If you look closely at the budget of a standard construction project, you will notice a structural imbalance. In residential construction, the foundation and structural framing account for roughly 27 percent of the total cost. The financial heavyweights lie elsewhere; Interior finishes consume over 24 percent of the budget, while the climate boundary, including exterior finishes, insulation, and major heating and cooling systems, accounts for over 21 percent¹. In commercial projects, this weighting is even steeper. Mechanical and heating systems alone consume 15 to 20 percent of a commercial budget². When you add the complex glazed facades required to seal these large structures, the climate boundary easily pushes past 30 percent of the total capital³.

Furthermore, this capital pays for more than just materials. Construction labor typically accounts for 20 to 40 percent of a total project budget⁴. Building a modern sealed envelope requires a high concentration of specialized trades. Climate technicians, electricians, and facade specialists command premium hourly rates to seal joints, prevent thermal bridging, and install complex mechanical systems.

In adaptive reuse projects, this financial burden becomes the defining constraint. The structural skeleton is already paid for. This means the primary cost of renovation is almost entirely wrapped up in upgrading the thermal envelope to meet modern energy codes and outfitting the interior.

When inflation squeezes a project, the standard industry reflex is to protect the floor plan at all costs. We keep the generic square footage exactly as the client requested, but because the “interior finishes”-post is a large part of the total, it’s easy to jump to the conclusion that if we aggressively cheapen the materials, it’ll save the project. Custom timber becomes laminate. Bespoke details become catalog hardware. A well-designed curtain wall disappears, and those details we thought would define the project stay at the drawing table. Little by little, the architectural spirit loses to the universal “maximum square meter” demand.

But there is a different way to negotiate a shrinking budget. Instead of degrading the materials to save the floor plan, we can save the materials by strategically reducing the thermal envelope.

Before looking at how to reduce the envelope, we have to understand why we overbuild it in the first place.

The modern real estate market loves a fully enclosed, homogenized climate. The logic is based on programmatic flexibility: if an entire 100-square-meter apartment is sealed and heated to a uniform 21 degrees Celsius, the spaces are interchangeable. A bedroom can become an office; a dining room can become a gym. This ensures maximum lifespan sustainability for the building's internal layout.

But this approach trades strategic climate benefits for programmatic flexibility. It assumes that every single square meter of a project requires the same high-energy, high-cost environment, 365 days a year.

By treating the climate boundary as a gradient rather than a hard wall, architects can unlock a different kind of flexibility, one that dramatically reduces construction and operating costs, and, if done right, actually elevates the sensory experience of the space at the same time.

The Palais des Expositions in Charleroi, Belgium, perfectly illustrates this logic. The original 1950s exhibition complex contained 60,000 square meters of enclosed space. When architects AgwA and AJDVIV took on the renovation, they were handed a budget of approximately €450 per square meter, roughly a third of what a standard comprehensive renovation costs in the Belgian market.

Insulating and heating the entire complex was mathematically impossible. So, they targeted the thermal boundary.

They removed the roof over the central section and stripped away the exterior cladding, reducing the heated footprint from 60,000 to 35,000 square meters. The central area was converted into an open-air public park, defined by the exposed concrete skeleton of the original building.

By subtracting 25,000 square meters of conditioned volume, the design team eliminated the mechanical equipment, insulation, and future heating bills for that space. The architects noted that this radical subtraction allowed them to execute the project at 33.3% of the standard budget rate, while redirecting the remaining funds to ensure the enclosed halls met high-performance standards⁵. Subtraction wasn't a sign of architectural surrender; it was the mechanism that saved the project.

This strategy relies on what we might call the "thermal onion"; layering spaces based on their actual climate needs.

The French architectural practice Lacaton & Vassal is famous for this approach. For their renovation of the Grand Parc housing estate in Bordeaux, they added unheated winter gardens to the facades of 530 existing apartments.

These winter gardens, wrapped in operable polycarbonate panels, act as passive greenhouses. They capture solar gain and pre-heat the exterior air before it reaches the primary living units. During temperate months, residents can open the interior glass doors to expand their living space. In winter, the buffer zone is sealed. This architectural layer reduced the heating demand of the core apartments by over 50 percent, all for a renovation cost of roughly €50,000 per unit⁶.

It is easy to romanticize unheated spaces, but implementing them in colder climates introduces real friction. The architecture only works if the occupants understand how to use it.

