CRE discovers its repurpose
Repurposing objects and residential properties has been big business for several years. HGTV has a long list of shows that have made repurposing their core theme – taking former banks and converting them into homes, teams of crafty folk raiding flea markets to re-do found objects, and remodels using reclaimed wood for floors and walls.
In real estate, repurposing has been a means of revitalizing neighborhoods and maintaining historical exteriors. The fervor seems to be picking up in the commercial arena, where there are many opportunities just waiting to be rediscovered and put to new use.
Why is repurposing happening now?
The ebb and flow of the human tide is an interesting phenomenon. With the Industrial Revolution, people left rural communities for factory jobs in cities. Economics, wars, and a growing middle class once saw cities diminish as suburbs sprawled.
Today, we are witnessing another tidal change.
- More and more people – especially millennials and new retirees – are choosing to live in urban areas. There, they can enjoy cultural offerings by foot, by bike, or by Uber – and thanks to advances in mobile technology, they can work from home or anywhere.
- Technology has also changed the way people shop. E-commerce has led to the wane of large box store giants and malls, while creating a need for regional distribution centers. As a result, there is a host of empty spaces begging to be repurposed.
- Economic cycles: Businesses have come and gone, and while similar businesses have tried to fill the void in those same spaces, they too have gone under. The economy is now booming, but perhaps the time has come for a bakery to not always be a bakery.
- Finally, there are the start-ups – new ideas in need of an affordable home base. As they start out, they may not be able to afford leasing space in a high-end location, but could easily adapt to a repurposed space in a more affordable neighborhood.
Why repurposing is important
Sometimes businesses close, the building is bulldozed, and new construction begins – or, the empty property simply sits vacant for years, slowly deteriorating. This is bad for communities, property values, and anyone interested in leasing or purchasing the space.
Around the country, repurposing and its benefits are on display:
- A box store in Missouri is now an artist colony
- A Maryland office building is now a green-building showcase
- An auto dealership in Michigan became a grocery store.
Before beginning a repurposing project
While repurposing a building can be expensive – say, upgrading and modernizing the guts to meet new standards – many municipalities offer tax incentives to offset those costs. It’s also a good idea to partner with architects and developers who have repurposed before, as well as, in some cases, to work with local historical and preservation societies.
To help make the repurposing project smoother, it’s important to generate a Due Diligence Report (DDR). Broader than a Property Condition Assessment (PCA), the DDR is especially important when examining a property that was constructed before modern technologies. New tech, such as infrared photography, ground radar, and spectrographic analytics, can help “see” various issues, such as moisture and cracks.
South Florida’s repurposing project
Repurposing projects don’t always have to be about the building. It could also be about land, as it was for the FBI building in Miramar.
A developer destroyed the native wetlands on the edge of the Everglades by dumping the area with gravel fill – but a vision to restore the land and to then use the swampy landscape as a natural security barrier interested the federal government. A repurposing project was born.
Morris Southeast Group has a decades-long history in the South Florida CRE market. We know the hidden gems and believe strong real estate initiatives and imagination make stronger communities.
For a free consultation, call Morris Southeast Group at 954.474.1776. You can also reach Ken Morris directly at 954.240.4400 or via email at kenmorris@morrissegroup.com.
Tags: Old Buildings
