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Southern California Commercial Properties: Evaluating for Adaptive Use

by | Oct 12, 2016 | Commercial Real Estate, Real Estate Law


While adaptive reuse projects are becoming more and more popular as a means of revitalizing communities and developments, it’s important to consider whether or not an adaptive reuse project is a good financial fit.

Adaptive reuse projects revitalize communities.

Adaptive reuse projects cater to a new generation of consumers.

They also present additional factors that may not be present in traditional ground up developments.

It’s not surprising that both investors and developers are interested in adaptive reuse as a means of enticing the new generation of consumers to love to live and work and play in urban areas that have already been developed. There are many instances in which it works, but it’s not the only method of drawing the younger generation in to older areas. It’s a major part of urban revitalization in the northeast where there are a significant number of abandoned and barely maintained buildings that no longer serve a purpose. Yet it is seen in many areas across the nation.

In fact, according to statistics, 90% of construction in the United States occurs on existing structures. This can include renovation of existing spaces or the adaptive reuse of existing buildings. This is most likely due to the fact that adaptive reuse is faster (in general), more affordable, and more sustainable in comparison to building from the ground up. Risk adverse developers and property owners see the financial value of retrofitting a building in comparison to a demo/rebuild project. The inventory of potential spaces for adaptive use projects is seemingly unlimited, but interested developers must consider the appropriate factors to ensure financial feasibility before the project commences.

Building Condition: Look for buildings with “good bones.” Adaptive reuse projects that are most profitable will have good foundations, visually pleasing facades, structurally sound cores that are structurally adaptable for purpose and tenant type.

Existing Capacity: Good options will not require extensive repair or reinstallation of plumbing, wiring, ventilation or infrastructure systems in order to meet current codes and needs of tenants, etc.

Possible Funding Opportunities: Investigate possible availability of any grants, funding, tax incentives, etc. that adaptive reuse projects could make the property eligible for and that could make the project more financially feasible.

Tax Credits: Also check into federal rehabilitation credits, state and local tax credits that the adaptive reuse project could apply to the project.

Location: Many feel we have surpassed the limitation of a “good location,” but it is still a major factor in the success of any project. Successful locations will be in a desirable neighborhood capable of widespread revitalization. Positive elements making a location desirable include: easy access to transit, plenty of parking, access to retail, restaurants and local attractions within walking distance, etc.

Adaptive reuse projects present a lot of opportunities for creative property developers in southern California. If you have questions about the feasibility of your adaptive reuse project, please get in touch with the real estate and business attorneys at The Law Office of the Law Office of Ernesto Aldover.