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CCIM Institute proposes adaptive reuse as separate property category | Dump Trucks Charlotte NC

Columbus Ohio Dump Truck Company Brief:

  • The institute estimates that 1% to 2% of the 32 billion square feet of U.S. commercial real estate space is made up of adaptive reuse projects, but there is no current source that quantifies and tracks this segment. This leaves the real estate and construction industries in the dark about the demand for conversion of obsolete structures into revitalized and new uses, as well as other market factors, the report said. With an official definition, the institute said the industry can start to measure investment in this sector and use those figures to potentially encourage similar development nationwide.
  • Adaptive reuse projects could be particularly beneficial to contractors, as these undertakings usually cost 15% to 20% less than their ground-up construction counterparts, according to the institute. In the face of rising labor and material costs, particularly given President Donald Trump's 25% tariff on steel imports, these projects might become more attractive to developers, thereby adding to the construction pipeline. Adaptive reuse developers are sometimes entitled to tax breaks or other financial incentives related to the renovation of historic structures as well.

Dump Trucks Columbus OH Insight:

The term adaptive reuse casts a wide net and can refer to the conversion of railroad tracks into a linear park or an unsightly parking garage into a luxurious mixed-use complex.

A good example of adaptive reuse is the $200 million conversion of Bell Labs in Holmdel, New Jersey, into a mixed-use, urban-style development. When complete, the former AT&T research and development site will be called Bell Works and will feature a public main street, a rooftop hotel, offices, some nearby residences and other amenities.

One thing adaptive reuse projects sometimes have going for them over new construction is a prime location. But even these deals can be tricky, according to Kim Ashby of Foley and Lardner LLP, because of permitting and zoning regulations. "This is especially true," Ashby said, "for areas with newer, more aggressive setback requirements from other properties, coastline and air rights."

Renovation projects, Ashby said, can also sometimes be delivered on a faster schedule.

"This, of course, depends on the magnitude of the renovation," Ashby said. "If the project is principally involved with revising the interior buildout, sprucing the envelope and exterior finishes, the turnaround time to an income-producing property will be greatly enhanced by using the existing structure."