October 1, 2021

Re-imagining real estate

The post-pandemic housing environment is accelerating the need for re-imagined development concepts.

Adaptive re-use is a general real estate term usually applied to urban areas. It is defined as preservation and enhancement of single structures - often historic assets - by adapting their use.

Re-purposing buildings is nothing new for the commercial real estate industry, adapting existing structures to the changing needs and desires of consumers over time. Cities have transformed everything from warehouses, factories and schools into retail space and artist lofts, although most of these have been part of downtown renewals.

But in the post-coronavirus world, housing will be involved in this restructuring at unprecedented levels. A quick look at the Census data and migration reports indicates a need for broader application going forward.

With the nationwide increases in remote work situations brought on by the pandemic, much of the population and workforce are clearly trending toward suburban and even exurban home purchases, finding a quality of life more suited to their needs.

But long before Covid-19, U.S. cities were plagued with an affordable housing crisis, short by as many as 7 million units.

The housing market has been struggling to keep up with demand since the 2010s. As the demand for residential real estate has increased, the scarcity of homes for sale has created a logjam on the supply side.

If many companies continue to normalize a remote or hybrid work model, could re-purposing office buildings into housing come next?

Special permits may be needed, or zoning ordinances may need to be waived. The post-COVID era will be one that examines classic urban planning to make sure it is not unintentionally inflexible in the face of future societal sea change.

And adaptation is spreading beyond city borders. Already deep in decline, hundreds of suburban malls and big box retail stores in otherwise desirable neighborhoods have recently become permanent economic casualties.

Some communities are ahead of the curve, already supporting an evolution away from car-centric design to one that is more walkable.

Adaptive reuse can generate value in the form of property taxes, employment and housing and my even inspire more investment, development and revitalization in the surrounding area.

In the future, whether empty offices or strip malls, many underused, abandoned or otherwise obsolete buildings may find a second life.