By Pam Brenner
Aging high-rises hosting high-speed networks. Cavernous warehouses featuring late-breaking technologies. Historical structures housing high-tech start-ups. Is it really possible to breathe new life into old buildings? And can it be profitable?
The answer to both questions is a resounding yes.
Intelligent renovation of existing buildings yields three key advantages over new construction: improved flexibility, timing, and value. While antiquated services, environmental hazards, and inadequate accessibility often plague older buildings, many newer buildings have similar limitations. Poor lighting, insufficient cabling infrastructures, and inadequate HVAC systems are common afflictions - even in structures less than 10 years old.
Whether it's eight, 80, or 180 years old, any edifice not equipped to handle today's functional requirements is in danger of financial obsolescence. And while the structural grids of some existing buildings prevent cost-effective renovation, many "obsolete" buildings can be successfully upgraded for contemporary use.
Trending Toward Renovation"Intelligent renovation of existing buildings yields three key advantages over new construction: improved flexibility, timing, and value."
Natural swings in the commercial real estate market, the unprecedented explosion of information technology in recent decades, and the pervasive trend of corporate restructuring combine to make renovation of existing buildings a desirable option for many businesses.
The availability of commercial space fluctuates in cycles. Marked changes in the economy, tax legislation, and in corporate strategies drive alternating shortages and surpluses. After World War II, a booming economy fostered two decades of continuous growth in the United States. The energy crisis of the 1970s hampered expansion.
In 1981, major tax reform cut taxes and freed millions of investment dollars in an effort to bolster the U.S. economy. In the wake of that reform, commercial developers and business owners built millions of square feet of new office space. The plethora of speculative buildings constructed in the 1980s created surpluses of commercial space in multiple urban centers for nearly a decade.
Since the 1980s, the stunning growth of information technology - and the resulting demands on building infrastructures - has challenged countless existing buildings. Power capacity and quality, vertical and horizontal cable pathways and HVAC capabilities are strained by the addition of multiple computers, servers, networks, and peripherals. Because of technology demands, buildings once thought to have a life-cycle of 50, 75, or 100 years have been rendered functionally obsolete in less than a decade.
Along with the real estate boom and bust of the 1980s and the explosion of network technology in the 1990s, waves of corporate restructuring have led businesses to cut real estate costs by putting more people in less space. From 1990 to 1994, the average office size decreased 9.8 percent, according to the Building Owners and Managers Association (BOMA) International, Washington, D.C.
With the shortage of available space in many markets, the need for more sophisticated infrastructures, and the never-ending quest for prime locations, the trend toward renovation keeps growing.