Never before has adaptive reuse been so prevalent in both urban and suburban areas than it is today. In many neighborhoods, service stations are being transformed into fast-food establishments, and vacated elementary schools into condos or hotels. As land becomes scarce and as towns and cities age, creative developers are stepping in to meet growing demand and are repurposing older, outmoded buildings into much needed residential, office, and retail spaces. As long as sound underwriting and proper planning are taken seriously, the outcome of a renovation and adaptive-reuse project is often better than a new development.
These are some of the key trends noted in Avison Young’s Topical Report: “Adaptive Reuse Projects: What’s Old is New Again.”
“Adaptive reuse projects take many forms; however, in its simplest definition, adaptive reuse is the redevelopment of a functionally, or financially, obsolete real estate property into a newer and better use,” said Ted Stratigos, Avison Young principal and managing director of the firm’s Long Island office. “With this increasing trend, especially in established areas in the U.S., where vacant and developable land is scarce, many cities and communities welcome these transformations, as they usually spread to other buildings and public spaces—often revitalizing an entire area.”
Adaptive reuse is far from a new concept. In fact, one of the most iconic buildings in the world, the Louvre, was born from it. Originally a 12th-century castle and residence for French royalty, the Louvre was converted to a museum in the late 1700s. Historical buildings in New England have also experienced a second life recently, as the region has become highly sought-after for redevelopment.
Another interesting case study is an adaptive reuse project in the historic Washington, D.C. Navy Yard district undertaken by real estate investor Forest City Realty Trust. This once historic neighborhood had been reduced to an expanse of dilapidated industrial facilities, but this eyesore was transformed after Forest City won the bid to repurpose the site for mixed-use development in the early 2000s. The developers embraced the challenge of retaining the historic architecture and landmarks of The Yards, especially since the site was on the National Register of Historic Places. As a result, today, this award-winning waterfront development is the recreational, residential, and retail hub for the expansive Capitol Riverfront community.
Meanwhile in New York, Long Island’s embrace of the adaptive-reuse movement is proving to be beneficial for both users and the city’s commercial real estate industry as a whole. As the report notes, adaptive reuse projects offer many advantages to communities, residents, occupants, and developers. Utilizing existing structures with character and historical significance often paves the way for an area-wide renaissance. Developers are able to recycle, or breathe new life into, an otherwise old and obsolete structure. Although projects sometimes require creativity, imagination, and patience, the many benefits include the revitalization of blighted areas; a reduced environmental impact due to public transportation and shorter commutes, which can include walking and cycling to work; the ability to capitalize on locations that cannot be redeveloped, such as waterfront or parkside spaces; incentives from governments; and LEED certification.
“Perhaps the best example of this trend in the New York area is the borough-wide transformation of Brooklyn, which is still going strong,” Stratigos continued. “On Long Island, the growing demand for live-work-play lifestyles has triggered the transformation of an area long utilized for industrial, manufacturing and distribution into retail and multi-residential properties. These highly attractive projects have area-wide benefits to employees, residents and the entire community.”
Indeed, according to Commercial Observer, in the Long Island neighborhood of Bushwick, industrial buildings are experiencing a “second life as bars, theaters, music venues, specialty gyms, and just about anything boutique or hipster-approved.” This trend has enticed investors and developers to capitalize on the new and increased demand.
Queens has also undergone considerable expansion due to adaptive reuse. In the Long Island City area, more than 11,000 new apartments have been built over the past decade, and more than 23 million square feet of adaptive-reuse projects are planned. In Astoria, Queens, the $1.5 billion Hallets Point project includes 4,000 residential units, and plans for 3.5 million square feet of development. In Jamaica, Queens, projects spanning 6.48 million square feet are planned.
The obvious first step in the decision-making process is to consider the financial requirements and the project’s likelihood to lease up or sell out. The developer/investor must also consider, and get advice on, such factors as: zoning; the site’s physical attributes; environmental impact and traffic studies; site and environmental remediation; historical significance; labor; parking; and proximity to rapid transit, which has been a key selling point.
“Although there are numerous considerations to address, the concept of adaptive reuse has significant positive benefits for developers, investors, the community and the environment,” concluded Stratigos. “Adaptive reuse prolongs and improves the usefulness of a building in its surroundings. Renovation of existing structures should always be the first consideration—the end result could yield a cohesive blend of old and new.”
For more information, please contact Ted Stratigos at 516-962-5399.
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