CREJ - Journal

Page 26 —

COLORADO REAL ESTATE JOURNAL

— January 7-January 20, 2015

Construction, Design & Engineering

he idea of recycling

often brings to mind

materials such as glass,

cardboard and aluminum cans.

What about recycling our lim-

ited real estate and buildings?

There are a number of rea-

sons people may choose the

path of adaptive reuse rather

then new construction. For

some, a lack of alternatives in

a particular location drives the

repurposing of existing build-

ings. For others, adaptive reuse

provides exciting possibilities

and encourages them to con-

sider the numerous potential

associated benefits. Reusing a

building does not mean set-

tling for a substandard prop-

erty. The possibilities for future

use of existing buildings are

unlimited. For example, a car

dealership could be converted

into a highly efficient commu-

nity health clinic, allowing the

health care client to increase

the size of its former facili-

ty and expand the number of

points of care available for its

providers.

While one major benefit of

reuse may seem obvious –

environmental sustainability –

there are a number of “hidden”

benefits associated with adap-

tive reuse that businesses may

not realize. When analyzing

future real estate plans, compa-

nies should consider the ways

that repur-

posing exist-

ing buildings

may improve

their busi-

nesses.

S a v i n g

money

one

way

that clients

can improve

their busi-

nesses with

r e p u r p o s -

ing in mind.

Clients can

lower their equity require-

ments by purchasing a build-

ing for less than the replace-

ment cost would be. Even if

the property is not available

for sale, the lease rate can be

quite affordable given that the

property may appear to be

obsolete. Clients should keep

this in mind when negotiating

with the property owners. In

some cases, the landlord may

be willing to provide signifi-

cant funds toward the tenant

improvements, keeping equity

requirements lower.

Of course, an older building

can have hidden issues and

cost considerations. Before

committing, clients should

extensively review the exist-

ing conditions. Building sys-

tems should be inspected by

independent service provid-

ers. Maintenance records and

past invoices should be avail-

able for review. Code issues

need to be considered to ensure

local authorities will approve

the updated facility’s intended

use. Ultimately, an appropriate

design must be developed and

a responsible remodeling bud-

get produced in order to deter-

mine if the building is truly the

bargain it appears to be.

If the client is dealing with

a short timeline, reusing a

building may be not only the

best option, but also the only

option. The zoning and site

plan approval process for a

new development can be

lengthy and only begins once

a site has been selected, due

diligence has been completed

and plans have been prepared

for review. Using an existing

building can shorten the wait

for occupancy significantly, as

adaptive reuse does not require

the same lengthy approval pro-

cess.

In some cases, old buildings

can provide aesthetic appeal

and promote certain qualities

that help define a company’s

brand and culture. Companies

can use the space both to rep-

resent the work they do and

the personality of the firm. The

property may contain attractive

features that can no longer be

duplicated. For instance, older

buildings often have charm-

ing architectural characteristics

and touches that new buildings

eschew for economic reasons.

Additionally, an old retail facil-

ity may have a significantly

higher parking ratio that office

users would find desirable

since new building codes often

limit the number of new park-

ing spots compared to the pre-

viously approved levels.

At its best, when a vacant

building is revitalized, it serves

as a tipping point to stimulate

a hub of growth and activity.

Existing buildings are part of

the fabric of a city and reflect

the history and culture of the

neighborhood. As such, older

buildings can have a large

impact on the vitality of that

city. This has been the case in

many parts of Denver. In the

River North District, for exam-

ple, the adaptive reuse of ware-

house and industrial buildings

has turned into restaurants and

co-working spaces. In fact, the

city of Denver and private par-

ties alike have been investing

heavily in the RiNo district,

which is experiencing a major

revival and now is considered

one of Denver’s most desirable

neighborhoods. In addition,

adaptive reuse projects like the

Rackhouse Pub’s brewery, dis-

tillery and cidery collaboration

are emerging in the formerly

industrial LoHi area.

The real estate and design

industry should urge clients to

think bigger when it comes to

sustainable design. By adapt-

ing their building needs towhat

already exists, they can enjoy

the benefits of a healthy envi-

ronment, a respect of the city’s

history, a strong community

and a successful business.

Adaptive reuse: good for the environment, business

Randy Myers

Chief investment

officer, The Neenan

Co., Fort Collins

While one

major benefit

of reuse may

seem obvious –

environmental

sustainability –

there are a

number of

ʻhiddenʼ benefits

associated with

adaptive reuse

that businesses

may not realize.