Adaptive reuse concerning commercial real estate is adapting an older building for a different use than it was built and designed for. Developers are seeing the advantages of adaptive reuse in the commercial real estate market. A couple of advantages are savings on demolitions and lower construction costs.
What is Adaptive Reuse?
Adaptive reuse can take many forms. For example, you are transforming an old church into office space or converting a historic building into a trendy restaurant. This out-of-the-box thinking can maximize a property’s potential and maximum value.
Often, historic buildings transformed with adaptive reuse can take advantage of certain tax credits, such as the federal Historic Tax Credit (HTC) program. The federal HTC allows commercial real estate investors rehabbing eligible historic buildings to deduct 20% of the project’s eligible costs from their federal income tax liability.
Reusing Old Office Buildings
The Covid-19 pandemic left many empty office buildings straining the commercial real estate industry. Even as companies returned to the office, many embraced a fully remote office. The ability to work from home has led to an increased interest in reshaping old office buildings into multifamily housing.
The modern-day workplace has changed dramatically over the past few years. Cubicles are a thing of the past. Companies are now opting for more spacious locations to provide their employees with amenities. Warehouses or old factories make great options for adaptive reuse. In 2021, 520 West 20th was renovated into a new office building. The original warehouse brick structure was incorporated into the design.
The companies returning to work are flocking to the amenity-filled offices to retain and entice workers back to the office. This has resulted in old office buildings being left vacant. Here lies an opportunity to utilize these structures for adaptive reuse.
Adaptive reuse can use existing structures to overcome the common challenges of new construction projects. Instead of building from scratch, the foundation, core, and shell are already in place, making it unnecessary to construct the vertical components from the ground up. Interior updates might be necessary to meet standards. Existing HVAC, electrical, plumbing, and elevator systems can potentially be utilized depending on the original building’s size, age, and layout. This approach can significantly reduce the time and costs associated with introducing a new space to the market.
When considering commercial real estate options, now is the time to think outside the box. If you are considering investing in real estate or if you would like to speak to one of our team members about partnering with us, you can fill out a contact form. We look forward to working with you!
