When you hear repurposing as a trend, you might think about dumpster-diving hipsters, or home decor experts trying to sell you an old worn table for 300% markup. But building repurposing is taking off in the commercial real estate sector as well. It’s becoming a great way to take an old property and turn it into a new opportunity.
The most common trend in commercial real estate repurposing is in the retail sector, specifically converting dying malls into something new. As retailers continue to leave outdated indoor mall spaces, owners are scrapping to figure out what to do with the empty spaces. The best answer? Converting malls into office spaces has proven successful in many markets. The New York Times recently featured the remake of Westside Pavillion in Los Angeles into office space as just one example of a successful conversion.
Owners of malls are quickly realizing that office tenants can be more loyal, and more stable. While outdoor mall spaces continue to thrive in retail, the malls of the 60s that lay dormant in your neighborhood may soon become the newest place for co-working spaces or other offices.
Even the healthcare industry is taking notice. As healthcare needs grow in the United States, so does the need for more space. Satellite offices are starting to pop up in mall locations, giving health care providers more range to serve more people.
Adaptive Reuse is Hardly a New Concept
Repurposing old buildings is not a trend that started with malls. Reusing old buildings, or adaptive reuse has been around a long time. One of the biggest draws to adaptive reuse is the tax incentives that often come with turning an old building into a new, more modern space. Historic buildings come with their own incentives as well.
Another benefit to adaptive reuse is location. Typically older buildings are in prime locations. So while you might have a lot of cost to make repairs and modernize the building, the benefits of higher rents in the long run make it well-worth the investment. And new construction costs can sometimes be higher than renovations alone.
As trade wars continue between the United States and other nations, adaptive reuse can also offset any increases in the cost of aluminum, steel or other building materials.
When it makes sense, repurposing commercial real estate can reap many benefits. Whether injecting new life into a dying area, or revitalizing an older building, it’s always wise to imagine the possibilities of old real estate.
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