Market polarisation
Commercial real estate is entering a phase of strong polarisation. Modern, well-managed, low-emission assets gain value. Older offices are increasingly seen as objects that need extra CAPEX and carry risk.
According to JLL research, sustainability influences investment decisions for a clear majority of respondents, and a significant share observed a decline in the value of assets failing to meet expectations in this area.
The discount mechanism
A brown discount isn't a single number — it's the sum of overlapping layers. Higher cost and regulatory risk, weaker leasing appeal, harder financing and lower liquidity. Each lowers the valuation on its own, and together they create the discount effect.
Importantly, the discount grows not because the building suddenly aged, but because the expectations of the market, tenants and lenders changed.
Why it is growing now
The pressure is amplified by the regulatory direction (EPBD, CSRD/ESRS) and by the rising importance of building data. At the same time the supply of new space is shrinking — according to JLL, retrofit already accounts for a significant share of completed office projects.
For many owners this means that modernising an existing asset stops being a side option and becomes the main way to defend value.
The path to reversal
Reversing a brown discount doesn't start with a big investment, but with a diagnosis: where the building really loses value, which actions have the highest return and how to phase them. Without that it is easy to spend the budget without moving the valuation.
Then comes the audit-to-retrofit logic: ordering CAPEX, delivering actions with a measurable effect and building the data that documents it.
What convinces the investor
Investors and lenders aren't convinced by a declaration, but by proof. An asset whose performance you can document in numbers — consumption, comfort, certification readiness — defends its valuation far more effectively than one that is „refreshed” but undocumented.
So reversing a brown discount is as much work on data and the asset-value narrative as it is technical work.
A brown discount isn't a verdict. It is the gap between a building's condition and the market's expectations — and every gap can be diagnosed and closed. The first step is an audit that shows where the lost value really sits.