What to Consider With Radical Reuse Projects

JACKSONVILLE, FL—The adaptive reuse trend seems to be gaining momentum. Adaptive reuse projects are creating new opportunities for developers that discern diamonds in the rough and are willing to risk unexpected challenges to drive a potentially significant profit.

Of course, not every distressed commercial real estate asset is a strong candidate for adaptive reuse and some markets are riper than others for opportunities. But the quest to restore strategic assets to new glory and the potential for attractive ROI are driving creative-minded developers to explore what is becoming a hot trend.

“One difference between large-scale adaptive re-use and new construction is the GC's approach to layout,” James Sutton, senior manager of Gordon's Castle, a Florida green building company in Jacksonville, FL, tells GlobeSt.com. “With new construction, the architect's plans not only represent his intent, the dimensions are 90% to 100% accurate.”

With radical adaptive reuse—such as adapting an historic school to condominium apartments—Sutton says the architect's plans more often represent his intent, but the plan dimensions on an X-Y axis are generally inaccurate unless they were based on laser readings after demolition. His advice: the GC needs to be prepared to re-lay out the project based on intent not accuracy.

“The need for significant structural changes to historic buildings is common whether that is caused by the need to move hallways and load bearing elements to maximize the economics of new use or because sites are usually in-fill, in developed-historic areas of a city where space is a premium—meaning the new mechanical units are headed to the roof requiring new roof load capacities,” Sutton says. He also notes that with large-scale adaptive reuse projects he has come to expect the possibility of hidden load bearing walls revealed by demolition and not considered in architectural plans made prior to demolition.

“The economics of public incentives for rehabilitation of historic structures drive decisions to restore but methodology can represent A to Z pricing and can become a negotiation,” Sutton says. “The only thing, you can't negotiate in working on historical structures is the need to abate hazardous materials including lead paint and asbestos—which simply isn't a problem in new construction.”