PHOTO SHOWS CAWLEY CHICAGO ADAPTIVE REUSE LISTING AT 1900 W. HUBBARD ST.
Adaptive reuse in commercial real estate refers to the repurposing of old buildings or sites. This process is closely associated with historic preservation, especially in cities with rich histories like Chicago. At Cawley Chicago, we have teams specifically dedicated to preserving what is best about our beloved city, while also developing it to be more modern and functional.
Cawley Chicago Managing Principal Zach Pruitt had the opportunity to share his expertise at Bisnow’s Chicago Repositioning and Adaptive Reuse Digital Summit on Thursday, May 13, 2021. Pruitt and other commercial real estate industry professionals exchanged their views on how the adaptive reuse process has changed throughout the pandemic; the pros and cons of repositioning versus ground-up construction; and, most importantly, what makes a building a good candidate for repositioning.
Pruitt’s panel focused on how to reposition older assets. Delph Gustitus, Principal at BTL Architects, pointed out that most often, communities have buildings that are ripe for repositioning.
“They have cultural history in the community and they would love to see the buildings brought back to life and repurposed,” Gustitus said. “A key is finding a building with good bones.”
Once you find a building with good bones, your challenge is to sell that existing building on what it could become, according to Pruitt. These endeavors require taking existing product and tailoring it to the needs and demand of today.
“When you take an old industrial building and create an office building, it’s revitalizing the whole neighborhood,” Pruitt said. “Revitalizing everything around it. But when we talk about hurdles, such as zoning, it’s tough to get projects going.”
Zoning is not the only major hurdle to adaptive reuse projects. Bob Habeeb, Founder and CEO of Maverick Hotels, pointed out that these projects can be difficult to finance in the best of times. However, Pruitt identified several programs that can add financial base to reduce risks for projects:
– Invest Southwest
– Small Business Funds
– Opportunity Zones
– Historic Tax Credits
“There are so many programs offering incentives for not only developers, but also owner users,” Pruitt said.
Even when all parties involved in these projects seem to be more financially conservative than ever, Ralph Zucker, President at Somerset Development, reminded everyone the importance of planning for success.
“Don’t settle for less money than you’ll need if you’re successful, ” Zucker said. “Redevelopment plans tend to accelerate further down the line.”
Despite the financial obstacles and uncertain times we are living in, the panelists were overwhelmingly optimistic.
“With more perceived risk, we expect higher return,” Adam Firsel, Managing Principal at Core Acquisitions, said. “Good projects get financed.”
Pruitt and his team continue to work on adaptive reuse projects in Chicago. Follow his team for updates.