselves as an alternative to demolition, where the structure will permit. A good example of a retrofit, currently under execution, is the Standard Building project in Rio de Janeiro.

When the subject turns to the leasing of retrofitted buildings, special care must be taken: one must check if indeed a retrofit occurred. Many developers have undertaken merely superficial refurbishment including fixing the floor surface and re-carpeting, providing a lowered ceiling and providing walls with a new finish, which is not exactly a retrofit. Such buildings restrict the use of new communication technologies, such as broad-band, and may come with risks such as electrical overcharge. The latter, for example, is becoming a growing concern for architects and engineers, since, according to the fire brigade, it is the major cause of non-natural fires.

In general, although timidly when compared to other solutions, the retrofit market has good potential for growth. The challenge for developers will be to identify buildings with structures that have the minimum physical requirements.