Article written by ntale muhammad
How Commercial Real Estate Use Is Changing: Five Adaptive Reuse Success Stories
The practice of taking an existing structure and repurposing it for some other use is not necessarily a new idea. This practice of adaptive reuse has, however, become increasingly common in the apartment industry.
No single reason explains this boom; it is a combination of factors. But one factor that is easy to point to is the fact that people enjoy living downtown. Renters have proven this over time by their willingness to pay more for urban core units.
Without deeply discussing principles of urban geography, one can see many structures that handily lend themselves to adaptive reuse in or near downtown areas. As cities evolved, centrally located buildings that once served a non-residential purpose (e.g. mills, factories, warehouses, etc.) are now placed in areas that present attractive residential opportunities.
Adaptive reuse can be a great way for developers to leverage extremely valuable but otherwise inaccessible plots of land. If a structure has been designated historically significant and therefore cannot be torn down, developers can get creative by repurposing these buildings into trendy, “hip” units that renters are willing to pay a premium for.
Using a variety of sources, including “Multifamily Executive” and individual property websites,compiled a list of some of the most unique adaptive reuse properties, then analyzed property-level performance against current market trends in an effort to see how some adaptive reuse properties.
The Arcade Providence took adaptive reuse to another level by redeveloping an indoor shopping mall and converting several former stores into micro-units.
Micro-units are a beast of their own in an analytical sense. Because the units are so small, effective rent typically isn’t comparable to the rest of the market. When analyzed on a rent-per-square-foot (RPSF) basis, however, micro units are more easily understood.