We see this friction clearly in Scandinavia. Glazed balconies are frequently added to Swedish apartments to act as thermal shields during the long winters. However, researchers studying energy-efficient renovations have documented a behavioral "rebound effect"⁷.

Tenants, accustomed to the homogenized climate of modern housing, often expect the glazed balcony to feel like a standard living room. When the temperature drops in January, they plug in highly inefficient electric radiators to heat the buffer zone. This is, of course, not only the case of glazed balconies (even though an uninsulated space requires more energy to heat to a comfortable temperature). The issue is relevant for the dwelling as a whole. Heating a house during winter to be able to walk around in a T-shirt completely neutralizes the energy-saving logic of the architecture.

Of course, insulation techniques in modern buildings nowadays are so efficient that they significantly reduce the need for heating, but in the shadow of rising temperatures due to global warming, we instead face the opposite issue during summer, when we need to cool down the spaces with electrical fans or air-conditioning.

No matter how you look at it, homogenized climate strategies in architecture have their advantages, but are not as perfect as they might sound, and climate-flexible strategies are certainly not about romanticizing frugal living conditions; there are benefits to be made.

The “unheated buffer” is not a flawed concept, but it demands adaptation. It requires the resident to accept a temperature gradient; perhaps using an unheated space for cold food storage in the winter, and as a shaded, well-ventilated dining room in the summer.

Beyond the spreadsheet and the energy models, leaving space unconditioned carries a profound architectural quality.

When Pritzker Prize winners RCR Arquitectes purchased a fire-damaged foundry in Olot, Spain, to serve as their headquarters, they did not insulate the walls or patch the collapsed roof. Instead, they embraced the ruin.

They surgically inserted heavily conditioned, frameless glass boxes into the existing volume to house computer stations and meeting rooms. The rest of the building (the circulation routes, the library, and the communal spaces) was left in a semi-conditioned state. The capital they saved by not drywalling and insulating the entire foundry was spent on massive steel tables and high-end glazing⁸.

The result is a deeply sensory experience. Moving from the warm, precise glass box into the rough, atmospheric void of the foundry creates an architectural tension that a standard, fully heated office could never replicate.

At first glance, an unheated circulation space might seem like a pragmatic compromise, but historically, in some regions, these spaces have carried deep cultural and functional meaning.

Consider the traditional Japanese engawa. It is a strip of wooden flooring situated beneath deep roof eaves, positioned precisely between the interior sliding shoji screens and the exterior garden.

The engawa is a physical manifestation of Ma (間), the Japanese concept of the interval or the spatial gap⁹. It is an intermediate zone that offers sensory experiences that fully enclosed rooms block out. It is a place where you can listen to the sound of rain hitting the soil without getting wet, or where you can capture a localized pocket of warmth from the low-angle winter sun. It is where you cool a watermelon in a bucket of water, later to eat with the family. It is where children play because the light is better than inside. It is not just a space of transit; it is a space of pause and reflection. It provides a tactile connection to the shifting seasons while maintaining architectural shelter.

The primary obstacle to building this way today is the appraisal metric. Commercial real estate is valued by Gross Leasable Area (GLA). Under international BOMA standards, rentable area is strictly defined by fully enclosed, conditioned space¹⁰. If you convert 30 square meters of an apartment into an unheated winter garden, you officially reduce the leasable size on the bank’s spreadsheet.

But as designers, we know that generic square footage is not the only measure of value.

Appraising property based solely on gross leasable area ignores operating expenditures and market differentiation. A residential unit featuring a high-quality unheated garden room appeals to buyers seeking specific amenity spaces. Real estate market data indicates that units with distinct architectural features often sell faster than units offering only generic square footage¹¹.

A thermal buffer that cuts heating bills in half directly improves the property’s net operating income over its life cycle. The “unheated void” equips the architect with a clear negotiation tool when facing value engineering.

Proposing a strategic reduction in the conditioned footprint defends the overall project budget. A thermal buffer that greatly decreases heating bills also decreases the overall cost of ownership. More importantly, reallocating capital from the HVAC and insulation of generic space toward the finishing of a concentrated core allows you to specify bespoke details and high-performance materials that elevate the architectural quality in the finished building.

The takeaway for our own design practice is simple: when the budget gets tight, don't immediately dilute the quality of the materials. Instead, ask yourself if every square meter actually needs to be heated to 21 degrees. Sometimes, the most valuable room in the project is the one you leave open to the air.

That’s all from this week’s deep dive. If you enjoyed it, feel free to share it with someone you know who also might, and spread the knowledge!

-Johan

[email protected]

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