The EPA estimates that the U.S. construction industry generates around 600 million tons of material waste each year. This is not only harmful to our environment, but also bad business. But what if we could turn this waste pipeline into revenue streams instead?
In recent years, the circular economy has gained traction as a transformative economic model that supports both sustainability and financial opportunity. Current estimates estimate that circular economy practices could bring an additional $4.5 trillion to the global economy by 2030, rising to $25 trillion by 2050.
What's different? Linear vs. circular
We currently operate in a linear economy that promotes 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 and focuses on “reuse”. The circular value of the product is crucial. This means that the product has a sufficiently high residual value and the reuse costs are lower. In this case, it is possible to make profits in the first life and beyond. When implemented correctly, the circular economy offers a win-win situation: products that are more durable and efficient, reducing costs while improving operational efficiency and sustainability.
The benefits of the circular economy in construction
1. Reduce costs through material buyback programs
Circular products often come with buyback or take-back programs that allow facility managers to recoup some of the initial investment when components are no longer needed. Companies buy back products from customers at a percentage of the original value, refurbish them, and resell them at near full value. This model creates a steady revenue stream and encourages reuse, reducing the need for new materials and keeping costs down. These programs allow facility managers to reduce disposal costs, receive financial credits and reduce total cost of ownership.
2. Customizable designs lead to operational savings
It's no secret that the pandemic has brought major changes to the commercial real estate market. With the increasing acceptance of work-from-home and hybrid work models, tenants are pushing for more flexible leasing options And smaller roomsThis is forcing landlords to rethink the way they use and design their spaces in order to remain competitive.
Products designed with the circular economy in mind, such as office capsules and modular furniture, enable facility managers to redesign and renovate their spaces much more quickly. CBRE research suggests that investing in circular designs can lead to this Long-term operational savings between 20 and 30%.
3. Improved construction efficiency
Circular products are inherently designed to be easily disassembled, reconfigured and reused. This design efficiency improves construction time and labor costs and reduces waste.
In practice, circular products reduce the inefficiencies associated with traditional construction methods. For example, McKinsey estimates that modular components can be manufactured offsite and quickly assembled on site, reducing construction time by 20-50%. Facility managers benefit from these efficiencies because they can make changes with minimal disruption to tenants and avoid the costs associated with traditional renovations.
4. Growing demand with tight supply
Not only are there financial opportunities, but there is also a growing demand for greener, more sustainable buildings and a significant shortage of supply. Research by JLL shows that only 34% of the market demand for sustainable office space can be met in the next few years.
The way forward: Harnessing the circular economy
The transition to a circular economy in the construction sector won't happen overnight, but facility managers can start by selecting products that prioritize durability, adaptability and efficiency. The circular economy is not just an environmental movement, but a strategic model aligned with business goals. By investing in well-designed, circular products, facility managers can reduce costs, increase tenant satisfaction and contribute to a more sustainable future for the industry.