CREJ - Journal

January 2015 — Multifamily Properties Quarterly —

Page 23

hen commercial real

estate properties are first

built, developers aren’t

thinking about how a new

owner, 10 years down the

road, needs that property to func-

tion in order to maximize profit. For

example, it is not a current concern

if multifamily properties will need

to be changed to assisted-living

properties, as the baby boomer

generation needs more care in the

next 20 years. Tenants of multifam-

ily properties have different needs

and space requirements than a

retirement home or assisted-living

facility. Maybe this should be a con-

sideration from the start in order to

secure the long-term success of the

building.

Typically, with multifamily, the

type of unit that is popular at the

time determines what the space

requirements will be. With that in

mind, there are several scenarios

that owners may face with current

buildings requiring updates. First

is demand. It makes sense that if

two- or three-bedroom units are in

demand, those would be the easiest

to rent and therefore most desir-

able for the owner. Depending on

income levels and other factors,

different size units are popular

at different times. Also, in time,

apartments may no longer be as

in demand, because condos might

become more profitable. If the

Colorado construction defect law

is changed in few years, it could be

enticing for owners to convert an

apartment building to more profit-

able condos. Another common con-

sideration is to convert lower levels

of a building into boutique retail

stores.

Often the large costs associated

with rehabbing existing buildings

for a new or future need is detri-

mental.

It would be valuable if an owner

were able to reconfigure the interior

of a building to match needs, as the

neighborhood experiences change.

A new technology makes interior

reconfiguration a reality. A former

Gensler architect and professor at

Texas A&M Univer-

sity has developed

a demountable

drywall joint tape

called Green-Zip.

This tape is impor-

tant because it

creates interior

versatility.

If you think

about the way

the interiors of

buildings are con-

structed, walls

are set into place

using studs and head rails. Then the

doors, windows, plumbing and elec-

trical are added. Drywall sections

are put onto the frame to connect

and cover up all of these items that

make up the wall.

Conventional drywall joint tape

is installed and seals access to the

entire wall, both inside and out.

It seals so well that when some-

one wants to remodel or even do

a plumbing repair, the only choice

has been demolition (hammers

and saws) and starting over with

new materials. This is very expen-

sive for the building owners. It also

accounts for 23 percent of garbage

in construction landfills, according

to the U.S. Environmental Protection

Agency. With a removable drywall

joint tape, materials can be reused,

including the drywall. Once the

drywall is removed, studs can then

be moved, allowing for the space to

be reconfigured. The same drywall

can be put back up to create that a

new space using the same materi-

als. Reconfiguring the interior saves

$110 per lineal foot, or $1,100 sav-

ings for every 10 feet compared

with demolition costs, according to

a Turner Construction case study.

Time and labor costs are also sig-

nificantly less.

Also, according to a Leadership

in Energy & Environmental Design

case study, demountable drywall

tape diverts 70 percent to 90 per-

cent of the building from landfills.

If a building is working toward Gold

LEED status, demountable tape can

contribute up to five LEED points.

“It’s encouraging to see new tech-

nology and practices that promote

both building deconstruction and

landfill construction waste diver-

sion,” said Brian Dunbar, LEED fel-

low, executive director at Institute

of the Built Environment.

The Internal Revenue Service

offers tax benefits because the

demountable dry wall tape makes

everything associated with a non

load-bearing wall pass the test

and become personal property.

This changes the materials from a

39-year to a five-year depreciation.

For the investor, this means an

additional 8.1 percent return on

equity, according to Real Estate

Review. For companies using their

own building, McGladrey account-

ing says that the tax benefits for a

profitable company is equivalent

to saving between $3 and $10 per

square foot of floor space.

The self-adhesive tape can save

time and labor because no auto-

taping tools are needed for the

first mud coat and there is no four-

hour to two-day drying time. All

of these benefits have an upfront

cost of $1 to $1.70 per sf of floor

space. A Barry Lynch, IFMA Fellow,

case study shows return on invest-

ment to be 7:1. The new industry of

changeable buildings is born with

a simple idea of demountable dry

wall tape.

Reconfiguring interiors using new technology

Technology

Les Simpson

President, Deferred

Tax Benefits,

Denver

Green-Zip drywall tape adheres to drywall in the same fashion as regular tape but

without the long drying time.

The removable drywall tape is used to be able to reconfigure spaces using the same materials.

‘It’s encouraging

to see new

technology

and practices

that promote

both building

deconstruction

and landfill

construction

waste diversion.’

– Brian Dunbar, Institute of the

Built Environment