Understanding Adaptive Reuse in Commercial Real Estate

There are many old buildings, such as warehouses and factories, that are no longer in use. While vacant, they attract vandals and fall into disrepair. Also, the owner is losing money each month without a tenant. Adaptive reuse can turn them into profitable properties through renovation and/or restoration. This repurposing of space has become very popular in the past twenty years, especially in commercial real estate. So, why renovate when a developer can demolish and rebuild? Below are some reasons why adaptive reuse is the better option.

1. More Economical to Renovate — Most developers opt to tear down a building and build a new one to get more money in rent and to add more amenities. However, it is more economical to renovate to avoid demolition costs as well as the rising costs of labor and construction materials. This is not to say that there won’t be “surprise” costs during the project (e.g. upgrading the electrical to meet code), but these costs are far less expensive than a new build because the structure is sound and the electrical and plumbing lines are already in place. Also, developers can save on reusing materials, such as hardware, which will preserve the character. Plus, it is hard to find the same quality.
2. A Prime Location — In real estate, location is everything. In many urban areas, there is not enough space for new construction. By renovating a property, you will be gaining a prime location and possibly a landmark.
3. Maintain the Character — When a building is renovated, it is given a new lease on life. Old buildings have a rich history that deserves to be preserved, albeit in a new way. It is important to find out if the building is listed on a historical register, which would mean strict municipal codes.

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