How the Building Sector Can Thrive with Products Designed for the Circular Economy
According to estimates from the EPA, the U.S. construction industry generates around 600 million tons of material waste every year. Not only is this harmful to our environment, but it’s also bad business. But what if we could turn that pipeline of waste into streams of revenue instead?
In recent years, the circular economy has gained traction as a transformative economic model supporting both sustainability and financial opportunity. Current estimates project that circular economy practices could generate an additional $4.5 trillion to the global economy by 2030 and rise to $25 trillion by 2050.
What’s Different? Linear vs. Circular
We currently operate in a linear economy, which encourages a “take-make-dispose” mindset. This model generates profit by producing as many products as possible at the lowest cost.
A circular economy takes a different perspective, focusing on “reuse”. What is crucial is the circular value of the product. The means that the product has a high enough residual value and a lower cost of reuse. In that case it is possible to make profits in the first life and beyond. When done right, the circular economy presents a win-win: products that are more durable, efficient, and cut costs, all while enhancing operational efficiency and sustainability.
The Benefits of Circular Economy in Construction
1. Reduce Costs Through Material Buyback Programs
Circular products often come with buyback or takeback programs, allowing facility managers to recoup some initial investment when components are no longer needed. Companies will repurchase products from clients at a percentage of the original value, refurbish them, and resell them at nearly full value. This model creates a steady revenue stream and incentivizes reuse, which reduces the need for new materials and keeps costs low. These programs allow facility managers to reduce disposal costs, earn financial credits, and lower overall operational expenses.
2. Adaptable Designs Lead to Operational Savings
It’s no secret the pandemic brought major changes to the commercial real estate market. With the broader adoption of work-from-home and hybrid work models, tenants are pushing for more flexible leasing options and smaller spaces, forcing landlords to rethink how they use and design their spaces to remain competitive.
Products designed with circularity in mind, such as office pods and modular furniture, enable facility managers to reconfigure and renovate their spaces much quicker. Research from CBRE estimates that investment in circular designs can result in long-term operational savings between 20-30%.
3. Enhanced Construction Efficiency
By their very nature, circular products are designed to be disassembled, reconfigured, and reused without hassle. This design efficiency improves construction timelines and labor costs and reduces waste.
In practice, circular products reduce the inefficiencies associated with traditional construction. Modular components, for example, can be manufactured offsite and assembled quickly on-site, reducing construction timelines by 20-50%, according to estimates by McKinsey. Facility managers benefit from these efficiencies, as they can make changes with minimal disruption to tenants and avoid the expenses associated with traditional renovations.
4. Growing Demand with Short Supply
Not only is there financial opportunity, but there is also a growing demand for greener, more sustainable buildings and a significant shortage in supply. Research from JLL shows that only 34% of the market demand for sustainable office space will be met in the next few years.
The Path Forward: Embracing the Circular Economy
The transition to a circular economy in the building sector won’t happen overnight, but facility managers can start by choosing products that prioritize durability, adaptability, and efficiency. The circular economy isn’t just an environmental movement but a strategic model aligning with business goals. By investing in well-designed, circular products, facility managers can reduce costs, enhance tenant satisfaction, and contribute to a more sustainable future for the industry.
