The year 2020 certainly turned the world upside down. The pandemic has had a dramatic impact on our way of life and certain aspects may never be the same. When it comes to changes in real estate, we have watched malls and retail centers struggle due to the acceleration of changing shopping and dining habits. We see the impact of the pandemic remote and hybrid working model on office leasing, and wonder what will come of all this possible empty space? According to an article written by the New York Times, experts estimate that over 170 million square feet of office space is expected to be freed up in this year alone, and over 7,000 retail locations will be available. Nearly one in four hotels nationwide face possible foreclosure. With the pressure of the pandemic, growing e-commerce, and changing work/lifestyles far fewer commercial entities are looking to take on new leases. We don’t know for sure what trends will stick from the pandemic, but we do know there is still a great need for housing, especially affordable housing. As a result, architects have begun to look at how repurposing commercial space can contribute to both housing and a livable, sustainable community.
Traditional American malls often make prime locations for housing developments as they tend to be in convenient, transit-accessible areas. A single vacant mall can be repurposed into several housing units mixed in with stores, restaurants, recreational facilities, and community gathering spots giving residents amenities and a sense of community. To create this community a mall may be knocked down and the property redeveloped, or in the case of the Arcade Providence in Rhode Island be repurposed into a mixed-use property. When it was built over 190 years ago, the Rhode Island mall had boutiques on all three floors. Now those shops have been transformed into 48 micro apartments on the 2nd and 3rd floors and hosts a mix of businesses, including restaurants, retail shops, and a hair salon on the 1st floor.
Hotel closures can also be especially valuable for residential development, as individual units come “prepackaged”. The fact that almost a quarter of all US hotel properties are facing foreclosure signals that the market could be flooded with easy opportunities for housing projects. Opportunities for repurposed housing also includes commercial offices, outdated industrial space, and decommissioned churches to name a few. These spaces usually exist within an already established community and offer a sustainable path forward for interesting time-honored design and construction.
To conclude, we find it is often less costly to repurpose a building than build from the ground up, especially in expensive markets. It is also much more sustainable. Nationally, new residential construction generally averages $225 to $350 a square foot, compared with $150 to $200 for an office-to-residential conversion. With all the excess vacant commercial property coming to the market, it just makes economic sense to repurpose some of these properties into affordable housing to meet the needs of the existing community.
In 2008, we served as the architects for the above pictured project, repurposing a bank building into a ground floor Starbucks with apartments above. Give us a call to see how we can assist with your re-use project.