Building the shiniest new building on the block from the ground up might not always be the best real estate investment. What older buildings may lack in efficiency and amenities, they make up for with striking architecture and character. New construction isn’t always the solution, especially in dense urban areas with rich culture and history.
Due to an increase in new Class A office space development, demand for Class B and C office space has declined since the recession. This creates an opportunity to repurpose these structures to reduce vacancies by attracting new tenants.
Consider the excess of underperforming buildings in downtown St. Louis. Some of these skyscrapers have a rich history and great location but are in need of repurposing. The right commercial real estate brokerage firm and developers can transform an old office building into a bustling boutique hotel, renovated condos or upscale apartments. And due to a recuperating economy, commercial real estate investments with a short lease time, such as multifamily housing and hotels, are showing strong and steady growth.
According to the Triad Business Journal, businesses are taking advantage of these dynamic spaces. For instance, “Kimpton has 60 boutique hotels in major cities across the country, and 13 of those projects have been adaptive reuse renovations, including the Tariff Building in Washington, D.C., which dates back to 1795; San Francisco’s Haslett Warehouse, which was established in 1907; and a B&O Railroad building in Baltimore which dates to 1906.”
Retrofitting older buildings to meet LEED for Existing Buildings: Operations & Maintenance (LEED EB O+M) criteria can also help earn real estate tax incentives, rewarding buildings that improve their operations to increase sustainability and reduce their environmental footprints. Retrofitting older buildings will help reduce operating costs as well.
If you’re interested in acquiring, leasing or investing in an older building with new potential, talk to the Intelica Office Brokerage Team about strategic opportunities in your area.