By James A. Schnur, CCIM
President and Designated Managing Broker
Integrated Real Estate Solutions
The Covid lockdown prompted a new paradigm in how organizations work, with hybrid and remote work becoming ubiquitous. Companies no longer needed all their office space, prompting them to drop lease renewals and seek smaller spaces for the fewer employees returning to the office. For example, a March 2021 Chicago Tribune article by Ryan Ori reported that at year-end 2020 15.5% of the city’s downtown office space remained unleased, an increase of 12.8% over the previous year.
While this statistic seems ominous, it could prove beneficial to organizations willing to adapt and overcome. Adaptive reuse, the opportunity to reuse a building for other than its original purpose, can prove an advantage for someone seeking to make a move. And offices are not the only buildings experiencing renewal. Here are a few examples of adaptive reuse – chapels and abandoned factories becoming vacation condos, a sugar refinery repurposed as a climbing gym, and a defunct museum now housing a new church. There are several reasons – environmental, economic, and social – why an adaptive reuse building could be the right choice for an organization’s next move.
Consider Environmental Impact
By choosing to move to adaptive reuse buildings, businesses contribute to a reduction in environmental impact over that of new development. Adaptive reuse buildings meet new needs using the same geographic footprint. In addition to reusing land, adaptive reuse also conserves resources. The U.S. Environmental Protection Agency (EPA) estimates deconstructing a building over demolishing saves up to 90% of construction and demolition (C&D) materials. Often overlooked but equally important are the energy savings realized by reusing a building rather than demolishing a structure and building from scratch.
An adaptive reuse building may not have changed its outward appearance, but the renovations ensure the building adheres to current safety and building codes. Adaptive reuse not only is environmentally friendly, but the process is also efficient. Upgrades in HVAC, electrical, and plumbing systems ensure operations run efficiently and promote a healthy environment.
Support Economic Sustainability
Adaptive reuse buildings also contribute to economic sustainability. By revitalizing an existing building, an organization can avoid some of the legal issues, zoning struggles, and conflicts with groups desiring to impede development projects that new developers face, making it easier and less expensive to renovate. These revitalized properties make it attractive for commercial businesses, entertainment venues, and residential housing to remain in urban areas and contribute to the economic sustainability of the city.
Recognizing the advantages of reusing empty commercial spaces in the Chicago Loop, former Mayor Lori Lightfoot’s administration developed a cash incentive plan designed to infuse new life and diversity into the LaSalle Street area. Landlords whose office buildings lay unoccupied were offered millions of dollars to convert their properties to residential apartments with the agreement to rent a number of the units at below-market rates. Such adaptive reuse projects revitalize neighborhoods and create attractive commercial as well as residential opportunities.
Promote Social and Community Well-Being
The Federal Historic Rehabilitation Tax Credit offers private investors a 20% income tax credit if they adaptively reuse and renovate properties listed on the National Historic Register. Adaptive reuse preserves these architectural treasures for the enjoyment of future generations while enabling renovators to incorporate energy-efficient upgrades that make a move to these properties attractive.
Adaptive reuse buildings in urban areas offer the advantage of close proximity to public transportation, city parks, and a variety of entertainment venues. Cultural opportunities such as museums, aquariums, and historic sites abound.
Commercial businesses located in adaptive reuse buildings in the city center find a rich labor market; the multiple transportation opportunities from suburb to city allow these organizations to pull from an even wider workforce. The entertainment and hospitality industries also recognize the attractive market in urban areas as well as the esthetic charm of adaptively reused historic buildings.
Whether choosing to purchase a property or lease space in the Chicago area, businesses have environmental, economic, and social incentives to consider an adaptive reuse building. The commercial real estate team at Integrated Real Estate Solutions can offer their experience and expertise to help you find the relocation opportunity that best supports your values and continued growth.
Integrated Real Estate Solutions, Inc. provides clients with the in-depth knowledge and experience that is critical to determine the right path to your next move, lease renewal, or strategic repositioning of your real estate portfolio. Contact us or call 847.550.0160 today about your needs, and put our success to work for you.